It Has Saved Our Bank Numerous Times.”

Bottom Line “It has saved our bank numerous times.”

In the early ‘80s, Mr. Heitkamp and ValueBank Texas were looking for a network partner that understood the needs of a community bank. PULSE was the perfect fit. Over the years, ValueBank has utilized many of our innovative products and services to help them grow. When it comes to fraud detection, they rely on DebitProtect®. It provides early warnings on fraudulent card activity, which has helped them significantly reduce their fraud losses. That’s good for ValueBank’s bottom line.

“If you’re not using DebitProtect, you better take a good look at it.” To take a good look at DebitProtect and hear what else Mr. Heitkamp had to say, go to:

VOLUME XXxiX NO. 1 BANKER january/february 2013 Advocacy

21 Winning with Franchise Players: Perk Up Your Personnel Playbook by William Granville III

23 Despite New Regulation, Debit Growth Remains Robust

24 The Lege is Back in Town By Steve Scurlock

26 Regulatory Agencies: A Quick Preview of Coming Attractions By Karen Neeley

28 Strategic Risk: What the Board of Directors Should Know About It and What They Should Do About It By Cathy Ghiglieri

30 How Banks Can Safely Embrace Bring-Your-Own-Device

Bonnie Kankel / Editor in Chief By Don Jackson Mary E. Lange / Contributing Editor Darlene Revers / Advertising Manager 33 IBAT Financial Services — Your Safety Net Amanda Morcombe / Advertising Assistant Terry Young / Association News Editor 34 So You’re Ready to Step It Up? John Wilson / Cover Design/Illustration By Steve Scurlock Barbara Jezek / Design/Production

IBAT’s bi-monthly magazine, The Texas Independent Banker, welcomes letters from readers. The Texas Independent Banker, January/February, Volume XXXIX, Departments Issue 1. Published bi-monthly by the Independent Bankers Association of Texas, 1700 Rio Grande Street, Suite 100, Austin, TX 78701, 512/474-6889, 4 Up Front 14 Personnel Update Bottom Line FAX 512/322-9004. Inquiries should be sent to the Editor. Editorial guidelines are available upon request. Advertising rates may be obtained by contacting 6 Foundation Footprints 16 Association News “It has saved our bank numerous times.” Advertising Sales at 800/749-4228 or 512/474-6889. Advertisements do not imply sponsorship by IBAT. ©2013 by the Independent Bankers Association of 8 Services Solutions 18 Leadership Division News In the early ‘80s, Mr. Heitkamp and ValueBank Texas were looking for a network Texas. No part of this publication may be reproduced in partner that understood the needs of a community bank. PULSE was the perfect fit. any form without written permission of the publisher. Opinions expressed in this publication do not necessarily General Counsel’s Corner 44 IBAT Calendar Over the years, ValueBank has utilized many of our innovative products and services reflect official policy of the Independent Bankers 10 Association of Texas. to help them grow. When it comes to fraud detection, they rely on DebitProtect®. Interest Rates 45 Advertising Directory It provides early warnings on fraudulent card activity, which has helped them 12 significantly reduce their fraud losses. That’s good for ValueBank’s bottom line.

“If you’re not using DebitProtect, you better take a good look at it.” To take a good Quote: Zig Ziglar look at DebitProtect and hear what else Mr. Heitkamp had to say, go to: ©2013 PULSE ©2013 January/February 2013 www.ibat.org ★ 3 Up Front

Small Affairs

ivil war historians are almost unanimous in their con- Wall Street must be revisited and refined to allow community clusion that the fate of the war turned on one historic banks to return to days of serving the needs of small business battle…the battle for Little Round Top at Gettysburg. and consumers with appropriate regulation and less government On July 2, 1863, Union Colonel Joshua Lawrence interference. Chamberlain, a mere school teacher from Maine, was But the battle can only be won if there is commitment of Cordered to take his 20th Maine, along with the 83rd Pennsylva- every community bank stakeholder, director, officer, employee nia, the 44th New York and the 16th Michigan to the crest of to immerse themselves in the conflict. For far too long, far too Little Round Top to protect it against a confederate advance. many have allowed others to wage the battle alone. A vast Chamberlain’s troops were outnumbered nearly three to one by majority have relied on peers to carry the load of contributing the 15th Alabama under the Command of William Oates. to bank political action committees, carry the community bank The fighting that ensued was fast and furious. Some 40,000 message to elected officials and regulators or participated in rounds were exchanged in the course of 90 minutes; saplings other initiatives designed to provide ICBA and IBAT the tools halfway up the hill were gnawed in half by bullets. The Union necessary for maximum effectiveness. troops had withstood three advances by Confederate troops. It is a new year. It is a fresh start. It is our time. We stand Recognizing that a third of his troops had fallen and conclud- ready to mount a major offensive legislative initiative in the ing that Little Round Top would be impossible to hold by mere 113th Congress to save this industry from further peril and defensive measures, Chamberlain placed himself in the front of restore a modicum of balance to bank regulation. Ask yourself, the line and gave the order to “Fix Bayonets.” His haggard and your directors and every employee in your bank what they are depleted troops charged down the hill. prepared to do to assist in this effort. It might be as simple as Surprised at the offensive charge, the 15th Alabama was developing a personal relationship with your member of Con- soundly defeated, the left flank was secured, and the Confed- gress, or writing a check to ICBA or IBAT’s political action eracy was deprived of marching onto Richmond and beyond. committee or even travelling to Washington to lobby on behalf When reflecting on the battle for Little Round Top, Oates of this effort. was quoted as follows. “We ran like a bunch of scolded dogs. It’s time to dismiss the conve- We had the numbers and yet we were severely defeated with this nience to just let someone else do single act of valor. Great events (the Civil War) sometimes turn it. Resolve in the new year that on comparatively small affairs.” you can make a difference regard- A single act of valor. A defining moment. less how small you perceive your Today, the community banking industry finds itself contribution to be. immersed in a war of its own. It is a fight for relevance and sur- Take a lesson from history. vival in a dynamic financial services marketplace. Through no Great events sometimes turn on fault of their own, community bankers wince at the high burden comparatively small affairs. H cost of oppressive regulation brought about by institutions less responsive to the needs of their marketplace; seeking gain at the expense of risk and customer vulnerability. Outnumbered by

hordes of Wall Street lobbyists and an opportunistic Congress, christopher l. community bankers find themselves seeking bold leadership to williston, cae, is conquer the long odds they perceive as stacked against them. President and Chief But it is a battle that can be won. A growing recognition Executive Officer of the exists in the halls of Congress that community banks and small communities across this vast land must be saved. Sentiment Independent Bankers persists that if the industry is to be saved then the shackles of Association of Texas. regulation brought about to curb the destructive practices of

4 ★ The Texas Independent Banker January/February 2013

Foundation Footprints

How Well Do We Know Our Local School Leaders? An investment in Texas that will provide rich returns!

s True Texas Community Bankers, we know we play a other industry group, have our finger on the pulse of our local definitive role in the evolving story of the Texas econ- economies. The super charged successes surrounding oil and omy and the number of jobs it can bring to an area. gas drilling, university and medical school expansions, innova- That is a given. tions in technology, manufacturing or Formula One auto races Looking toward the future, we now have an oppor- have created a gold rush for some areas of our state; the drought Atunity to play a definitive role in the evolving story of our Texas impacting our ranching and agricultural sectors is creating eco- education system and the 4.9 million students who pass through nomic uncertainty in others. Each of these successes and declines our local schools needing a solid grounding in personal financial is matched by families moving toward growth and opportunity. management. In our role as community bankers, we are acutely aware As you read ahead to Steve Scurlock’s legislative overview of this ebb and flow. We see it on our Main Streets. We see it in this issue (“The Lege is Back in Town”), the Texas Legislature in our local school capacity of both overflow and underutilized convenes this month. Among the many issues confronting our campuses, in our local taxing authorities, with graduating high elected leaders is the continued focus on growing our economy school students making individual decisions to either stay in our with good paying jobs, meeting our obligations with responsible communities or move away. taxes, addressing the shortages of water, and preparing our grow- Community banking, local economies, local education with ing young population for life with a good education. We know relevant life lessons in personal and small business finance, Out- these issues are interconnected, and as True Texas Community standing Teachers, students eager for relevant teaching. These Bankers, we have an opportunity to guide the discussion on are the threads that bind our communities together. personal financial management by investing the time to get to Your support of the IBAT Education Foundation has been know our local school leaders. truly amazing. Your contributions have made it possible for us As your Foundation meets with local school districts and to make a difference in the class- superintendents to provide the IBAT Teach the Teacher Pro- rooms in Texas. We continue to be gram™, we’ve learned a great deal about the structure of our encouraged by your generosity and Texas education network and the need to learn even more. we thank you. Did you know: But we can and must do more. …There are 20 Texas Education Agency (TEA) Regions How well do you know your local …Most regions have between 40-60 Independent School schools’ leaders, superintendents, Districts (ISDs) principals and teachers? Can you help IBAT and share your connec- …Region 7 – Kilgore has the most ISDs with 102 tions with local school leaders to …Region 19 – El Paso has the least ISDs with 5 bring the IBAT Teach the Teacher …Region 10 –Richardson has 80 ISDs plus 44 charter Program™ so that by 2014 we schools will have impacted 100,000 high Willard J. Still is school students in each of the 20 …Region 11 – Fort Worth has 76 ISDs plus 26 charter the Board Chairman TEA Regions of Texas? schools of the IBAT Education If so, please drop IBAT Foun- …Region 6 –Huntsville has 57 ISDs plus 11 charters dation President Mary Lange Foundation and Vice …Region 12 – Waco has 97 ISDs – more than Austin, [email protected] a quick email and Chairman of American Houston, or San Antonio let her know you are eager to help Bank, N.A. in Waco …IBAT has already delivered its Teach the Teacher in this worthwhile endeavor. H Program™ to seven TEA Regions and is prepping to visit six more in 2013. As True Texas Community Bankers, we, more than any

6 ★ The Texas Independent Banker January/February 2013

IBAT ad 01.2013.pdf 1 12/12/12 5:07 PM

services solutions

First American Payment Systems Real Texans Helping Texas Banks Build and Strengthen Banking Relationships

e all know the qualities that make community the big processors — doesn’t end at the bank; it extends all the banks dynamic and powerful players in the mar- way through to the merchant end-user. First American houses ketplace. True Texas Community Banks are filled and employs its own Customer Service Center, accessible to cus- with people — people who know their custom- tomers via email or toll-free number, 24 hours a day, 365 days a ers and work tirelessly to build meaningful per- year. Wsonalized banking relationships. They take every opportunity to As you would expect, First American protects customer data understand and serve the unique needs of each customer. They using state-of-the-art technologies to provide the highest levels are responsive and considerate, knowing that the customers of confidentiality, integrity and availability of data and comput- they serve help support their community and make it a positive ing resources. It employs a high-level team of engineers to moni- place to live. True Texas Community Bankers see themselves as tor and maintain all systems and, in the event of an emergency partners in the success of their customers. or natural disaster, has the ability to recover critical systems to This begs the question: If we hold these values dear in our maintain business functionality and system availability. own businesses, shouldn’t we refer our customers to vendors that But, when it comes right down to it, it’s their shared Texas C share the same values? values that make the difference. M This exact question was on the mind of the IBAT Services First American fundamentally understands that deposi- Board of Directors as we sought the “right” fit for a merchant ser- tory business and the accompanying customer relationships are Y vices endorsement; a provider that not only emphasizes exem- at the top of every financial institution’s priority list and their CM plary customer service and security, but also offers strong market- Bank Referral Program enables bankers to focus on precisely MY

ing resources and support. In Fort Worth-based First American that. Rather than engaging community banks simply as resellers CY

Payment Systems, we found that fit. of a third-party vendor’s service, First American works side-by- CMY side with your employees to First American is one of the few processors to own and oper- K ate all of its core products and services — including credit, debit, deliver stronger banking cus- EBT, ACH, gift card and check processing and remote deposit tomer relationships by build- capture — giving them a distinct customer service advantage. ing strong relationships with Additionally, First American’s FirstView® online reporting tool your merchant customers through offers merchants real-time secure access to a detailed account of competitive pricing and an unpar- their processing activity down to the transaction. alleled customer experience. As a True Texas Commu- The Relationship-based Approach to Merchant Services nity Banker, you work too hard to First American takes a customized approach, built around develop your customer relation- each financial institution’s current and future goals for growth ships to turn them over to a com- and retention. In addition to the revenue opportunities that a pany that doesn’t value and serve merchant services program can generate, First American pro- your customers in the same ways vides each bank with a Client Relationship Consultant and that you do. a Marketing Specialist to attract and retain your high-value For more information about merchant relationships, yielding a 50%+ closing percentage how First American Payment Sys- JOHN W. JAY is Chair of for merchant referrals. With your bank’s specific goals in mind, tems can enhance your merchant the IBAT Services Board First American’s in-house marketing team develops, designs and customer relationships, please con- and President of Roscoe tact Cody Yanchak, Director of implements customized marketing campaigns as well as all of State Bank. their materials, including direct mail, brochures, letters, press Sales — Financial Institutions, at releases, advertising, newsletters, mass emails, posters, etc. (817) 317-7213 or Cody.Yanchak@ Further, First American’s culture of people-based customer First-American.net. H service — a level of customer service that can’t be matched by

8 ★ The Texas Independent Banker January/February 2013 IBAT ad 01.2013.pdf 1 12/12/12 5:07 PM

CMY

K GENERAL cOUNSEL’S CORNER

Commonly Asked Questions

he more things change, the more they stay the same. Q. When may a fiduciary (administrator, executor, guard- Regardless, it is worth revisiting our commonly asked ian, trustee) give a third party signature authority on a fidu- questions as they still come up time and again! Here ciary account? are some of my favorites. A. Fiduciaries may not delegate their duties or effectively T H appoint a successor. However, they may hire an agent. So, don’t Q. Consumer comes to the bank with a power of attorney add an “authorized signer” on a fiduciary account. on her parent. She wants to close the existing accounts and re- H open them as joint accounts (her parent and her) or as POD Q. Our safe deposit box customer has died. Do we have to accounts (with her as beneficiary). Can we do this? require a court order to allow anyone access? A. No! The Durable Power of Attorney Act doesn’t speak A. No! First, a co-tenant can still access the box and remove to this. However, there is a Texas appellate case in which the contents if she wants to. Also, the Probate Code allows certain court opined that this would violate the Probate Code section persons to inspect the contents of the box. These include the on non-testamentary multi-party accounts. In a strange bit of spouse, parent, descendant who is at least 18 years old, and a logic, the judges noted that the parties must agree to the joint person named as executor in the will. tenancy or to the POD beneficiary. Apparently they did not H believe that the attorney in fact is acting for the principal. In Q. What, if anything, can the person doing the inspection any event, this case throws a monkey wrench into the works. remove from the box? Just don’t let an attorney in fact set up joint tenancy accounts or A. The will can be given to the person named in it as execu- accounts with POD beneficiaries. tor, the burial deed can be delivered to the inspector, and insur- H ance policies can be delivered to a Q. Can a power of attorney be used to change the trustee beneficiary named in the policies. of a formal trust? The bank should make a copy of A. No. Look to the trust instrument for the explanation the will and keep that copy for four for successor trustees. The appointment of the successor is not years. something that can be accomplished by the attorney in fact of H a trustee. Q. May the bank keep copies H of records electronically? Do we Q. It has always been our practice on trusts to get the first have to keep original paper copies? page (for the name) and the last page (for the signatories). Is A. Both state law (Uniform this sufficient for our document purposes? Electronic Transaction Act) and A. Not really. But neither do you want the entire trust doc- federal law (E-SIGN Act) permit ument. Then you would just have to hire an attorney to read it records to be retained electronically. Karen Neeley and interpret it for you! Rather, you should request a Certificate A court cannot deny admissibility of received her BA and of Trust. This simple document (which typically is 1 to 2 pages) a record just because the record was JD from the University will give you all of the pertinent information, like the correct digital. of Texas at Austin. name of the trust, its nature (revocable, irrevocable), the trust- H She is a director for ees and how successors are appointed, and other pertinent infor- Q. What is the record reten- the Texas Association mation. The Trust Code specifically provides for this document. tion period for e-mail? of Bank Counsel and There is also a provision in the Finance Code, but probate and A. There isn’t a specific period General Counsel for the trust lawyers never look there! Just remind them of this provi- (Continued on page 44) Independent Bankers sion and ask for the certificate, which should be notarized. Association of Texas.

10 ★ The Texas Independent Banker January/February 2013 January/February 2013 www.ibat.org ★ 11 interest rates

Bond Portfolio Strategies for 2013 Interest Rate Risk and Investment Strategies Looking Back and Thinking Ahead as the low rate environment persists. A duration-adjustment As we transition into a new year, bank investment officers swap may involve moving out on the yield curve to take advan- should take time to assess the big picture and think about stra- tage of higher yields or in order to maintain proper balance Since 1979, The Baker Group has helped financial institutions tegic direction for the bond portfolio. A glance in the rear view between asset and liability duration. Historically, community navigate volatile and unpredictable economic environments through mirror in instructive. We know that 2012 was punctuated by a banks maintain fairly high balances of non-maturity deposits, the use of robust tools and resources for investment and interest rate which are relatively high duration liabilities. This must be kept great deal of politics and a continuation of sloth-like economic risk management. As we on 2013’s evolving new conditions, our growth. Banks were also notified of the potential body blow of in mind when determining the proper duration of assets includ- task is to help financial institutions develop effective processes and Basel III. Through it all, the word of the year for financial mar- ing investments. It is the relative difference between effective kets was “uncertainty.” duration of assets and liabilities that ultimately determines the strategies for optimal performance in any environment. For most of 2012 we were uncertain of who would be in volatility of a bank’s economic value of equity. Duration swaps the White House after the first week of November. Once the are a classic asset/liability management strategy for banks that Our proven approach of total resource integration utilizing software election was decided, we focused our uncertainty on the pend- are too asset or liability sensitive and need to extend or shorten and products developed by Baker’s Software Solutions* — combined ing “fiscal cliff” of substantial spending cuts and tax increases, the net duration of their assets. with our solid investment experience and advice — makes us the Relative Value Swap: At any given point in time, some sec- which collectively would lop off a significant chunk of GDP investment firm of choice for financial institutions. When facing the growth. That particular uncertainty is still lingering, but it’s fair tors of the bond market offer better value than others. More- to assume some degree of fiscal drag on the economy regardless over, the relative advantage of the different sectors (as measured challenge of an uncertain environment, The Baker Group can help you of any agreement. The bottom line is that we can expect contin- by their yield spread relationships) is constantly changing. sharpen your ued sluggish growth, low interest rates, and another challenging Mortgage-backed securities versus municipals, callables versus year for bank investments. MBS… all of these relationships should be monitored as markets move. Savvy portfolio managers will take advantage of the A Method for Active Management changing relationships and do swaps that sell what is rich and Prudent portfolio management begins with strategic analy- Focused Asset/Liability Focused Investment buy what is cheap compared to historical averages. As always, sis of the balance sheet, including trends in growth and mix as each bank will have a different sector allocation that is optimal well as broad interest rate risk exposures. From there we can for them given their liquidity and cash flow needs, tax position, Evaluate Earnings and Capital at Risk Develop Quarterly Strategies Tailored Board Education move to tactical decision-making, relative value analysis, and etc. Here again, a big-picture view Simulate Stressed Rate Scenarios Determine Optimal Relative Value Webinars for ALCO the security selection process. This sort of top-down method of the balance sheet is necessary. provides a framework for active management of investments by Analyze Risk Management Strategies Manage Risk vs Reward Tradeoff Interest Rate Risk Conferences Muni Tax-Loss Swap: Banks rebalancing and restructuring the portfolio in order to achieve should always be looking at their the optimal risk/reward profile for the market conditions that tax position and working with their exist at the time. accountants to optimize their after- The time has long past when banks could pursue a “buy- tax performance. Each bank has its and-hold” strategy for bonds. A passive management style can own unique set of circumstances, Baker knows banking. potentially result in substantial opportunity costs and underper- but generally the Tax Code allows formance. At least once a year, portfolio managers or investment for a loss on the sale of securities committees should evaluate the overall posture of the invest- To find out how The Baker Group can assist your institution in defining and meeting its financial to be deducted for tax purposes. ment portfolio and make any adjustments that are dictated by Moreover, for a taxable bank, the JEFFREY F. CAUGHRON objectives, call your Baker representative today at changes in balance sheet mix, tax considerations, or the risk interest income from reinvestment is Associate Partner with position of the bank. The best time to make such adjustments is is allowed to be earned tax free if at the turn of a year when the bank can do tax loss swaps as well The Baker Group LP the proceeds are used to purchase as restructure the portfolio for better efficiency. municipals. The bottom line is that Types of Bond Swaps the bank can recoup a tax-deduct- Duration Adjustment Swap: Many portfolios have seen ible loss with tax-free income. This natural shortening of average life and/or a decline in duration (Continued on page 43) Member: FINRA and SIPC Oklahoma City, OK Austin, TX Birmingham, AL Indianapolis, IN Salt Lake City, UT Springfield, IL 12 ★ The Texas Independent Banker January/February 2013 The Baker Group 1601 Northwest Expressway, 20th Floor Oklahoma City, OK 73118 ocus fInterest Rate Risk and 2013 Investment Strategies

Since 1979, The Baker Group has helped financial institutions navigate volatile and unpredictable economic environments through the use of robust tools and resources for investment and interest rate risk management. As we focus on 2013’s evolving new conditions, our task is to help financial institutions develop effective processes and strategies for optimal performance in any environment.

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 financial institutions. When facing the challenge of an uncertain environment, The Baker Group can help you sharpen your focus.

Focused Asset/Liability Focused Investment Focused Management Strategies Education Evaluate Earnings and Capital at Risk Develop Quarterly Strategies Tailored Board Education Simulate Stressed Rate Scenarios Determine Optimal Relative Value Webinars for ALCO Analyze Risk Management Strategies Manage Risk vs Reward Tradeoff Interest Rate Risk Conferences

Baker knows banking.

To find out how The Baker Group can assist your institution in defining and meeting its financial objectives, call your Baker representative today at 800.937.2257.

Nash Rasmussen Guthrie McLane Jr McLane III

Baytown Houston State University. Rasmussen is owned subsidiary of Bank of the West. Keith Hughey has joined John M. also a former chairman of the Indepen- Guthrie previously served as the Frisco Floyd & Associates (JMFA) as a senior dent Bankers Association of Texas. branch director of GSB Mortgage. His consultant. His focus will include advis- Kenneth R. Hanks has been named experience covers all facets of the mort- ing financial institutions on strategic chief financial officer of NexBank Capi- gage industry, with a particular interest planning, corporate governance, manage- tal, Inc. and its banking subsidiary, Nex- in VA lending. Military Mortgage Shop, ment succession, leadership and organi- Bank SSB. With nearly three decades of founded by Guthrie, continues to operate zational health/human systems. Hughey experience in the banking and financial as an online branch of GSB Mortgage. joins JMFA with more than 35 years of services industry, Hanks will oversee Guthrie graduated from the University of consulting and managerial experience. financial management, information tech- Oklahoma. nology and operations for NexBank and He received his Bachelor in Business Happy financial matters for the organization’s Administration degree in accounting, Drayton McLane, Jr. and Drayton broker-dealer and investment banking and completed post graduate studies in McLane, III have been elected to the subsidiary. Hanks holds a BBA in finance finance and economics from the Univer- board of directors of Happy State Bank and an MBA from the University of Texas sity of Houston. and the bank’s holding company, Happy at Austin. Dallas Bancshares, Inc. Michaux Nash, Jr. has announced Fort Worth McLane, Jr. received his Bachelor his retirement after more than 50 years in Cody Yanchak has been named direc- of Business Administration degree from banking. Most recently he served as exec- tor of sales, financial institutions, for First Baylor University in 1958 and his Master utive marketing director and chairman of American Payment Systems. Yanchak has of Business Administration degree from the Dallas advisory board for American been responsible for growing the ISO, Michigan State University in 1959. He National Bank of Texas. In addition to Agent, and Financial Institutions since worked for the family-owned McLane numerous business and civic activities, he began working for First American in Company, serving as president and CEO Nash has also served as a member of the 2010. In his new role as director of sales for 30 years. He currently serves as chair- board of directors of Independent Bankers for financial institutions, he is now sin- man of the McLane Group, a parent Association of Texas and the IBAT Edu- gularly focused on financial institutions company consisting of family owned busi- cation Foundation, as well as the Indepen- partnerships. nesses operating throughout the world dent Bankers Association of America. John Newton has been promoted to McLane, III graduated from Baylor Jimmy Rasmussen, president and director of sales, strategic partners, for First University in 1996 with a BBA in Mar- CEO of HomeTown Bank, N.A. of American Payment Systems. Newton will keting. After graduation, he worked at Galveston, has been elected to the Fed- provide sales leadership to the ISO and MBNA Bank in Dallas for two years, and eral Reserve Bank of Dallas board of direc- Agent vertical. He initially joined First then he joined the McLane Group where tors by its member banks. He will serve a American in 2009, and has been instru- he worked with several of their compa- three-year term starting January 1, 2013. mental in the development and growth nies getting an understanding of each of In his role as a board member, Rasmussen of First American’s core ISO, Agent and the businesses. In late June 2010, he was will provide input on regional economic Referral partnerships named CEO of Classic Foods, a kettle conditions as part of the Federal Reserve’s Grapevine cook company under the McLane Group monetary policy functions. He holds a Jeffrey I. Guthrie has been named umbrella located in Ft. Worth, Texas. B.B.A. and M.B.A. in finance from Sam president of GSB Mortgage, Inc., a wholly (Continued on page 45)

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High School Teachers Learn How to Teach Financial Literacy The Education Foundation of the Independent Bankers Association of Texas hosted the Teach the TeacherTM Program on November 10 in Conroe and on December 1 in Mount Pleasant. The goal of the one-day program, for which participants earned six hours of Texas Education Agency-approved continuing education credit and an incentive stipend, is to provide educators with engaging and practical approaches to teaching money management to students. High school economics, social studies and business education teachers learned how to teach topics such as credit, debit, taxes and credit scores, among many others. More than 50 teachers attended the two programs, impacting 8,000 students from more than 25 school districts in the North Houston area and Northeast and East Texas. Woodforest National Bank, PULSE, MidSouth Bank and Lone Star College Montgomery sponsored the program in Conroe. Guaranty Bond Bank and American National Bank in Mount Pleasant, Alli- ance Bank and City National Bank in Sulphur Springs, Bank Texas in Quitman, MidSouth Bank in Tyler, Lamar National Bank and Liberty National Bank in Paris, PULSE, Credit Security Group and Northeast Texas Community College sponsored the Mount Pleasant program. “The IBAT Foundation chose to Top Photo: Woodforest National Bank Officers Julie Mayrant, Danny Mata and Bob Hanvey present four Conroe High School teachers with a $5,000 school award during the IBAT Teach focus on financial literacy because sta- the Teacher ProgramTM on November 10. Woodforest National Bank added a Facebook Con- tistics show that Texas trails most of the test to the program to build awareness among the area high schools about financial educa- nation in this important area,” Mary tion tools. Bottom Photo: East Texas high school teachers attended the six hour IBAT Teach the TeacherTM program on December 1, learning innovative ways to instruct their students on Lange, IBAT Education Foundation financial education topics like credit scores, budgets and more. Northeast Texas Community president, said. “Texas community bank- College in Mount Pleasant along with area community banks helped sponsor the program. ers are committed to providing the necessary education that will allow students to align with the Texas Essential Knowledge has mandated financial education as a begin a path of financial success. Learning and Skills (TEKS) and State of Texas requirement for graduation from a public relevant financial habits in the classroom Assessments of Academic Readiness high school, and beginning in 2013, the is the first step in making this happen.” (STAAR) tests as well as C-SCOPE stan- TEKS test will include a financial literacy Concepts taught during the program dards. Additionally, the Texas Legislature component.

16 ★ The Texas Independent Banker January/February 2013 Father-son Duo Earn about IBAT’s newest endorsed service companies with 500 or more employees, Highest Boy Scout Honor provider and how you can deepen your 20 were midsize with 150-499 and 45 were relationship with your merchant custom- ranked small companies with 149 or fewer Rogers Pope Sr. and his son, Rogers ers, contact Gordon Moore at gmoore@ employees. Pope Jr., have been awarded the Distin- ibat.org. guished Citizen Good Turn Award of the H Boy Scouts of America. Pope Sr. is chair- H McKinney Bank Group man and CEO of Texas Bank and Trust Texas Access to Justice Recognized as One of Top Places in Longview, and Pope Jr. is president and Foundation Observes Prime to Work in D/FW COO of the bank. Partner Bank Recognition Month McKinney-based Independent Bank Neither man reached the level of Group has earned a spot among the Dallas Eagle Scout when they participated in The Texas Access to Justice Foun- Morning News “Top 100 Places to Work” Boy Scouts of America in their youth. dation recognized banks and financial for the second year in a row. But they were selected for the highest institutions that help invest in justice The 2012 edition placed Independent Scout honor because of “their devotion through the Texas IOLTA (Interest on Bank among the top mid-sized companies to the citizens and youth of East Texas,” Lawyers’ Trust Accounts) program during in the Dallas-Fort Worth area. according to Mike Northcutt, president of Prime Partner Bank month in November. Rankings are determined by the the East Texas Area Council of the Boy More than 70 banks and credit unions are results of an anonymous internal survey. Scouts of America. committed to being Prime Partners and Recognition is earned through the opin- The Distinguished Citizen Good Turn directly benefit the funding of civil legal ions of employees and not on an outside Award has been presented since 1992 to services in Texas communities. voting body. people who support Boy Scouts and par- Prime Partner banks voluntarily pay Independent Bank was also recog- ticipate in multiple nonprofit organiza- higher interest rates on IOLTA accounts, nized in 2012 as a member of the 100 Fast- tions in their communities. More than helping close the gap in legal services est-Growing Private Companies in North 14,000 people and 3,000 adult volunteers funding. These banks have contributed Texas by the Dallas Business Journal and are part of the East Texas Area Council of millions of dollars in IOLTA revenue SMU’s Caruth Institute. Boy Scouts. throughout Texas. Nine member banks of the Inde- H H pendent Bankers Association of Texas IBAT Endorses First American were recognized for participating in this Bank of the West Honored Payment Systems program since its inception more than with SBA Gold Award The Independent Bankers Associa- five years ago with the Prime Partners in Grapevine-based Bank of the West tion of Texas has announced its endorse- Justice Award. They include: Huntington has received the U.S. Small Business ment of Fort Worth-based First American State Bank; LegacyTexas Bank, Plano; Administration’s (SBA) 2012 Dallas-Fort Payment Systems (First American). First Lindale State Bank; Lone Star National Worth Gold Award. American is a merchant services provider Bank, Pharr; NewFirst National Bank, El The Bank approved nearly $23 mil- that offers competitive transaction pro- Campo; Northstar Bank of Texas, Den- lion in 7(a) loans during the SBA’s fiscal cessing rates and supports the latest point- ton; PlainsCapital Bank, Dallas; Preston year and was one of only two banks to be of-sale equipment, software and VARs on State Bank, Dallas; and Security State honored. networks that process billions of dollars Bank, Littlefield. The presentation was made at the in transactions each year for more than H quarterly meeting of the North Texas 140,000 merchants nationwide. Association of Government Guaranteed First American is one of the few pro- Investment Professionals Inc. Lenders (NTAGGL) and was accepted cessors to own and operate all of its core Voted Top San Antonio Workplace on the bank’s behalf by Bank of the West products and services, which include Investment Professionals Inc. (IPI) chief lending officer Phil Cloud. credit, debit, EBT, ACH, gift card and has been recognized as a Top Workplace H check processing, and remote deposit for 2012 in a survey sponsored by the San capture. Additionally, First American’s Antonio Express-News. IBAT Partners with SNL Financial FirstView® online reporting tool offers San Antonio area employees identi- Independent Bankers Association of merchants real-time secure access to a fied 80 companies out of 696 nominated Texas has teamed up with SNL Financial detailed account of their processing activ- as the best places to work and IPI placed to offer IBAT member banks exclusive ity, down to the transaction. 18th in the Small Company category. discounts to SNL Financial’s extensive If you would like more information Of the winners, 20 were large product offerings. (Continued on page 18)

January/February 2013 www.ibat.org ★ 17 Leadership Division News Update on Regional Conversions Region 8 – Wendy Griffin, Schertz Bank IBAT’s Tour de Texas The Leadership Division has success- & Trust, 210-945-7400 Regional Meeting Schedule Set fully converted two of its new Leadership Region 9 – Hazem Ahmed, Integrity Join IBAT Chairman Troy Robin- regions—Region 1 and 5. In early 2013, Bank, SSB, Houston, 713-335-8707 son and IBAT President and CEO Chris the next four regions (2, 3, 8, 9) will begin Region 10 – Tee Dippel, Brenham Williston for the IBAT Annual Regional converting, and all region conversions National Bank, 979-836-4571 Meeting Tour coming to a city near you will be completed by June 2014. For a Region 11 – Ricky Leal, First Community January 28-31 and February 26-28. These map, log on to the IBAT website at www. Bank, NA, 956-364-7007 annual meetings provide you an opportu- ibat.org and click on the Leadership Divi- nity to visit with IBAT leadership to learn sion page. more about your association as well as Many of you have already taken the receive legislative and regulatory updates opportunity to become involved in your important to our industry. Attendance areas. Even though we still have work to grows each year, so make your reserva- do, Leadership board members in the yet- tions early. to-be-converted regions have volunteered to be “champions” of their region during Join Us in DC in April the conversion process. If you have any While you have your calendar out, questions or suggestions, contact any of go ahead and mark April 23-26 for the the individuals below or Mae Beth Palone We’ll See You in Austin on March 5 21st Annual IBAT Congressional Visit to at IBAT. You should have received a Save the Washington, DC. As you can tell from the Date postcard inviting you to attend the weekly Bottom Line newsletter, there are Region 1 President – Doak Crabtree, IBAT Community Banking Day at the many federal mandates and regulations of choice Happy State Bank, Stratford, 806-366- Capitol in Austin on March 5-6. We’ve affecting the stability and prosperity of 2265 changed our usual format this session. your bank. Your attendance is imperative Region 2 – Abel Castro, First Bank & Rather than hosting a legislative lun- in getting the community banking mes- Trust, Lubbock, 806-788-0800 cheon, we’ll be inviting all of our Texas sage to our national leaders. Let’s make Region 3 – Charles Comer, First State legislators to join us for an informal break- sure the Leadership Division is well-rep- Bank of Mineral Wells, 940-325-7821 fast at the Austin Club. We will still have resented this year. Region 4 – Rick Jamieson, TIB-The Inde- our legislative briefing on March 5 and a Angie Brown Elected BOI Class President pendent BankersBank, Dallas, 972- group dinner. Congratulations to Angie Brown 650-6067 All Leadership Division members who was recently elected Class President Region 5 President – Justin Steinbach, are encouraged to personally invite your of the 2012-2013 BOI Level One Class. Frost Bank, Dallas, 214-515-4055 local representatives and senators to join Ms. Brown is Senior Vice President at Region 6 – Zach Dean, Fort Davis State you for this come-and-go breakfast buf- First National Bank of Giddings and is a Bank, 432-426-3211 fet. There will be no program but rather former president of the IBAT Leadership Region 7 – Michael Rehm, Jefferson Bank, an opportunity for you to visit with your Division. H San Antonio, 210-736-7660 local legislators in an informal setting.

association news cont’d “IBAT Services recently announced our partnerships with banking associa- our new relationship with SNL Financial tions across the country. With over 2,000 SNL Financial is a leading provider and we have been most pleased with not depositories as clients, SNL is firmly com- Choose an EFT Network Invested in You of financial information on more than only the financial data and analytical tools mitted to the community banking indus- While some would like community financial institutions to have fewer choices and less control, 6,500 public companies and 50,000 pri- they provide, but also their wonderful try by providing solutions that help banks SHAZAM believes that community financial institutions must remain in control of their own futures. vate companies in the business sectors customer service,” remarked Curt Nelson, manage an increasingly difficult and chal- critical to the global economy: banking, IBAT Services President. “I am confident lenging environment.” SHAZAM is owned and operated by community financial institutions. We understand who you are and financial services, insurance, real estate, that our relationship with SNL will be H what you believe in. We’re here for you, providing the cost-effective technology that makes you more effective. energy, metals & mining, and media & of great benefit to our member banks for You do have a choice in EFT networks. Choose the only EFT network invested in your success. communications. The SNL information years to come as the banks evaluate their Calyx Launches Mobile Apps service integrates breaking news, compre- performance and grow their business.” Calyx Software has launched Calyx hensive data and expert analysis into an J.P. O’Sullivan, SNL’s Associate Mobile for iPhones and Android smart- electronic database available online and Director for Community Banking noted, phones to provide loan officers the (800) 537-5427 updated around the clock. “We are excited to continue to grow (Continued on page 20)

18 ★ The Texas Independent Banker January/February 2013 D n News

freedom of choice

Choose an EFT Network Invested in You While some would like community financial institutions to have fewer choices and less control, SHAZAM believes that community financial institutions must remain in control of their own futures.

SHAZAM is owned and operated by community financial institutions. We understand who you are and what you believe in. We’re here for you, providing the cost-effective technology that makes you more effective. You do have a choice in EFT networks. Choose the only EFT network invested in your success.

www.shazam.net (800) 537-5427 association news cont’d said. “They know the business inside and goal of $49.3 million.This year also marks convenience of on-the-go productivity out and have a passion for what they do.” the bank’s twelfth year partnering with and business oversight. LegacyTexas has received awards for the Salvation Army Angel Tree program. Authorized users will be able to start Best Mortgage Lender and was recognized Bank employees and customers came an application from scratch or by select- in D Magazine’s Best Mortgage Profes- together to provide holiday gifts to 85 ing a contact from their phone list and sionals 2012 publication. San Antonio area children and seniors, view their pipeline, obtain instant status Taylor also said the Bank has also put exceeding their annual goal of 75. reports on specific loans or add to their list together one of the top loan platforms in H of necessary tasks. the business. All data will be securely transferred “We have moved to a completely IBT Offering Real-time back and forth from either PointCentral paperless system and have launched a new Red Flag Fraud Alerts or Point and synchs are automatic. Loan Operating System,” he said. “They Cedar Park-based IBT is offering real- H allow us to get our work done in a timely time Red Flag Alerts to its fraud preven- manner and make the process much more tion initiatives product suite for Internet LegacyTexas Mortgage Team convenient for our customers.” and mobile banking. Grows with Boom H To assist institutions in complying LegacyTexas Bank is looking at a with the Red Flag guidance and regula- banner year for its mortgage team during Lone Star Capital Recognized as tions, IBT has developed a strategic iden- the 2012 surge in home sales across North United Way Pacesetter tity theft prevention plan that alerts the Texas. In October alone, the bank closed Lone Star Capital Bank of San Anto- consumer immediately on recognition of almost 100 mortgage loans totaling $20 nio was honored as a United Way Paces- some important common triggers as iden- million. etter for the second year in a row, help- tified in the guidance. The bank began preparing for the ing the Alamo City become the number The initiatives safeguard financial sales boom a year ago by bringing aboard one best performing city in America for institutions’ customer information by high profile loan professionals to help United Way giving. alerting the customer of suspicious activ- meet the expected upswing in real estate. For the eighth year in a row, Lone ity, heightening awareness as it occurs and Gerry Taylor, who leads the mort- Star Capital attained 100 percent par- requiring their confirmation of activity in gage division, credits the 19-member staff ticipation from its employees and its 2012 real time. assembled in anticipation of the sales contribution increased 20 percent. IBT also announced Roscoe State increase. Combined giving from San Anto- Bank has incorporated additional services “Most of our loan officers have worked nio pacesetter institutions totaled $32.9 into its relationship with IBT by adding in this business for 10 to 20 years,” Taylor million, an unprecedented lead toward a integrated channel services such as Inter- net banking with real-time and bill pay. H NORTHSTAR Named One of Best Companies to Work For Focusing on For the fifth straight year, NORTH- STAR BANK OF TEXAS has been named one of the Best Companies to the future... Work For in Texas for the year 2013. The At TBB, we are always moving awards program was created in 2006 and is a project of Texas Monthly, the Texas forward. We have big plans Association of Business (TAB), the Texas for 2013 and are excited to State Council of the Society of Human take you with us! Resource Management (TSC-SHRM), and Best Companies Group. The statewide survey and awards program was designed to identify, recognize and honor the best places of employment in Texas, benefiting the state’s economy, its workforce and businesses in general. This distinguished list is made up of only www.thebankersbank.com • 800-522-9220 the top 100 businesses in Texas. H

20 ★ The Texas Independent Banker January/February 2013 Winning with Franchise Players Perk Up Your Personnel Playbook

By William Granville III, ChFC

n professional football, the term franchise player is used to the strict rules governing Qualified to describe the key leaders on a team. Names like Roger Retirement Plans, like 401k and pension plans. This means NQDC plans provide Staubach, Aaron Rodgers and Drew Brees come to mind. employers with tremendous flexibility. They allow the organization to choose IThe same is true of your institution. reward them appropriately. Give them an the right plan for their business from a Running an organization is a team executive benefits plan that recognizes variety of deferred compensation arrange- effort, and everyone on the team has an the value they bring to your team. ments. (Phantom Stock Plans, Deferred important role. Yet, certain players have When creating your executive ben- Cash Incentive Plans, and Supplemental unique abilities that bring extraordinary efits packages, Non-Qualified Deferred Executive Retirement Plans are among value to the team. Whether in profes- Compensation (NQDC) plans are a must. the alternatives.) sional football or in business, franchise The IRS calls these “Top Hat” plans, and Employers can be selective as to players position your organization to reach they present an attractive alternative for which executives are offered an executive its fullest potential. businesses that want to offer their key benefits package. The organization can Consider what would be the impact executives more than just stock options. design executive benefits to provide for to your business if your franchise players distributions during the time of employ- Non-Qualified what? were to leave, or if a competitor were to ment, or payments may be postponed lure them away. NQDC plans are attractive for many until after retirement. NQDC can also be To keep your franchise players loyal, reasons. Foremost, they are not subject (Continued on page 22)

January/February 2013 www.ibat.org ★ 21 Winning with Franchise Players cont’d 1. The employer selects specific terms That was easy. for the compensation plan(s), Initial and ongoing work in the areas tailored to function like familiar qualified including: benefits promised, payout of accounting, administration, and com- plans by using either a ‘defined benefit’ or date(s), and provisions for vesting. pliance are needed to ensure a successful a ‘defined contribution’ approach. What- 2. An agreement is executed between executive benefits program. Using experi- ever forms the packages take, all NQDC the employer and the employee, enced consultants and third-party admin- plans allow for customized vesting sched- which defines the terms of the istrators to manage the details will ensure ules which can be used to incentivize compensation plan unique to that the plan is handled efficiently, with lim- executives to remain with your organiza- individual. ited time required from the financial staff tion long-term. This is often referred to as 3. As an accounting procedure, the of your organization. Managed properly, “Golden Handcuffs”. employer creates a deferred liability your executive benefits program will Perhaps most important, employers account to reflect its obligation to attract, retain and reward franchise play- can adjust any of the terms of the plan pay the deferred benefits. ers for your organization, thus enabling for each participant, to respond to the 4. Once an Employer signs a deferred your team to continue to grow shareholder unique compensation needs of each key compensation agreement, there is value. And that’s a win for everyone. H executive. potential liability that must be met at some point. Therefore, for prudent William Granville III, ChFC is the Managing Member of Granville Financial Group (GFG), How can I set up Deferred financial management of the organi- Compensation for my team? an independent consulting firm specializing in zation’s obligation, an Asset Reserve the design, implementation and servicing of Creating executive benefits plans of tangible assets should be estab- executive benefits plans. A certified Minority requires minimal effort from you as an Business Enterprise with recognized expertise lished. Mutual Funds, Guaranteed in executive benefits, GFG assists its clients employer when an experienced consul- Investment Contracts and BOLI/ in attracting and retaining key personnel while tant is enlisted to help you design a plan COLI are among the alternatives. securing earnings potential and reaching that will meet your unique needs. The vendor diversity targets. For more informa- consultant will walk you through a simple tion about customized financial solutions from Granville Financial Group, visit www.Granvil- four-step process. leGrp.com.

22 ★ The Texas Independent Banker January/February 2013 Despite New Regulation, Debit Growth Remains Robust Financial Institutions Surveyed in 2012 Debit Issuer Study Expect 15 Percent Growth for PIN Debit, 8 Percent Increase in Signature Transactions This Year

ach year, PULSE commissions New Dynamics in Debit Interchange Oliver Wyman to conduct the At PULSE’s request, Oliver Wyman Debit Issuer Study to provide also prepared a supplemental white paper, an objective fact base on debit New Dynamics in Debit Interchange, based card issuer performance and expect this growth to continue in 2012. on findings in the Debit Issuer Study. This financial institutions’ outlook Looking ahead, issuers project 15 percent brief details the significant effects on debit for the debit card business. growth for PIN and 8 percent for signa- interchange as a result of Regulation II, Responses to the 2012 study reflect that ture transactions in both consumer and including changes to debit interchange growth in the debit industry remains E business debit. rates, the impact on regulated issuers and strong, despite profound regulatory Debit card fraud continues to impact the impact on exempt issuers. changes. In addition, the study highlights all issuers, with data breaches and com- For example, despite being exempt that certain core aspects of debit remain promises the main sources. The number of from the regulatory cap and despite mod- unchanged. issuers affected by a data breach decreased est change to date, 44 percent of smaller “The latest Debit Issuer Study pro- in 2011 to 88 percent from 94 percent in financial institutions anticipate decreases vides more evidence that growth in debit 2010. Of those issuers’ cards, 7 percent in their debit interchange rates over the remains robust even in the face of sig- were potentially compromised, with 1 coming year. And, anecdotal evidence nificant regulatory headwinds,” said Steve percent actually experiencing fraud. from various smaller debit card issuers Sievert, Executive Vice President of Mar- Surveyed issuers expect fraud loses to suggests that they are already experienc- keting and Communications for PULSE. continue and indicated fraud to be a top ing erosion in their debit interchange rev- According to the study, active debit concern in 2012, second only to increased enue, month over month. cardholders performed an average of 18.3 regulation. Although challenges were PULSE participants wishing to transactions per month, as compared to identified, issuers have varied outlooks on receive a copy of New Dynamics in Debit 16.3 in 2010. These transactions resulted key opportunities. Interchange, or the Debit Issuer Study in an annual average spend of $8,326 per Fifty-seven financial institutions — Executive Summary, should contact Mark card. The number of accounts with debit including large banks, credit unions and Martin [email protected]) cards continues to increase, with a 76 per- community banks — participated in the or John Fuller (johnfuller@pulsenetwork. cent penetration rate, up from 73 percent study. Collectively, the participants issue com) with PULSE. H in 2010. 87 million debit cards and operate 47,000 All issuers reported strong growth in ATMs. The sample is representative of For additional information about the study, visit debit in 2011. Consumer PIN transac- the U.S. debit market in terms of insti- www.pulsenetwork.com/distudy. A video inter- tution type, location and debit network view with Tony Hayes of Oliver Wyman discuss- tions increased 9 percent, while signa- ing the results of the study also is available at ture transactions grew 11 percent. Issuers participation. www.pulsenetwork.com/debitregs.

January/February 2013 www.ibat.org ★ 23 The Lege is Back in Town

By Steve Scurlock

or the 83rd time since the programs. The fiscal situation in the state birth of our state, the Texas is dramatically improved, due primar- Legislature will convene for ily to enhanced sales tax collections and 140 days in regular session the spin off from shale oil plays around starting on the second Tuesday the state. Likely the first order of busi- in January. ness will be to address several “account- After unsuccessful ing solutions” deferring expenditures into attempts to venture onto the national 2013, including $2 billion in payments Fstage, Governor Rick Perry and Lt. Gov- to the permanent school fund, and some ernor David Dewhurst assume their cus- $5 billion in deferred federal health care tomary roles. House Speaker Joe Straus obligations. has again drawn an opponent — Mine- IBAT’s Community Banking Day Other “big issues” will be addressed ola’s Bryan Hughes — and is expected to at the Capitol throughout the spring. There has been retain the center chair after the requisite March 5-6, 2013 some discussion of revising the business drama. tax structure, but drastic changes are not We hope to see you in Austin! The Texas Senate will have six new anticipated. Public education — at all lev- members, an abnormally high number for els — will be front and center, and much that body. The new Republican members the opportunity to shine. The Republi- will depend upon the timing of several are substantially more conservative than cans lost a handful of seats, but retain a lawsuits regarding school funding. There those whom they are replacing, which strong majority at 95 – 55. is a growing sense of urgency to address could change the dynamics somewhat in While admittedly the primary the state’s water needs, and such will be the upcoming session. Houston Senator “action” impacting community banking is the subject of attention at the upcoming Mario Gallegos passed away shortly before centered in Washington, D.C., the state session. Finally, the attempts to bring a the election, and at this writing, a special legislature deals with a number of issues workable solution to the windstorm insur- election has yet to be set in this solidly that impact your personal and profes- ance issue will occupy much time and Democratic seat. The partisan makeup sional lives. State taxes, fees, interest energy. will be exactly the same, with 19 Republi- rates, consumer protection, privacy issues, IBAT has long been the leader in pro- cans and 12 Democrats. disclosures, foreclosure law, liens, con- posing proactive legislative initiatives and The Texas House will see 43 mem- tracts, regulatory structure and a host of working those issues through the process. bers who weren’t in the body for the last others fall under the purview of our state Your IBAT Legislative Committee and session, and a total of 67 who will be lawmakers. Board of Directors have approved a mod- seated on the floor for their first or second At this time two years ago, lawmak- est proactive agenda for this session, and session. A significant number of tenured ers were facing significant shortfalls in at this writing, we are still in the process and very capable House members are not funding existing programs, and the end of negotiating with various stakeholders returning, giving a number of rising stars result was significant cuts to a number of on several of these issues.

24 ★ The Texas Independent Banker January/February 2013 Among issues we are working on as proliferation of losses on debit card trans- ago allowing for banks to name a regis- part of a possible proactive agenda are: actions. We have had preliminary discus- tered agent for service. The original lan- Tax Lien Lending Industry. This sions with various players, and will hope- guage dealt only with actions against a growing industry lends money to pay prop- fully have a workable solution to have financial institution, and we are proposing erty taxes, and takes on the super-priority introduced as legislation. that this protocol should cover all types lien position of the taxing entity. These Mortgage Payoff. A bill passed last of service, including that dealing with a transactions have created problems for session requiring mortgage servicers to bank’s customers. several of our community banks. We are provide accurate and timely payoff infor- Home Equity. We are working with exploring a number of different options mation to title companies. We are working several groups to address minor changes with various groups to require timely and on legislation to extend those same rights in home equity loan refinancing. accurate payoff information, additional and privileges to insured depositories, as As always, your involvement and disclosure to the borrowers in the event of we continue to get complaints from our engagement in the legislative and regula- an existing lien, clarification of lien prior- member banks related to delays in trans- tory process is critical. We are honored to ity and applicability of Reg Z disclosures mittal of this information, especially from represent community banking, and appre- on these transactions. the larger servicers and banks. ciate tremendously the trust you place in Debit Card Fraud. We have Service on Financial Institutions. us and your support of IBAT. H attempted over the past several sessions to We are proposing to expand language in address various aspects of the continuing a bill we pushed through several sessions Steve Scurlock is IBAT’s Executive Vice President.

January/February 2013 www.ibat.org ★ 25 REGULATORY AGENCIES A QUICK PREVIEW OF COMING ATTRACTIONS By Karen M. Neeley

exas legislative sessions are every two years, but regulations are forever! And with a new regulator, the Consumer Financial Protection Bureau (CFPB), and a “new” law to implement (Dodd- TFrank Act, a/k/a DFA), there are plenty of rulemakings to come. Here is a snapshot of where the DFA rulemaking is to date and some pro- jections for agency activity in the near future.

26 ★ The Texas Independent Banker January/February 2013 DFA Rulemaking Snapshot rule made all future SEC rules vulnerable to the largest, systemically significant DFA required 398 rulemakings. to a similar challenge. It is important to banks. As of October 1, 2012, 237 rulemaking note that the provision requiring the SEC Fair Lending deadlines have passed. Out of these, 149 rulemaking mandates the cost/benefit The CFPB has issued guidance clearly have been missed and 88 have been met analysis quite clearly. Unfortunately, the indicating that it embraces the concepts with finalized rules. Regulators have not CFPB rulemaking does not include simi- of disparate impact and disparate treat- released proposals for 35 of the 149 missed lar explicit language. Thus, the ability of ment which have been engrafted onto fair rules as of that date. Rules must be pro- the banking industry to use this argument lending analyses from federal employment mulgated not only by the CFPB but also is weak. law since the early 90’s. Regression analy- by the SEC and the CFTC. CFPB Operations ses have been aggressively used to find Meanwhile, the amendments to statistically significant disparities in home In addition to rulemaking, the CFPB Regulation E on foreign remittances are lending and unsecured consumer lending, has taken seriously its authority to inves- getting a second look from the CFPB. particularly as to ethnicity. Unless the tigate entities under its umbrella. It has Concerns expressed through comments US Supreme Court takes a pertinent case initially focused on mortgage complaints regarding liability for consumer errors as and reverses the findings of ten appellate (including servicing issues) and credit to wiring instructions as well as the dif- courts, this approach will continue. ficulty in ascertaining certain local taxes card complaints. Its enforcement actions and other costs led the agency to delay have targeted several large credit card UDAP/UDAAP implementation of the rule until “spring” operations with regard to add-on products, DFA gives the CFPB the authority to 2013 with proposals to come on amend- requiring significant reimbursements to identify unfair, deceptive and abusive acts ments to the rule. consumers and money penalties. It inves- and practices. The CFPB has been using The mortgage rules have been pro- tigated the marketing and origination that authority on a case by case basis and posed, and the comment periods have practices of a student lender with empha- has indicated that it has no intention of all closed. The CFPB is working to have sis on ability of borrowers to repay and issuing rules. Rather, its interpretation of “final” rules in place on qualified mort- adequacy of disclosures. It has also inves- the law should be divined from its enforce- gages so that the automatic application tigated banks to determine whether they ment actions. Meanwhile, the banking of the DFA on January 21, 2013 will not participated in discriminatory practices in regulators still have UDAP authority and be triggered. The agency realizes that the the making and issuing of car loans. have used that to attack products and mortgage lending industry will need time Future investigations are likely to marketing that is deemed either unfair or to implement the rules, including revising involve overdraft fees and the ordering of deceptive. While the number of enforce- forms, upgrading data processing systems, transactions in overdraft protection pro- ment actions may be small, the number and training employees on the changed grams. More credit card investigations are of “matters requiring attention” on exams rules. Nonetheless, the mortgage rules expected, with a look at whether issuers appears to be growing, based on anecdotal are still a work in progress at this writing. are charging the best possible exchange evidence. Sadly, the DFA left little wiggle room on rates. Conclusions some issues. However, the ultimate merger Guidance on add-on products for This spring there will be an avalanche of the RESPA and TILA requirements credit cards clearly indicates that debit of new proposed and final rules. Bankers and the revisions to disclosures is up in card and deposit account programs can are advised to sharpen their pencils and the air. The new calculation of “finance expect similar scrutiny. Payment protec- comment. Clearly, the rational comments charge” (which would dump all costs into tion and credit monitoring products are in provided on the Regulation E Foreign that category and significantly increase the cross-hairs. The concern is whether or Remittance Rule had an impact. In addi- APRs) is vigorously opposed by the lend- not customers were deceived into buying tion, compliance officers must stay on ing industry and other real estate players, products they did not understand. their toes and be prepared to update poli- like the title insurance industry. Other Banking Agencies cies and procedures for boards to review Meanwhile, the SEC has had its rules and approve. And IBAT will be working assailed in federal court. Last July, the At this writing, the biggest unknown hard to represent the best interests of its U.S. Court of Appeals rejected a rule that for banking regulation is the status of the members! H would have made it easier for sharehold- so-called Basel III capital rules. The community bankers, state regulators (through ers to insert board candidates onto pub- Karen Neeley is General Counsel for the Inde- lic-company ballots, saying the agency CSBS), and numerous congressmen have pendent Bankers Association of Texas and of failed to adequately assess the costs. The all called on the federal banking regula- Counsel to the law firm of Cox Smith Matthews, rejection of the so-called proxy access tors to apply Basel III (as proposed) only Incorporated.

January/February 2013 www.ibat.org ★ 27 STRATEGIC What the Board of Directors Should Know About It and What They Should Do About It

trategic risk is currently a managed, however, unless the board of risk outlined by the Office of the Comp- focus of regulatory scrutiny directors understands the total risks that troller of the Currency, which include the and the board of directors exist across the entire bank. For example, following: should understand what it the board cannot appropriately decide 1. Credit risk: the risk to earnings and is and how to manage it. to offer a new lending product without capital from the failure to be repaid Strategic risk is the risk to considering the risk levels present in the on a loan; a bank’s earnings and capi- bank’s technology, liquidity and capital 2. interest rate risk: the risk to earn- tal from making poor business decisions, adequacy. Similarly, the board cannot ings and capital from movements in Sfrom not implementing business decisions appropriately decide to expand its foot- interest rates; properly, or from failing to respond to print without considering the risk present 3. price risk: the risk to earnings and industry changes. For example, strategic in the bank’s current level of operations. capital from changes in the value of risk is increased when a bank offers a new If the bank does not have sufficient man- investment portfolios; product or service without having the agement expertise, or if the bank’s opera- 4. transaction risk: the risk to earn- experienced personnel or the appropriate tions and technology lack the ability to ings and capital from fraud, error infrastructure in place first. Strategic risk handle the new business, strategic risk or inability to deliver products or is also increased when a bank embarks on is increased by being unable to properly services; a new venture without conducting ade- implement this business decision. 5. reputation risk: the risk to earnings quate due diligence or without having Strategic risk, therefore, is necessarily and capital from negative public appropriate risk controls established. a component of the broader analysis called opinion, gossip, rumors or press The board of directors can assess the enterprise risk management or “ERM.” reports; level of strategic risk by reviewing the ERM is the assessment and management 6. Compliance or legal risk: the risk to bank’s goals, along with the strategies of risk across the whole bank or enter- earnings and capital from violations and implementation plans to meet those prise. If the bank has not yet conducted of law, regulation, internal policies goals. The review should include an anal- an ERM assessment, now is the time to or ethical standards; ysis of the resources available to meet the begin the process. While there is no one 7. strategic risk: the risk to earnings goals including the sufficiency of bank’s right way to conduct an ERM assessment, and capital from adverse business management team, technology, opera- the depth and breadth of the review will decisions; tions and communications. External fac- necessarily depend on such things as the 8. Foreign exchange risk: the risk tors that might affect successfully meeting complexity of the bank, the types of prod- to earnings and capital from the the bank’s goals should also be analyzed ucts and services it offers, and the tech- conversion from one currency to including changes in the economy, taxes, nology currently in use. another; and regulatory environment, competition and One place to begin the ERM assess- 9. liquidity risk: the risk to earnings technology, just to name a few. ment is to identify and assess risk across and capital from failing to meet obli- Strategic risk cannot truly be the enterprise using the nine categories of gations as they come due.

28 ★ The Texas Independent Banker January/February 2013 C RISK By Cathy Ghiglieri What the Board of Directors hould Know bout t and What hey hould Do bout

These nine risk categories are inter- twined. For example, a growing exposure to interest rate risk could affect credit, price and liquidity risks. Likewise, the potential noncompliance with certain laws and regulations (compliance risk) could affect not only reputation risk, but also liquidity risk. Conducting an ERM analysis is no small task. But once it is completed, the results may be utilized in several ways. First, the board of directors should discuss how the current risk levels should be managed or reduced in order to meet the bank’s profitability goals. The negative impact to a bank’s profits from increasing loan losses or narrowing margins is obvi- ous. But what about the negative impact on profits due to Fair Lending compliance problems? Second, the ERM analysis should be factored into the strategic plan. Making business decisions without measurably the bank’s chances of meeting Discussions at the annual strategic plan- knowing all of the risks present in the or exceeding its strategic goals. ning retreat could address such questions bank is a tricky proposition for the board Assessing the bank’s strategic risk, as: Are the present products and services of directors and can increase the level of armed with valuable information from an the right ones for the board’s risk appe- strategic risk, as well as harm the future ERM assessment, will not only bode well tite? Is the level of risk within the toler- profitability of the bank. Performing an for the bank’s next examination, but will ances established by the board of directors enterprise risk management analysis is assist the board in making sound business or should these tolerances be adjusted or time-consuming, but the results can be decisions in the future. H the risk reduced? Third, the ERM analysis critical for the board in moving the bank should be factored into the bank’s capital forward in a profitable and sound way. Ms. Ghiglieri is the former Texas Banking Com- missioner and is President of Ghiglieri & Com- planning in order to more knowledge- Utilizing the results of a full enterprise risk pany, a bank consulting firm based in Austin, ably determine how much capital will be management assessment prior to making Texas. She is the co-author of “The Ultimate needed over the next five years consider- any major business decisions will improve Guide for Bank Directors.” Contact her at www. ghiglieri.com. ing all of the risks present in the bank. the bank’s strategic risk and will enhance

January/February 2013 www.ibat.org ★ 29 30 ★ The Texas Independent Banker January/February 2013 How Banks Can Safely Embrace Bring-Your-Own-Device by Don Jackson

ring Your Own Device Standards (PCI DSS) or GLBA that Prohibitions (BYOD) programs, which could affect how employees may use their Unapproved devices should be pro- allow employees to use their devices. hibited from accessing the corporate net- own smartphones, tablets and Before implementing BYOD, it’s work. If an approved device has an unap- laptops in the work environ- best to decide in advance which types proved application installed on it, that ment, are significantly chang- of devices employees will be allowed to device should be prohibited from accessing information technology use and the ways in which they will be ing your bank’s network because some (IT). Banks and other financial service allowed to use them. For example, you applications install malware, infecting the Bfirms are among the organizations embrac- should consider how employees will need device. If an infected device is plugged ing BYOD, as it allows senior executives to connect to the corporate network — into a USB port on a company computer, and employees to use for work and pleasure either via your bank’s wireless network, a the computer could become infected, the mobile devices, service providers and public wireless network, or the employee’s and ultimately, so could the company operating platforms of their choice. cell phone network — to track when network. IT research analysts predict that by employees are on the network and iden- An infected device doesn’t even 2013, 80 percent of businesses will support tify anomalous activity. have to connect to a corporate computer a workforce using tablets, and by 2014, 90 The IT department should assess the to affect its network. If an employee is percent of organizations will support cor- interoperability of the various devices sitting in the office and uses a personal porate applications on personal devices. that may be used by employees to ensure device to connect to your bank’s wire- they can send and receive data without less network, the device could download Considerations any negative impact to the corporate business documents, avoiding firewalls While BYOD programs can save network. IT should know which types of and the bank’s internet prevention/detec- banks money and increase productivity, phones support the virtual private net- tion system (IPS/IDS), which both help they can also present challenges to main- work (VPN) specifications required for prevent outsiders from getting in or out taining control over corporate data. If a secure connection. IT should also be of the corporate network. If any personal your bank is evaluating a BYOD plan or familiar with the security requirements for device is lost or stolen, the bank’s con- currently has one in place, consider secu- the devices and their operating systems, as fidential information might be found. rity issues and industry regulations such well as with which applications are secure And if an employee is using an infected as Payment Card Industry Data Security and approved for access on the devices. (Continued on page 32)

January/February 2013 www.ibat.org ★ 31 BYOD cont’d personal laptop, it could infect other com- onLending the moveYour puters on the company network. This is why full-time network security monitor- NORTHSTARExpertise BANK OF TEXAS in Denton has acquired Austin- ing is so important as it lets organizations based Treaty Oak Bank. NORTHSTAR BANK is the largest community bank see everything that attempts to go in and inTips Denton for County, helping and oneyou of thehelp largest in the Dallas / Ft. Worth area. Over out of their network. smallthe past businesses13 years, NORTHSTAR, become as a full-service bank, has grown from two IT managers may want to forbid the locations to ten locations located throughout North Texas, with assets over $1 use of mobile platforms that are not com- billion. With thegood move into the Austin and Marble Falls areas, NORTHSTAR patible with your organization’s require- looks forwardloan candidates.to expanding its hometown style of community banking into ments and encourage users to choose from Central Texas. a list of approved mobile devices your IT management team supports. When employee-owned devices are managed by an employer, users usually experience only minor changes in the ways in which they use their devices for personal activities. With so many types of mobile devices and operating systems in the market, it can be expensive and time consuming to manage and support everything available. If your bank plans to allow an infinite number of devices, your IT team will need to become familiar with new platforms Abound Resources Dell SecureWorks FIS for information processing and keep pace Growth and Efficiency Information Security, Compliance, CONNECTIONS- Customer Relationship Advisory Services, Technology Risk Mangement Services, Management Software with rapidly changing platforms. Ryan Esquell 512-351-3702 Security and Risk Consulting Les Anderson 205-222-4003 Partnering AccuSource Solutions Anne Faullin 512-724-1634 The Genesis Group Expense Management Program, Deluxe Financial Services Advertising & Marketing One way to keep the benefits of Office Supplies, Promotional Items, Check Printing Services™ Melissa Kinion 800-725-3800 BYOD from being eclipsed by support Turn-Key Marketing Deluxe Business AdvantageSM Bill Saunders 800-869-0992 x106 Deluxe Detect® The Hertz Corporation costs is by partnering with mobile device Advantage Health Plans Trust* Deluxe Knowledge Exchange Solution™ Car Rental Discounts, CDP#46681 management (MDM) service providers. SM Allyson Kealy 201-307-2381 Health, Dental, Vision, Long Term and Deluxe Provent It’s almost always cheaper to partner with Gift Cards Short Term Disability, AD&D, Group Term John M. Floyd & Associates an MDM provider than managing BYOD Life, and Voluntary Life Kirk Hudson 903-504-5488 Executive Search Group in-house. MDM vendors that monitor Jay Kempton 800-521-1711 Dial Dunkin & Associates Steve Swanston 866-264-5017 *Paid Endorsement Credit Life Insurance, Overdraft Privilege mobile devices 24/7 have the knowledge American National Balloon Note Financing Mark Roe 800-410-3107 and staff to work with countless types of Insurance Company Doak Dunkin 800-234-6401 McCleary/German Architects old and new devices and operating sys- Credit Life and Gap Waiver Insurance Diebold, Inc. Architecture, Planning and Interior Design Kevin Moore 281-535-7469 tems. MDM vendors can assist with basic ATM Security Products & Services Scott Clanton 713-552-0707 IT security issues such as password policy The Baker Group Bank Operations Equipment & Supplies Promontory - CDARS Broker/Dealer, A/L Management Opteva® ATM Equipment Access of over $50 Million enforcement and remote device-wiping. Mike Mackey 888-480-0301 Gary Guerrero 210-242-6123 FDIC insurance on CDs Vendors can accommodate multiple plat- CSI Web@Work First American Payment Insured Cash Sweep Service forms and address major requirements for Board Portal Systems Chuck McBrayer 866-776-6426 x3432 Employee Portal Merchant Processing Services device provisioning and configuration. ® ® Bill Evers 800-545-4274 x19224 Cody Yanchak 817-317-7213 PULSESelect / MoneyPass To address the countless policies, reg- Surcharge-Free ATM Network Corporation Service First Data Online Banking Mark Martin 832-214-0247 ulations, configurations, compliance risks Company (CSC) Internet Banking Systems, and legal implications, it’s wise to work Uniform Commercial Code Bill Payment Talaris Inc. Search and Filing Jack McDonald 512-493-2903 Teller Cash Dispensers, with an information security specialist up Ciela McDevitt 800-927-9801 x3439 Teller Cash Recyclers, front to help design a BYOD program spe- Quickchange Machines cifically tailored to the needs of your bank James Robinson 325-692-0109 11/12 and its customers. H

Call Ramona Jones: 512-275-2209 www.ibatservices.com Don Jackson, CISSP, is a Senior Security Researcher with the Counter Threat Unit (CTUTM) Research Team at Dell SecureWorks

32 ★ The Texas Independent Banker January/February 2013 IBAT Financial services – Your Safety Net

IBAT has been a source for quality insurance products for over 35 years.

any of you recall the stronger, insurance products became more The insurance marketplace always IBAT diligence and plentiful and competitive. goes through cycles – and because of that, commitment to Texas In order to offer the most competitive we have retained the ability to reactivate community bankers insurance products to our members, IBAT the IBAT Bond Trust as a safety net for when, in 1977, H.B. elected to reactivate its in-house insur- our members in the future. As an advocate 1886 was presented to ance agency, IBAT Financial Services. for our members we will continue to strive the Texas Legislature In August of 2008 the IBAT Bond Trust for excellence in our product knowledge, to approve the formation of the IBAT business was transferred to a variety of claims support and customer service while MBond Trust. In less than a month’s time the superior insurance markets with dedicated enhancing insurance terms and condi- House and Senate passed the act and the national underwriting units specializing in tions of the products we offer. Governor signed the bill into law, thereby providing products and services for today’s IBAT Financial Services’ mission is creating the safety net for the required financial institutions. to “Uniquely deliver insurance solutions fidelity bond coverage for community Since that time IBAT Financial Ser- as an advocate and consultant to Finan- bankers in the State of Texas when all the vices has carefully expanded the number cial Institutions.” We hope you allow us other markets were fleeing the state. of insurers we represent — but never com- the opportunity to prove that to you and IBAT’s insurance advocacy efforts promising by accepting contracts with your bank! H have been continuous since that day. The an insurance market with unacceptable For more information about IBAT Financial Ser- IBAT Bond Trust was the premier product financial strength. We understand our vices, contact Carol Troy at 800-749-4228 or of its time, but as the banking industry got fiduciary role to our members — and we [email protected]. take it seriously.

January/February 2013 www.ibat.org ★ 33 So You’re Ready to Step It Up? By Steve Scurlock

ommunity banking is fac- personal level, the future of our banks and We at IBAT believe the time has ing unprecedented chal- our livelihoods, is at stake. come to “raise our game” as an industry lenges. The good news… There are plenty of excuses in addi- to ensure the future of this great industry. we as a segment of the tion to the possible time commitments. The IBAT Leadership Division is playing financial services indus- Politics is unseemly at times. It’s certainly a key role in building involvement and try enjoy a superb reputa- less than fun in many instances. Someone participation, and our hope is that you tion with lawmakers, the else who likes this stuff will take care of it. will strongly consider doing your part at press, the public and certainly within our It’s one more thing that will likely cost me whatever level you can. Crespective communities. With all the hur- some money. You are no doubt asking yourself, dles thrown in our path, you are “What can I do to be more still doing the right things for engaged?” Here are some the right reasons. thoughts for your consideration: There are a number of com- • Join the Leadership Division munity bankers across the state and participate in the process. who are very engaged in the We’re establishing a more for- political process. We desperately mal regional structure to provide need to increase those who are ample opportunities to engage willing to step up. You are busy, and be involved. Call us, watch and keeping up with your daily for more information or check tasks, the continuing avalanche out the Leadership Division sec- of regulatory requirements, tion on our website. professional education and the • Support our Political Action civic and volunteer activities Committees. Our state PAC you all are involved in is becom- spent over $440,000 over the ing more and more problematic. last two year election cycle. We It’s also nice to have some time are on track to do roughly the left over for family, friends and same in this cycle. The Federal even a bit of “me” time. PAC spends about $60,000 per With that said, it is incum- cycle. Political contributions bent upon all of us to step into are a critical component of the the political and legislative fray. process, and every community Nothing less than the future banker should be supporting of our industry, and on a more these efforts. We need your

34 ★ The Texas Independent Banker January/February 2013 help, and will gladly provide some needed. Additionally, during the legis- you’ve been to either or both of these options for you to participate. lative session, we will send out periodic events, you will no doubt understand • Keep up with what’s going on in the updates on what’s important to you in and appreciate the value of a strong industry. We do a weekly e-newsletter the process. showing of community bankers. If you — The Bottom Line — and attempt • Get to know your lawmakers, prefer- haven’t, please consider joining us. You to put everything in that Tuesday ably in the campaign process. Volun- won’t regret it! morning email that is important from teer, write a check, build relationships To those who are “all in,” we thank a regulatory, legislative and political and get their cell phone number to use you sincerely. For those who aren’t yet perspective. We try to make it an easy when you really need it. there, please consider “stepping it up.” read, and provide links for those who • Join us for IBAT Community Bank- We have a tremendous story to tell, and desire additional information. Please ing Day at the Capitol, March 5 and an industry worth fighting for. Let us know read it, and please pay attention to our 6. And consider joining us in Wash- what we can do to help you. H “calls to action.” We don’t “cry wolf,” ington, D.C. for a most worthwhile and we use this option only when and educational visit April 24 – 27. If Steve Scurlock is IBAT’s Executive Vice President.

James Dreibelbis, Woodforest National Bank, The H Woodlands First National Bank, Hereford Doak Dunkin, Dial Dunkin & Associates, Harlingen Bob Fidler, Deluxe Financial Services, Shoreview, MN Winner of the PAC Drive Drawing Kathleen Fields, Padgett, Stratemann & Co., L.L.P., San Antonio Thank you to the following banks for H David Fuller, Point Bank, Pilot Point conducting in-house PAC drives! Dwight Garey, Amegy Bank of Texas, Houston Robert Gerry, Integrity Bank, ssb, Houston First National Bank Texas, Killeen Jay Gober, First State Bank, Graham First State Bank, Abernathy Texas Bank and Trust, Longview William Granville, Granville Financial Group, Amarillo National Bank Mason National Bank Sugarland Anahuac National Bank Independent Bank, McKinney Steven Griffith,Padgett, Stratemann & Co., L.L.P., First National Bank, Baird First National Bank of Moody San Antonio Fannin Bank, Bonham Guaranty Bond Bank, Mount Pleasant Wendy Griffin,Schertz Bank & Trust Brady National Bank Muenster State Bank Scott Heitkamp, ValueBank Texas, Corpus Christi First Bank, Burkburnett First National Bank, Munday Jeb Hughes, Community National Bank, Midland First State Bank & Trust, Carthage Lamar National Bank, Paris Robert Hulsey, American National Bank of Texas, ValueBank Texas, Corpus Christi Liberty National Bank, Paris Terrell Stockmens National Bank, Cotulla Peoples Bank Paris John Jay, Roscoe State Bank Texas Heritage Bank, Cross Plains Point Bank, Pilot Point Al Jones, American Bank, N.A., Corpus Christi TIB-The Independent BankersBank, Dallas First National Bank of Port Lavaca Mayo Kasling, First National Bank of Hughes Springs Access Bank Texas, Denton Bank Texas, Quitman Mary Lange, IBAT Education Foundation, Austin First State Bank, Denton Bank of San Angelo Robert Marling, Woodforest National Bank, Spring Dilley State Bank Jefferson State Bank, San Angelo Julie Mayrant, Woodforest National Bank, The First National Bank of Eagle Lake Lone Star Capital Bank, NA, San Antonio Woodlands United Bank of El Paso del Norte First National Bank of Shiner Don McCaskill, Peoples Bank Paris Fayetteville Bank Citizens Bank, Slaton Cliff McCauley, Frost Bank, San Antonio Fort Davis State Bank Woodforest National Bank, Spring Milton McGee, IBAT, Henderson Pecos County State Bank, Fort Stockton Town and Country Bank, Stephenville John Miles, Peoples Bank Paris First State Bank, Gainesville Alliance Bank, Sulphur Springs James Miller, Veritex Community Bank, Garland HomeTown Bank, Galveston Texas First Bank, Texas City Michael Murphy, Sage Capital Bank, Gonzales First National Bank, Giddings First National Bank of Weatherford Michaux Nash, American National Bank of Texas, Dallas Mills County State Bank, Goldthwaite First National Bank of Winnsboro Charles Neff, Integrity Bank, ssb, Houston Sage Capital Bank, Gonzales First State Bank, Yoakum First State Bank, Graham Curt Nelson, IBAT Services Inc., Austin Bank of the West, Grapevine Bank PAC, Guaranty Bond Bank, Mount Pleasant Gruver State Bank PRESIDENT’S CIRCLE Jim Payne, First State Bank & Trust Company, First National Bank of Hebbronville Carthage Contributors over $1,000 Citizens National Bank, Henderson Brad Perry, Peoples Bank Paris Rogers Pope, Texas Bank and Trust, Longview First National Bank of Hereford Ronald Abbott, Peoples Bank Paris Zan Prince, First National Bank of Weatherford First National Bank of Hico Keary Barnes, Catalyst Financial Company, Houston Steve Retzloff, Allegiance Bank Texas, Houston Community National Bank, Hondo Cynthia Blankenship, Bank of the West, Grapevine Michael Richmond, Woodforest Financial Group, Integrity Bank, ssb, Houston H. Gary Blankenship, Bank of the West, Grapevine Inc., The Woodlands Industry State Bank Richard Browning, Peoples Bank Paris Troy Robinson, Bank Texas, Quitman Jacksboro National Bank Jason Brummerhop, Amegy Bank of Texas, Houston Deborah Scanlon, BKD, LLP, Houston Junction National Bank Craig Buford, CBA of Oklahoma, Oklahoma City Kilgore National Bank Terry Christian, Peoples Bank Paris (Continued on page 36)

January/February 2013 www.ibat.org ★ 35 Julie Courtney, Independent Bankers Association of PARTNERS Texas, Austin Ruth Ann Crowson, Alliance Bank, Sulphur Springs Contributors $300-$499 Charles Doyle, Texas Independent Bancshares, Inc., Tyson Abston, Guaranty Bond Bank, Mount Pleasant Texas City Susan Allen, Texas Heritage Bank, San Antonio Wade Easley, First National Bank of Hereford Brandon Bartek, Mills County State Bank-Early Mickey Eddins, Alliance Bank, Sulphur Springs Art Scharlach, Guaranty Bond Bank, Mount Peter Bennis, Pinnacle Bank, Keene Pleasant Roger Elliott, Alliance Bank, Sulphur Springs Glenn Biggs, Texas Heritage Bank, Boerne David Schneider, PULSE, Houston Chet Fenimore, Fenimore, Kay, Harrison & Ford Kenneth Black, Citizens National Bank, Henderson LLP, Austin Dennis Schwartz, Schwartz & Associates, McKinney Daryl Bohls, Allegiance Bank Texas, Houston Alan Fielder, First Lockhart National Bank Steve Scurlock, IBAT, Austin Ricky Bowman, Roscoe State Bank, Sweetwater Ervin Flencher, Citizens State Bank, Somerville David Seitze, Frost Bank, San Antonio Chuck Cowell, Preston State Bank, Dallas Joseph Ford, Fenimore, Kay, Harrison & Ford LLP, George Sowers, Woodforest National Bank, Conroe Austin James Cox, Southwest Bank, Odessa Brenda Standlee, American Prudential Capital, Inc., Richard Gasdia, Aporia Solutions, Inc., Houston Doak Crabtree, Happy State Bank, Stratford Houston J. Mark Gibson, First National Bank of Bosque Kathryn Deason, Citizens National Bank, Henderson Justin Steinbach, Frost Bank, Dallas County, Valley Mills Matthew Doyle, Texas First Bank, Texas City Dianne Stone, First National Bank of Hico John Gilliam, First National Bank of Bosque County, Troy England, First Bank, Conroe David Stovall, Stovall, Grandey & Allen CPAs, Valley Mills David Estes, Texas Heritage Bank, Cross Plains Fort Worth Judy Gillis, Alliance Bank, Sulphur Springs Jason Flanagan, Citizens National Bank, Henderson Glen Thurman, First National Bank of Moody Chad Golden, TIB-The Independent BankersBank, Greg Garland, First Bank & Trust, Lubbock Bradley Tidwell, Citizens National Bank, Henderson Irving Lee Gaskamp, Bank of Brenham, N.A. Christine Weinzapfel, Muenster State Bank, Patrick Gray, TIB-The Independent BankersBank, Deanne Gordon, CHUBB Insurance, Houston Gainesville Dallas Jack Griggs, Texas Heritage Bank, San Antonio Gary Wells, Happy State Bank, Amarillo Virginia Grimes, The Genesis Group LLC, Jack Griggs, First State Bank, Abernathy J. David Williams, HCSB, Kerrville McKinney Christy Hester, Texas Bank and Trust, Longview Chris Williston, IBAT, Austin Dickie Heathcott, Crowe Horwath LLP, Irving Kelly Holmes, Woodforest National Bank, Thomas Wooten, Community National Bank, Hondo Charles Helm, Alliance Bank, Sulphur Springs The Woodlands John Hermann, First State Bank, Yoakum Kyle Irwin, Gruver State Bank J. Pat Hickman, Happy State Bank, Amarillo Rick Jamieson, TIB-The Independent BankersBank, STATESMEN Janey Holstien, IBAT, Austin Irving Contributors $800-$999 Cary Johnson, First State Bank of Burnet Patrick Kennedy, TransPecos Financial Corp., San Ramona Jones, IBAT, Austin Antonio Paul Airhart, Security State Bank, Winters Sam Kana, First National Bank of Eagle Lake Joe Kim King, Brady National Bank Charles Comer, First State Bank of Mineral Wells Bonnie Kankel, IBAT, Austin Dennis Kutach, First State Bank, Yoakum Christopher Doyle, Texas First Bank, Texas City Jay Kempton, Advantage Health Plans Trust, Kirk Lee, Guaranty Bond Bank, Mount Pleasant Kenneth Horton, First Capital Bank, Quanah Oklahoma City David Linaburg, TIB-The Independent BankersBank, Russell Marshall, First Victoria National Bank Joe Kim King, First National Bank of Ballinger Dallas Frank Morris, First State Bank, Gainesville Timothy Koch, University of South Carolina, Steve Mack, Texas Heritage Bank, Boerne Jeff Nunn, Citizens Bank, Amarillo Columbia Steven Mack, First State Bank, Abernathy Michael O’Rourke, TIB-The Independent Kevin Kogucz, Federal Home Loan Bank of Dallas Michael Marshall, Texas Bank, Henderson BankersBank, Dallas David Lacy, Community Bank & Trust, Waco Steve McIlhaney, Main Street Checks, Inc., Norman Riley Peveto, First State Bank of Mineral Wells James Law, Alliance Bank, Sulphur Springs Dean Narrell, Roscoe State Bank, Sweetwater Ed Rumage, Jacksboro National Bank Chris Long, Primus Services Group LLC, Coppell Norman Ormiston, Grapeland State Bank Greg Schwertner, First National Bank of Ballinger Michael McKenzie, Alliance Bank, Sulphur Springs Mike Pearce, Bank of the West, Grapevine Kevin Monk, Alliance Bank, Sulphur Springs Hector Pena, UMB Bank, Dallas Billy Moore, PlainsCapital Bank, Lubbock Brian Pohlmeier, HCSB, Plainview DELEGATES Michael Moores, Citizens National Bank, Henderson Charles Redfearn, Point Bank, Pilot Point Contributors $500-$799 Karen Neeley, Cox, Smith, Matthews, Inc., Austin Michael Rehm, Jefferson Bank, San Antonio John Northcut, Stockmens National Bank, Cotulla Darlene Revers, IBAT, Austin David Alford, Citizens National Bank, Henderson James O’Jibway, Austin County State Bank, Bellville Michael Rhodes, Lamar National Bank, Paris Lawson Allen, Fort Davis Mae Beth Palone, IBAT, Austin John Rountree, Texana Bank, Linden Sam Baker, First Bank, Conroe Lester Parker, United Bank of El Paso del Norte Gaylan Schroeder, Texas Heritage Bank, San Antonio Micah Boles, First National Bank of Bosque County, Charles Plummer, Frost Bank, San Antonio Matthew Sharp, Sharp BancSystems, Inc., Bedford Valley Mills Rogers Pope, Texas Bank and Trust, Longview Joe Sharp, First Baird Bancshares, Inc., Bedford Cleve Breedlove, AccessBank Texas, Denton Ralph Preuss, Alliance Bank, Sulphur Springs Scott Sharp, First Baird Bancshares, Inc., Bedford L. F. Bridges, Alliance Bank, Sulphur Springs Jimmy Rasmussen, HomeTown Bank, N.A., Mark Sheffield,Roscoe State Bank, Bastrop Dewey Bryant, Southwest Bank, Odessa Galveston Eric Standlee, American Prudential Capital, Inc., Gina Carter, CalTech, Fort Worth Edgar Rhode, First National Bank Texas, Killeen Houston Abel Castro, First Bank & Trust, Lubbock Marty Rivers, First State Bank - Downtown Denton J. Michael Terrell, Waggoner National Bank, Vernon Carl Cecil, Liberty National Bank in Paris Craig Robbins, SHAZAM, Irving Tim Teske, Green Bank, N.A., Dallas James Chambers, Town and Country Bank, James Robinson, Talaris Inc., Abilene Paul Urban, Texas Heritage Bank, San Antonio Stephenville John Schmitz, First State Bank, Gainesville Dawn Wells, Happy State Bank, Amarillo Anita Collins, American National Bank of Texas, Thomas Sellers, Alliance Bank, Sulphur Springs Mary White, IBAT Education Foundation, Cedar Hill Sachse Charles Thomas, First State Bank & Trust Company, Mike Wilks, First National Bank, Rotan Windol Cook, TIB-The Independent BankersBank, Carthage Jacksonville Kinney Williams, Yennik, Inc., Lubbock Mark Wood, AccuSource Solutions, Carrollton Wayne Cooper, Alliance Bank, Sulphur Springs David Willmann, Llano National Bank James Worsham, Alliance Bank, Sulphur Springs Doyle Cooper, Texas Leadership Bank, Royse City

36 ★ The Texas Independent Banker January/February 2013 FRIENDS Deborah Dinsmore, Integrity Bank, ssb, Houston Ben Kerr, Bank Texas, Quitman Tieman Dippel, Brenham National Bank Tom Key, First State Bank of Mineral Wells Contributors $101-$299 Cynthia Dopjera, Harper & Pearson Co., P.C., Melissa Kinion, The Genesis Group LLC, McKinney Houston Larry Abernathy, Citizens National Bank, Athens Jack Kleinecke, TIB-The Independent BankersBank, Kevin Downing, PNC Capital Markets, LLC, Dallas Victoria Ronald Adamek, First State Bank, Yoakum Charles Doyle, Texas First Bank, Texas City David Kuykendall, Texas Bank and Trust, Longview William Adamson, Bank Texas, N.A., Kilgore Kevin Drew, TIB-The Independent BankersBank, Ricky Leal, First Community Bank, N.A., Harlingen Hazem Ahmed, Integrity Bank, ssb, Houston Dallas Coy Lewis, Coy Lewis Company, Houston Paul Albright, BancVue, LTD, Austin Jim Duke, Woodforest National Bank, The Woodlands Scotty Lindley, First Bank Texas, SSB, Abilene Ronald Alfred, Brenham National Bank Jim Dyer, Fort Davis State Bank David Litton, Citizens National Bank, Henderson Deanna Alfred, Brenham National Bank James Dyer, Fort Davis State Bank Penni Livingston, TIB-The Independent Charles Amato, Lone Star Capital Bank, N.A., John Dyer, Texas Bank and Trust, Longview BankersBank, Dallas San Antonio Kelly Earls, TIB-The Independent BankersBank, Forrest Lloyd, Wellington State Bank Randy Andrews, Texas Bank and Trust, Longview Dallas Shaw Lokey, AloStar Bank of Commerce, Atlanta Thomas Atkinson, TIB-The Independent Larry Eichenbaum, Woodforest National Bank, BankersBank, Dallas Lance Looney, City National Bank of Sulphur Springs Austin Wallace Lynch, Point Bank, Pilot Point Kenneth Babcock, Woodforest National Bank, Susan Eick, Deluxe Financial Services, Harrison New Ulm Chip Lynch, Independent Community Bankers of Hot Springs America, Dallas David Barnes, First State Bank, Yoakum Bobbie Ellis, Roscoe State Bank, Sweetwater Chris Baughman, First Bank, Conroe Kevin Malone, HCSB, Plainview Roy Eon, Texas Bank and Trust, Longview Benny Martinez, First National Bank of Ballinger Lin Bearden, First National Bank of Weatherford Ryan Esquell, Abound Resources, Austin Jacob Bezner, First State Bank, Gainesville Dudley Mason, First Bank Texas, SSB, Abilene Claire Estep, Texas Bank and Trust, Longview Jerry McMillon, CliftonLarsonAllen, Austin Wendy Blaeser, Deluxe Financial Services, Tim Farley, Citizens National Bank, Mount Enterprise Shoreview, MN Thomas Mecredy, Vining Sparks, Austin Mark Few, HCSB, Plainview Gail Boehme, Community National Bank, Hondo Beth Medlin, Bank Texas, Quitman Diddy Fields, Roscoe State Bank, Sweetwater Brad Boyd, Community National Bank, Hondo George Meisenheimer, Citizens National Bank, Kristie Fox, Roscoe State Bank Rob Brezina, Ham, Langston & Brezina, LLP, Marshall Houston Wayne Frederick, The WFA Group, Houston Jay Messenger, Muleshoe State Bank David Brooks, Independent Bank, McKinney William Freed, Community National Bank, Jeffry Michelson, First Lockhart National Bank San Antonio Damon Brooks, Sharp BancSystems, Inc., Bedford Michael Moehle, Fisoc, Inc., Austin John Fuller, PULSE, Plano Terri Brown, Citizens National Bank, Marshall Kenneth Moore, Anahuac National Bank Javier Garza, American Prudential Capital, Inc., James Morell, Woodforest National Bank, Spring Joe Brunson, Bank Texas, Quitman Houston Neal Brussell, First Bank, Conroe Sherra Morris, Woodforest National Bank, Catherine Ghiglieri, Ghiglieri & Company, Austin League City Jo Ann Buchanan, Fort Davis State Bank Olin Gilliam, Community National Bank, Hondo Gregory Burress, First National Bank Texas, Killeen Nancy Mullins, First National Bank Texas, Killeen Ross Glenn, Happy State Bank, Amarillo Ann Murphy, Point Bank, Pilot Point John Buttery, Llano National Bank Kelly Goulart, IBAT, Austin Marsha Byrd, Texas Bank and Trust, Gladewater Foster Murphy, First State Bank & Trust Company, Gail Graham, Citizens National Bank, Tyler Carthage Stan Callahan, Amarillo National Bank Mark Greene, TIB-The Independent BankersBank, Juan Nichols, Bank Texas, Quitman Alvia Calvert, Happy State Bank, Dumas Dallas David Norris, Happy State Bank, Amarillo George Camp, Bank Texas, Quitman Debbie Griffin, Bank Texas,Quitman John Northcut, Stockmens National Bank, Cotulla Rick Carlton, Southwest Bank - Downtown, Odessa G. Groff, Community National Bank, Hondo Mae Beth Palone, IBAT, Austin Charles Carpenter, Texas Bank and Trust, Terrell Don Gromatzky, Mills County State Bank, Hamilton Joe Parker, First National Bank of Byers Brenda Cates, Bank Texas, Quitman Peggy Hardy, Texas Bank and Trust, San Augustine Steve Patrick, Mills County State Bank, Goldthwaite Craig Chaikin, Texas Bank and Trust, Longview Randy Harger, Investment Professionals, Inc., Jessica Pelache, First National Bank Texas, Killeen E.E. Chance, Woodforest National Bank, Spring San Antonio Kay Pepper, Roscoe State Bank C.R. Cloutier, MidSouth Bank Texas, N.A., Greg Harmon, The First National Bank of Eagle Lake Lafayette, LA Robert Peterson, ICBA Main St. Checking/Certegy Donna Harrelson, Texas Bank and Trust, Longview Card Svcs, Saint Petersburg Gerald Cobb, Woodforest National Bank, The James Hartley, Industry State Bank Clark Peveto, First State Bank of Mineral Wells Woodlands C. T. Head, Mills County State Bank, Goldthwaite Dick Coggeshall, Elan Financial Services, McKinney Charles Phelan, TIB-The Independent BankersBank, Joe Herrman, Roscoe State Bank, Bastrop Dallas Jason Coleman, Fortner, Bayens, Levkulich & Israel Hinojosa, First National Bank of Hebbronville Garrison, PC, Denver, CO David Phelps, Briggs & Veselka Co., Houston Christopher Hopkins, Federal Home Loan Bank of Stanley Pinkham, Texas Leadership Bank, Royse City Mike Colvin, Level 5, LLC, Atlanta, GA Dallas, Irving Gary Conway, Roscoe State Bank Joanne Posen, Cornerstone Correspondent Lending, Carol Hopper, Citizens National Bank, Henderson Albuquerque Evelyn Craig, Citizens National Bank, Henderson James Hudson, TIB-The Independent BankersBank, Harrison Powers, RUTH RUHL, P.C., Dallas Becky Craker, TIB-The Independent BankersBank, Dallas Dallas Carroll Putnam, TIB-The Independent BankersBank, Brooke Jamieson, TIB-The Independent Dallas Chris Cronin, American National Bank of Texas, BankersBank, Irving McKinney Charlie Rand, Bank Texas, N.A., Lindale John Jenkins, Anahuac National Bank Nancy Ray, First State Bank of Mineral Wells Randy Curtis, First National Bank Texas, Killeen Tom Jester, Minor & Jester, Denton Franklin Darilek, First Victoria National Bank Nelwyn Richardson, Citizens National Bank, Ed Jones, Woodforest Financial Group, Inc., The Henderson J. Raymond David, Point Bank, Pilot Point Woodlands Russ Richardson, Star Bank of Texas, Fort Worth Alice David, Point Bank, Pilot Point James Kangerga, Citizens National Bank, Henderson Glen Riff, Community National Bank, Hondo Joseph David, Point Bank, Pilot Point Don Kaspar, First National Bank of Shiner John Ritchie, First State Bank of Mineral Wells John Davis, Roscoe State Bank, Sweetwater Mark Keator, Citizens Bank, Lubbock Richard Ritchie, First State Bank of Mineral Wells Franklin Deaderick, Southwest Bank, Odessa Michael Keeley, Hunton & Williams, Dallas Richard Roberts, Bank Texas, Quitman Jamie Dean, Fort Davis State Bank Scott Kelley, TIB-The Independent BankersBank, Craig Roberts, Guaranty Bond Bank, Sulphur Springs Zach Dean, Fort Davis State Bank Dallas Darla Rooke, Junction National Bank Scott Dickerson, Texas Bank and Trust, Longview (Continued on page 38)

January/February 2013 www.ibat.org ★ 37 John Zacek, First Victoria National Bank Curtis Bull, TIB-The Independent BankersBank, Ervan Zouzalik, Prosperity Bank, Flatonia Amarillo Bryan Bumpas, Jacksboro National Bank Thomas Burdett, Happy State Bank, Amarillo PALS Charles Burton, North Texas Bank, NA, Decatur William Buttery, Llano National Bank Contributors $100 Kenny Rooke, Junction National Bank Chris Cabbiness, First National Bank of Hereford Tom Rothe, Community National Bank, Hondo Don Abernathy, The Bankers Bank, Oklahoma City Thomas Canfield,Mason National Bank Jeff Sabin, Federal Home Loan Bank of Dallas G. Drew Allbright, TIB-The Independent Amy Capps, Mason National Bank Craig Sanders, Amarillo National Bank BankersBank, Dallas Lesley Carey, The First National Bank of Eagle Lake Ray Sanders, Woodforest National Bank, The Bob Allen, Barbers Hill Bank, Mont Belvieu Barbara Carney, TIB-The Independent BankersBank, Woodlands Angie Alvarez, ValueBank Texas, Corpus Christi Dallas Don Sapaugh, City National Bank of Sulphur Springs John Anderson, HCSB, Plainview Kent Carruthers, The Citizens Bank of Clovis, NM Jerry Schaffner, PlainsCapital Bank, Dallas Elizabeth Ardell, Texas First Bank, Texas City Stephen Cates, Bank Texas, N.A., Mineola Susan Schwertner, First National Bank of Ballinger Sam Armstrong, ValueBank Texas, Corpus Christi Andrew Cawthon, Kilgore National Bank David Seim, Happy State Bank, Lubbock Michele Arvo, TIB-The Independent BankersBank, Philip Cecil, Liberty National Bank in Paris Terry Sherrill, Briggs & Veselka Co., Houston Dallas Pamela Cernoch, Industry State Bank, New Ulm Dennis Simmons, SWACHA, Dallas Mike Atkins, Southwest Bank, Odessa Margaret Cherryhomes, Jacksboro National Bank Preston Simons, Commerce Street Capital, LLC, Cecil Atkission, HCSB, Plainview John Childers, First National Bank of Ballinger Dallas J. R. Avant, Dilley State Bank Allan Childs, Pecos County State Bank, Fort Guy Sims, Shamrock Bank, N.A., Coalgate, OK Jeff Avant, Dilley State Bank Stockton Mike Smith, Citizens National Bank, Henderson Kimberly Avriett, Anahuac National Bank Carol Chiu, Integrity Bank, ssb, Houston Amelia Smith, First Lockhart National Bank Brian Ayensworth, Independent Bank, Waco Mitchell Chouke, Texas First Bank, Texas City Peter Smith, Happy State Bank George Bailey, United Bank of El Paso del Norte Carol Christian, First State Bank - Downtown Scott Sparks, Federal Home Loan Bank of Dallas Carolyn Baker, HCSB, Plainview Denton Gregory Sprawka, First Victoria National Bank Dotsy Balentine, Moody National Bank, Galveston Kenneth Clark, First National Bank, Port Lavaca Ron Stovall, Roscoe State Bank J.B. Bankhead, Lamar National Bank, Paris John Clemens, Amarillo National Bank Tony Street, First State Bank of Mineral Wells Bobby Barker, Happy State Bank, Dumas Eric Clifford, Lamar National Bank, Paris Alan Strittmatter, Point Bank, Pilot Point W. H. Bauer, First National Bank, Port Lavaca Cody Cockerham, First State Bank & Trust Richard Stuart, First State Bank of Mineral Wells Don Beaty, First National Bank of Winnsboro Company, Carthage Bryan Studdard, Roscoe State Bank Eula Beck, Union State Bank, Killeen Glynn Collier, Mills County State Bank, Goldthwaite Paul Sturm, Point Bank, Pilot Point Sammy Bell, First National Bank of Winnsboro Gary Colman, Yoakum National Bank Brian Surovik, Investment Professionals, Inc., Brandon Benavidez, First National Bank Texas, Sandra Comer, Citizens National Bank, Henderson San Antonio Killeen Danny Copeland, Citizens National Bank, Henderson Steve Swanston, John M. Floyd & Associates, Sandra Benoit, Anahuac National Bank Wayne Corman, First National Bank of Eagle Lake Bellaire Michael Bernhardt, First Bank, Wichita Falls Angela Corona, ValueBank Texas, Corpus Christi Rebecca Tanner, Citizens National Bank, Henderson Linda Bertrand, Anahuac National Bank Edwin Cox, Muleshoe State Bank David J. Temple, TIB-The Independent BankersBank, Shane Best, Texas Bank and Trust, Longview Matthew Crable, Texas First Bank SBA (LPO), Dallas Debbie Bigelow, Amarillo National Bank Pearland Michael Thompson, Extraco Banks, N.A., Temple John Billups, First Victoria National Bank Jerry Craft, Jacksboro National Bank Roy Thompson, Bandera First State Bank Patricia Blackshear, TIB-The Independent Michael Crain, Alliance Bank, Sulphur Springs Connie Tolles, IBAT Financial Services, Spring BankersBank, Irving Debra Crawford, TIB-The Independent BankersBank, Shane Tomlin, Roscoe State Bank Joe Blackshear, Texas First Bank, Texas City Dallas Bruce Toppin, Rosenthal Pauerstein Sandoloski Bill Blackwell, Mills County State Bank, Goldthwaite Tom Creek, First National Bank Texas, Killeen Agather LLP, San Antonio Joe Boaz, First Victoria National Bank, New Waverly Trey Crim, Kilgore National Bank Carol Troy, IBAT Financial Services, Austin Gary Boening, Yoakum National Bank R. Cullen, First National Bank, Port Lavaca Terry Tuggle, First Community Bancshares, Inc., Stayton Bonner, Citizens National Bank, Henderson James Dangelmayr, Muenster State Bank Killeen Otto Borchers, Yoakum National Bank Steven Davis, Gruver State Bank Tim Turbeville, First State Bank, Gainesville Waymon Boyd, First National Bank, Port Lavaca James Davis, Fort Davis State Bank Lynn Vincent, First State Bank & Trust Company, Jerry Bradley, First National Bank of Hico Mike Davis, Brady National Bank Carthage Hank Bradley, BancFirst, Oklahoma City Pamela DeCeault, Kilgore National Bank George Waggoner, First National Bank Texas, Harold Deem, First State Bank, Gainesville Conroe George Brannies, Mason National Bank Lawrence Del Papa, Texas First Bank, Galveston Lyle Walden, TIB-The Independent BankersBank, George Briant, Happy State Bank Kenneth Derks, Equias Alliance, LLC, Plano Dallas Steven Bridges, Mills County State Bank, Frank Diebel, First National Bank, Port Lavaca T. L. Walker, Sage Capital Bank, Gonzales Goldthwaite Ray Dierschke, The First National Bank of Ballinger William Ware, Amarillo National Bank Joseph Bright, Muenster State Bank Sheila Dixon, Citizens National Bank, Tyler Robert Weinzapfel, Muenster State Bank Don Briscoe, TIB-The Independent BankersBank, Dallas David Doyle, Texas First Bank, Texas City Kay Wesson, Roscoe State Bank, Bastrop Monte Brogdin, Amarillo National Bank Mark Duncum, North Texas Bank, NA, Decatur Cyd West, First National Bank Texas, Killeen Daniel Brooks, Independent Bank, McKinney Doak Dunkin, SWBC, Financial Services Division, B.J. Westbrook, Woodforest Financial Group, Inc., San Antonio The Woodlands Craig Brooks, First Victoria National Bank Tom Duren, Mills County State Bank, Goldthwaite Kevin White, MPA Systems, Inc., Sanger F. E. Brown, Kilgore National Bank Sherwood Dye, Anahuac National Bank Wilson Wicks, City Bank, Lubbock Richard Browning, Southwest Bank, Odessa John Eastwood, Bank of the West, Grapevine Dory Wiley, Commerce Street Capital, LLC, Dallas Randy Bryant, TIB-The Independent BankersBank, Dallas David Edzards, Lamar National Bank, Paris Everett Williams, Anahuac National Bank Danny Buck, Lone Star Capital Bank, N.A., John Elliott, Southwest Bank, Lubbock Nikki Wilson McDaniel, First National Bank Texas, San Antonio Killeen William Ellis, Texas Leadership Bank, Royse City Bruce Buenger, Industry State Bank Tony Wooster, Citizens National Bank, Henderson Martin Englander, Independent Bank, McKinney

38 ★ The Texas Independent Banker January/February 2013 Ava English, Anahuac National Bank David Epke, First National Bank Texas, Killeen Cheryl Ervi-Westermann, TIB-The Independent BankersBank, Dallas Tom Escoe, First State Bank & Trust Company, Carthage Maurice Estinbaum, HomeTown Bank, N.A, Galveston Will Fair, Independent Bank, Waco Jim Farley, Southwest Bank, Lubbock Sidney Farmer, HomeTown Bank, N.A., Galveston Rocky Farrar, Happy State Bank Dick Fellers, Happy State Bank Curtis Fendley, Lamar National Bank, Paris Nelson Finch, Jefferson Bank, San Antonio Robert Finney, Muleshoe State Bank Francis Fisher, Muenster State Bank Mike Fitzhugh, Bank Texas, Longview Gary Flemmons, Texas Leadership Bank, Royse City Betsy Flencher, Citizens State Bank, Somerville Gary Forbis, Fannin Bank, Bonham Gary Foster, First National Bank of Sterling City Patricia Foster, First National Bank Texas, Killeen Diane Francis, TIB-The Independent BankersBank, Dallas Kent Fry, ValueBank Texas, Corpus Christi Dawna Fullwood, Roscoe State Bank, Sweetwater Burnie Galle, Industry State Bank Linda Galligher, Alliance Bank, Sulphur Springs Alex Garcia, ValueBank Texas, Corpus Christi Edgar Garrett, First National Bank of Winnsboro, Commerce Gregory Garrison, HomeTown Bank, N.A., Galveston Wiliam Garrison III, First National Bank of Hico Donald Gartman, Texas First Bank, Texas City Carlos Garza, Texas First Bank, Texas City Ray Geistweift, Security State Bank & Trust, Fredericksburg SNL Financial partners with IBAT to bring Phil George, Southwest Bank, Odessa John Gertson, First National Bank of Eagle Lake Rodney Gibson, Fannin Bank, Bonham better banking intelligence Jamie Gibson, Southwest Bank, Lubbock Gene Giles, First State Bank & Trust Company, to Texas banks Carthage Gary Gilliland, HomeTown Bank, N.A., Galveston Deposit Rates UBPR Valuation Demographics Kenneth Goates, Texas Bank and Trust, Tyler Barry Gober, First State Bank, Graham Charles Gober, First State Bank, Graham SNL helps Texas banks: Mert Goldman, United Bank of El Paso del Norte � Kelly Gonzalez, ValueBank Texas, Corpus Christi Evaluate performance relative to peers John Gosser, Shay Financial Services Co., Irving � Improve competitive intelligence and reﬁ ne their pricing strategies Herbert Graham, Southwest Bank, Odessa Tom Graves, Mills County State Bank, Goldthwaite � Understand competitor branches/deposits and market demographics Cody Graves, Mills County State Bank, Goldthwaite Jerry Graybill, Jacksboro National Bank � Assess potential mergers and acquisitions Sheila Gresham, Citizens National Bank, Henderson � Gail Grieve, ValueBank Texas, Corpus Christi Prepare for board, investor and regulator meetings Maribel Griffon, Fannin Bank, Honey Grove Luke Grizzaffi,First State Bank, Gainesville Special offer for IBAT members: Lew Ellyn Gross, Industry State Bank  Howard Hackney, Texas Bank and Trust, Longview Mention this ad for 60 days of free SNL access with a new annual Larry Haire, Kilgore National Bank subscription. Contact Julie Jones at [email protected] or 434.951.4419. Cliff Hale, Citizens National Bank, Longview Scott Hall, First National Bank of Hereford Heath Hamberlin, Texas Bank and Trust, Longview Russell Hammonds, Junction National Bank www.SNL.com/CommunityBank (Continued on page 40)

January/February 2013 www.ibat.org ★ 39 Eugene Kasberg, First National Bank of Ballinger Jamie Miller, Veritex Community Bank, Plano Douglas Kaspar, First National Bank of Shiner Connie Milligan, Texas Bank & Trust, Longview Scott Keeling, First National Bank of Hereford Jan Mills, First National Bank of Winnsboro Terry Keltz, Brady National Bank George Minear, First National Bank of Shiner Ross Kerns, Amarillo National Bank Kelly Minear, First National Bank of Shiner, Richard Kimbrough, HCSB, Hart Richmond George Hansard, Pecos County State Bank, Frank King, Brady National Bank David Minear, First National Bank of Shiner, Bellville Fort Stockton Bentley King, Pecos County State Bank, Anita Minor, Bank of the West, Grapevine Rodney Hansen, Shay Financial Services, Inc., Irving Fort Stockton Randy Mitchell, First National Bank of Winnsboro Mitchel Harbus, First State Bank, Yoakum Charles King, Texas Bank and Trust, Longview Tom Mobley, Kilgore National Bank William Harper, First State Bank, Graham Linda Kirchoff, ValueBank Texas, Corpus Christi Dianne Monroe, Happy State Bank, Dumas William Harrison, The First National Bank of Eagle David Kleinecke, First National Bank of Shiner Robert Montgomery, Muleshoe State Bank Lake Ronny Knight, First National Bank of Winnsboro Elizabeth Morgan, First Convenience Bank, Arlington John Hasskarl, Brenham National Bank Fred Knipling, First National Bank, Port Lavaca Ryan Morris, First State Bank, Gainesville Sonja Havens, First National Bank Texas, Killeen Marie Jo Knippa, Yoakum National Bank Stephen Mueller, MBM Advisors, Inc., Houston Steve Haverlah, Llano National Bank Corey Krusa, Amarillo National Bank Lee Murchison, First Bank, Wichita Falls Rayburn Haynie, First National Bank, Port Lavaca Mike Kuhlman, Happy State Bank, Canyon Bradley Myers, ValueBank Texas, Orange Grove Harlan Heitkamp, ValueBank Texas, Corpus Christi Doug Kunkle, First Bank, Wichita Falls Maurita Myers, Texas Bank and Trust, Longview Dolphy Hellman, Muenster State Bank Bryan Kurtz, First Victoria National Bank, Magnolia Charles Napier, United Bank of El Paso del Norte Chris Hendricks, Texas Bank and Trust, Longview Sherri Kusak, First State Bank, Yoakum William Natho, First National Bank of Shiner, Claude Henry, Texas Bank and Trust, Tyler Kenneth Kvinta, First State Bank, Yoakum Yoakum A. G. Hermann, First State Bank, Yoakum Heather Lam, Davis Kinard & Co, PC, Abilene Merlyn Neel, Muleshoe State Bank Hank Hernandez, United Bank of El Paso del Norte Harlan Lambert, Pecos County State Bank, Mindy Nelson, Alliance Bank, Sulphur Springs Guillermo Hernandez, United Bank of El Paso Fort Stockton James Nelson, Alliance Bank, Rockwall del Norte Janice Landiss, First National Bank, Giddings Rita Nelson, First National Bank Texas, Killeen Gerald Hess, Muenster State Bank Sammie Leck, First Victoria National Bank Patti Nethery, First National Bank Texas, Killeen Hue Hillis, Citizens State Bank, Buffalo Freda LeFevre, First National Bank of Hico Joe Nichols, State Bank of De Kalb, De Kalb Fred Hilscher, First National Bank of Shiner Larry Legler, Yoakum National Bank Deborah Odom, Gruver State Bank Brian Hobart, Independent Bank, McKinney Fred Leonard, Integrity Bank, ssb, Houston Ronny Ortowski, First State Bank, Gainesville Richard Hoerster, Llano National Bank Steve Lewis, Jefferson Bank, San Antonio Lamar Osbourn, Southwest Bank, Odessa Jimmy Hoerster, Llano National Bank Claude Lewis, ValueBank Texas, Corpus Christi Steven Osterloh, First Victoria National Bank Steven Hoerster, Llano National Bank Fred Locker, Muleshoe State Bank Bob Pagan, HomeTown Bank, N.A., Galveston Mike Holbert, Texas Bank and Trust, Longview John Loeffler,Junction National Bank Paul Painter, Alliance Bank, Greenville Mack Holt, First National Bank of Hico Warren Longmire, Texas First Bank, Hitchcock Sheri Paris, Texas Bank and Trust, Longview Scott Holyfield,Bank of the West, Grapevine Larry Lott, Texas Leadership Bank, Royse City Donnie Park, First Bank, Wichita Falls Archie Hood, Fannin Bank, Honey Grove Dale Lunsford, Texas Bank & Trust, Longview Kelly Park, First Victoria National Bank John Hooker, First Bank, Iowa Park Fred Lynch, First Victoria National Bank James Parker, First National Bank of Byers Robert Hoxworth, First National Bank Texas, Killeen Shelly Lynch, Woodforest National Bank, The Sam Parker, Texas Bank and Trust, Longview Robert Huff, Southwest Bank, Odessa Woodlands Leo Parsons, Lamar National Bank, Paris J. Keith Hughey, J. Keith Hughey Company, Steven Lyssy, ValueBank Texas, Corpus Christi Clint Patrick, Mills County State Bank, Brownwood San Antonio David Magness, Texas Leadership Bank, Royse City Donna Patterson, First Victoria National Bank, Veronica Humphrey, Anahuac National Bank James Maloney, United Bank of El Paso del Norte Bryan Cynthia Hundl, First National Bank of Shiner Brian Marek, Hunton & Williams, Dallas Bonnie Pedroza, Jefferson Bank, San Antonio W.T. Hutton, Muleshoe State Bank Dave Marlow, Yoakum National Bank Bryan Peeler, Fannin Bank, Bonham Clint Irwin, Gruver State Bank Gustavo Martell, United Bank of El Paso del Norte Carlos Pena, Texas First Bank, Texas City Mark Irwin, Gruver State Bank W. Scott Martin, First Bank, Wichita Falls Darlene Pence, TIB-The Independent BankersBank, Kimberly Irwin, Gruver State Bank Vince Matthews, HomeTown Bank, N.A., Dallas John Irwin, Gruver State Bank, Amarillo Galveston Joe Perrin, First National Bank of Hereford Jim Ivy, Pecos County State Bank, Fort Stockton Austin McAnally, Fannin Bank, Bonham John Perrin, First National Bank of Hereford Claud Jacobs, First State Bank, Yoakum Bill McCandless, Lone Star Capital Bank, George Peyton, Happy State Bank, Canadian May James, ValueBank Texas, Corpus Christi San Antonio Edward Pfeil, First Victoria National Bank Lydia Jenkins, Anahuac National Bank Denisa McCauley, Frost Bank, San Antonio Dan Phillips, Kilgore National Bank Jay Jenkins, Anahuac National Bank Jerry McClure, First Bank-Wichita Falls, Burkburnett Charles Phillips, Integrity Bank, ssb, Houston Lamar Johanson, First National Bank of Hico Reggie McDowra, Lamar National Bank, Paris Odis Pippins, First National Bank Texas, Killeen Jerry Johnson, First Bank, Burkburnett James McElray, Integrity Bank, ssb, Houston Pat Plaia, Winnie John Johnson, Happy State Bank, Canadian Don McElroy, Muleshoe State Bank Charles Pluenneke, Mason National Bank Tim Jones, First Victoria National Bank, College Laura McKethan, Citizens National Bank, Longview Barry Polk, First National Bank of Hico Station Richard McKinney, First Victoria National Bank, Catherine Potter, Texas First Bank, Texas City Jason Jones, Roscoe State Bank, Sweetwater Rockport Randy Price, First Victoria National Bank Joe Joplin, Independent Bank, McKinney Rick McMinn, Anahuac National Bank Jack Radke, Independent Bank, McKinney Gregg Jordan, Amarillo National Bank Jim McVay, United Bank of El Paso del Norte Laura Ramsey, First Bank, Wichita Falls Murray Jordan, Brady National Bank J.C. Melcher, First National Bank, Port Lavaca Corky Randolph, Alliance Bank, Rockwall Gene Jordan, Texas Bank and Trust, Longview Gene Menn, Fayetteville Bank Jerry Redwine, Muleshoe State Bank Barry Josserand, First National Bank of Hereford James Meredith, First National Bank Texas, Killeen Mary Reeves, First National Bank of Moody, Dallas Rodney Joy, First Security State Bank, Cranfills Gap B.B. Messimer, First National Bank of Winnsboro Lyndle Reeves, First Bank Texas, SSB, Munday Bill Kacal, Integrity Bank, ssb, Houston Mary Michalsky, Polaris Benefits, LLC, Houston Lloyd Reiter, First State Bank, Gainesville Tim Kahanek, First Victoria National Bank Elam Miles, Mills County State Bank, Goldthwaite Darlene Renken, Yoakum National Bank Jonathan Kalich, First National Bank of Shiner Frosty Miller, Llano National Bank Jim Richard, First State Bank, Graham

40 ★ The Texas Independent Banker January/February 2013 George Richardson, Muleshoe State Bank Siavosh Tarighi, TIB-The Independent BankersBank, Escoe Tom, First State Bank & Trust Company, Terry Richey, Southwest Bank, Odessa Dallas Carthage William Rider, HomeTown Bank, N.A., Galveston Tommy Tatum, First National Bank of Hereford Susan Tomchesson, First Victoria National Bank, J.D. Riggs, Roscoe State Bank Doyce Taylor, Fannin Bank, Bonham Rosenberg Annette Ritter, Anahuac National Bank Terry Teague, HCSB, Plainview John Clyde Tomlinson, Texas Bank and Trust, Steven Roberts, TIB-The Independent BankersBank, David Terrell, TIB-The Independent BankersBank, Longview Dallas Dallas Toby Tripp, Southwest Bank, Odessa Don Robinson, North Texas Bank, NA, Decatur William Thiele, Yoakum National Bank Eddie Tucker, First State Bank, Graham Frank Roddie, Brady National Bank Russell Thomas, First National Bank of Eagle Lake Ben Turbeville, First State Bank, Gainesville Drew Rose, Fort Davis State Bank, Odessa Dawn Thomas, First National Bank Texas, Killeen Steve Turner, Lone Star Capital Bank, N.A., J. Andrew Rottner, North Texas Bank, N.A., G. E Thompson, First State Bank, Yoakum San Antonio Decatur Clay Thompson, Bank Texas, N.A., Tyler Terry Tyson, Citizens National Bank, Henderson Ronald Rudloff, Industry State Bank Connie Thurman, First National Bank of Moody Jim Underwood, First State Bank, Graham Gary Rusch, Alliance Bank, Greenville Gilbert Tijerina, First National Bank of Hereford (Continued on page 42) Richard Ruschhaupt, Independent Bank, McKinney John Sanders, First National Bank of Huntsville Allen Sanderson, Fannin Bank, Bonham John Satterwhite, First National Bank of Winnsboro Clyde Sawyer, Pecos County State Bank, Fort Stockton Manette Scanio, American Bank, Corpus Christi Sandra Schmidt, Industry State Bank Marcia Schmitz, Muenster State Bank TIB Mark Schmutz, First Victoria National Bank, Katy Patrick Schully, First State Bank, Gainesville Capital Markets David Schulz, Industry State Bank Milton Schwartz, Mills County State Bank, Turnkey. Integrated. Bankers. Goldthwaite Greg Schwertner, Brady National Bank Kevin Sebade, Muenster State Bank Dick Severson, Lamar National Bank, Paris Stuart Shiloff, United Bank of El Paso del Norte William Shine, First National Bank Texas, Killeen J. Michael Shivers, ValueBank Texas, Richmond Traci Shore, TIB-The Independent BankersBank, Dallas Mary Shows, Yoakum National Bank Keith Shurtleff, Alliance Bank, Sulphur Springs Brian Sims, Happy State Bank Tom Sipp, TIB-The Independent BankersBank, Irving Lori Sirman, Texas Bank and Trust, Tyler Trent Sisemore, Happy State Bank, Amarillo Bobby Smallwood, Lamar National Bank, Paris Edward Smien, First National Bank Texas, Killeen Cliff Smith, Citizens National Bank, Henderson Randy Smith, Bank Compensation Consulting, Inc., Plano Phillip Smith, Citizens National Bank, Tyler Alfred Smith, Happy State Bank Robert Smith, Sage Advisory Services, Austin Richard Spencer, Texas Bank and Trust, Longview Dorothy Spiller, Fannin Bank, Bonham Janice Spooner, First National Bank of Weatherford Ronnie Spradlin, Kilgore National Bank Willis Stamper, Jacksboro National Bank Patrick Stanley, Amarillo National Bank Patti Staples, Lamar National Bank, Paris Chad Stary, Kleberg First National Bank of Kingsville Robert Stennis, First American Bank, SSB, Bryan Harrell Stevens, Happy State Bank, Amarillo Jimmie Stewart, Llano National Bank Connie Stockbridge, Mason National Bank Bill Stovell, First National Bank of Hereford David Strayhorn, First Bank, Burkburnett Dewey Stringer, Integrity Bank, ssb, Houston Dale Swinburn, Happy State Bank, Canadian Vican Tan Sun, Integrity Bank, ssb, Missouri City Scott Tankersley, CalTech, San Angelo

January/February 2013 www.ibat.org ★ 41 Jessica Valentine, Woodforest National Bank, Spring Jeffery Van Wart, Integrity Bank, ssb, Houston Herschel Vansickle, First Victoria National Bank Jerome Vascocu, Richland State Bank, Rayville Kenneth Vickers, First Victoria National Bank Brian Vincent, Happy State Bank Brent Wade, Amarillo National Bank R. A. Wagner, First National Bank of Shiner Travis Wall, First State Bank & Trust Company, Carthage Mark Walling, Texas Bank and Trust, Tyler Claude Walter, Muenster State Bank Ted Waterman, HomeTown Bank, N.A., Galveston David Watson, Yoakum National Bank Paul Weaver, Southwest Bank, Odessa Michael Weaver, First National Bank of Shiner, Cuero Jan Webb, Independent Bank, McKinney David Webster, The First National Bank of Eagle Lake Henry Weinzapfel, Muenster State Bank Melanie Weischwill, First Victoria National Bank Brenda Wendt, Woodforest National Bank, The Woodlands ANNIVERSARIES Linda West, Happy State Bank

S ecurity State Bank, Ore City — September 21 — IBAT’s Milton McGee with Lee Hag- gard, president of the bank Robert Weyerts, Pecos County State Bank, Fort Stockton Jay Wheless, ValueBank Texas, Ingleside Charles White, First Bank, Wichita Falls Brian White, First National Bank of Moody Michael White, Woodforest National Bank, The Woodlands Audie Wienecke, First National Bank of Hico

EAR Dave Wilcox, Anahuac National Bank C.H. Wilcox, Anahuac National Bank Roger Williams, First National Bank of Sterling City Tan Williams, Anahuac National Bank David Williams, TIB-The Independent BankersBank, Dallas Jeannie Williams, Yennik, Inc., Lubbock Perry Williams, Happy State Bank, Amarillo E. W. Williams, Slaton Karen Williamson, First National Bank of Moody Blan Willoughby, First National Bank, Port Lavaca David Wilson, Texas Bank and Trust, Longview

100 Y Bill Wilson, Fannin Bank, Bonham Teague Winger, Gruver State Bank April Witt, Texas Bank and Trust, Longview Gaddis Wittjen, Texas First Bank, Texas City David Wood, Independent Bank, McKinney Mason Woodruff, North Texas Bank, NA, Decatur Ernest Woodward, Pecos County State Bank, Fort Stockton M.J. Wooten, Llano National Bank Jack Wu, First National Bank, Port Lavaca Dan Yancey, First National Bank Texas, Killeen Randolph Young, United Bank of El Paso del Norte Ralph Yzaguirre, Lone Star Capital Bank, N.A., San First National Bank, Evant — October 17 — Carol Troy, agency manager for IBAT Antonio Financial Services, and Ronnie Sullins, chairman and CEO of the bank Harvey Zimmerman, Texas Leadership Bank, Royse City H

42 ★ The Texas Independent Banker January/February 2013 interest rates cont’d from page 12 strategy in particular is best executed at the turn of the year in order to have an ® entire twelve months to recover any loss. WELCOME NEW MEMBERS Cash Flow/Liquidity Management Swap: To a very large extent, investment 21st Century Financial Services Patriot Capital Patric Jerge, President Patrick Hamner, Managing Director portfolio management is simply the man- Austin, TX Dallas, TX agement of cash flows. Just as we look at www.21CFS.com www.patriot-capital.com rate sensitivity for the overall balance 21st CFS provides affordable data processing services to Patriot typically invests $3-15 million of subordinated sheet, we must also take a macro view of community banks. 21st CFS’ customers operate in a nearly debt and equity per transaction for growth buyout and the portfolio and pay close attention to the paperless environment with teller POD and e-statements recapitalization transactions in businesses generating that help the bank control costs and promote operating $3-15 million of EBITDA. Patriot has closed 90 deals positioning of cash flows for reinvestment. efficiencies. since 1999 in business and consumer services, consumer products, manufacturing, distribution, education, This involves creating and maintaining a CFC Technology Corporation application software, and transportation. schedule of maturities, prepayments, and Kimberlee Karr, Marketing Manager other sources of principal return that will Plymouth, MN Unicom Technologies, Inc. www.cfctechnology.com Richard Penn, Business Development Manager optimize the risk and reward of reinvest- Houston, TX CFC Technology is a provider of technologies and ment in future months and years, regard- www.unicom-tech.com operational-based solutions and services to community less of the direction of interest rates. Cash banks with a focus on increasing its customers’ abili- Unicom Technologies, a managed compliance solutions flows for many securities, callable bonds, ties to enhance efficiencies and generate profits for their provider, eliminates Information Technology compliance and MBS in particular, are moving targets organizations. worries. Unicom analyzes, protects, and validates financial organizations’ data management infrastructure from because of the options risk. This makes it the network to the application layer to ensure protection critical that the profile be monitored and of information and compliance with industry standards measured for changes in rates, and adjusted and regulations. with bond swaps when necessary. The Baker Group has always main- tained that active portfolio management has distinct advantages if it is done properly. We work with clients to develop a sound decision-making process and well-defined goals as well as reporting systems that allow for pre-trade analysis or scenario simula- tions. The tools and processes for making better decisions and achieving optimal performance are available, and now is the time to take advantage of them. 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]. H *The Baker Group LP is the sole authorized dis- tributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.

January/February 2013 www.ibat.org ★ 43 geneRaL coUnseL’s coRneR cont’d from page 10 for e-mail as such. Look at the record. There are many e-mail messages that really are just substitutes for a phone call setting up a time to meet. These really don’t need to be retained. However, other messages are substitutes for formal correspondence. (Yes, children, in the “old days” we used to write letters!) Keep these based on the subject. Some could be essentially loan memos that relate to the underwriting on the application. Some may be collection efforts. Some may be regulatory compliance analyses. Keep these based on the underlying type. ★ Q. Our IT Department says we have beaucoup storage capability. Wouldn’t it just be easier to keep everything rather than to make decisions? A. Easier, yes. Safer, no. In the event visit with Waggoner national november 13 the bank were ever sued, it will be given Bank in vernon. iBat organizes and facili- a “litigation hold” notice that prohib- iBat visit with First Bank & trust of tates banker roundtable with its the destruction of electronic records. Childress. FDiC senior compliance officer in san antonio. (Remember the Enron shredding deba- around visit with First Capital Bank, cle?) Then, you will be required to search Quanah. november 14 amarillo Cluster program: for any electronic records that relate to october 25-26 the Bank secrecy act. the trial and produce them. The fact that visit with Happy state Bank in amarillo. november 14-16 you didn’t have to keep the record is irrel- meeting of state community state Foundation senior Crime stop- evant. If you have it, you will produce it! bankers associations in san pers in Washington DC. ★ and beyond Diego, Ca. aHpt Board of trustees meeting Q. One of our commercial loan offi- october 14-19 in oklahoma City. november 15 iBat education hosts Bank Financial Women in texas cers has a customer whose real property october 29 operations institute in Dallas. meeting in longview. is partially in a flood zone. But the struc- oCC’s southern District trade Women’s lender Forum october 18-19 executive Conference in Dallas. ture is actually on higher ground. Can iCBa quarterly board and com- hosted by the small Busi- october 31 we waive the flood insurance? mittee meetings in omaha, ness Development Center Credit analysis summit in san (Continued on next page) nebraska. at West texas a&m in antonio. amarillo. texas association of Bank Coun- sel Convention in san antonio. november 1 texas tech advisory Board texas education Conference in meeting in Dallas. Dallas. iBat Calendar november 1-2 october 23 advanced Credit analysis sum- January 2013 June 2013 texas society of association mit in san antonio. executives Ceo strategies 21–22 techMecca, Fort worth 13–15 Leadership conference, breakfast in austin. november 6-7 Horseshoe Bay iBat Community Bank Charter 27–31 iBat Regional Meetings october 24 task Force meeting in Dallas. iBat leadership Division February 2013 September 2013 november 9 regional meeting in Houston. 10–12 winter summit, Lake tahoe, nV 21–24 iBat convention, san antonio Waco Cluster program: Bank iBat speaks at the new compli- secrecy act. 25–28 iBat Regional Meetings October 2013 ance association in san angelo. november 10 13–18 Bank operations institute tiB Board meeting in irving. March 2013 iBat teach the teacher pro- october 25 gram™ in Conroe. 5–6 iBat community Banking Day at the iBat leadership Division capitol, austin regional meeting in irving. For information about any of these programs, April 2013 contact Julie courtney at 800-749-4228 or 23–26 iBat congressional Visit 44 ★ The Texas Independent Banker January/February 2013 [email protected], or visit www.ibat.org. A. No. Waiver is not permitted. If limitation in either the SAFE Mortgage this is a big deal to the customer, they Act or the FDI Act. This creates a little could go through the LOMA (letter of dilemma. But if the criminal background map amendment) process. This neces- check is performed through law enforce- sitates a survey and a filing with FEMA. ment, the FCRA does not apply. H But without the LOMA, the fact that the Advertising Directory structure is outside of the area that could Author’s note: This column is just my favorite commonly asked questions. What are yours? flood is irrelevant. Require the insurance. Remember that you can go to www.ibat.org to H find the compliance hotline. You can also down- Q. We are renewing a commercial load IBAT2Go from the iTunes store. Happy loan that is secured by real property. reading. AccuSource Solutions We have a certified appraisal in the file. www.accusourcesolutions.net page 7 Do we have to require a new certified appraisal? Advantage Health Plans www.advantagehealthplans.com page 5 A. Not necessarily. If you are renew- personnel update cont’d from page 14 ing and not advancing additional funds The Baker Group www.gobaker.com page 13 and there have been no changes, then you San Antonio should not need a new certified appraisal. Leslie Gaylord has joined Invest- BKD, LLP However, you should still have an “evalu- ment Professionals, Inc. (IPI) as vice pres- www.bkd.com page 39 ation” that documents the fact that the ident, director of fixed income, serving as CalTech original appraisal is still valid and that the lead trading manager for IPI financial www.caltech.com page 48 there are no significant changes to the advisors and banking partners. Gaylord First American Payment Systems valuation. Remember that the federal has over 30 years of experience in fixed www.first-american.net page 9 regulators published updated guidance income securities including municipal Ghiglieri & Company on appraisals that clarifies many of these bonds, adjustable rate mortgages, mort- www.ghiglieri.com page 43 issues and also discusses tax valuations as gage-backed securities, and collateralized Granville Financial Group well as automated valuation models. This mortgage obligations. She has served in www.granvillegrp.com page 22 interagency guidance can be accessed at senior executive and board level positions throughout her career. H IBAT Services the FDIC web site through FIL-82-2010. www.ibatservices.com pages 32, 47 H Q. We are updating our personnel JMFA www.jmfa.com page 11 procedures. Can we get credit reports on compliance guy cont’d from page 46 our employees? Kansas Bankers Surety Company Association of Texas — community banks 785-228-0000 page 15 A. Yes, if you comply with the Fair are different, didn’t participate in nor Credit Reporting Act. There is a specific PULSE profit from the bad behavior that contrib- employment form for consent to obtaining www.pulsenetwork.com page 2 uted to the “meltdown,” provide unparal- the credit report which must be separate leled service to their communities and are SHAZAM from the application for employment. But www.shazam.net page 19 worth fighting for. IBAT will continue to it can provide ongoing consent for future work on behalf of community bankers by SNL Financial credit reports as well as the initial report www.snl.com page 39 working to refine the concept of a com- on hiring applicants. munity bank charter with the understand- The Bankers Bank H www.thebankersbank.com page 20 ing it is going to be an uphill battle. Calendar Q. Can we also require criminal Additional information about our TIB background checks? efforts will be provided in early 2013 as www.mybankersbank.com page 41 A. Yes. In fact, you must get these we work on this vital initiative to preserve on mortgage loan officers. In addition, our industry — so stay tuned! H the FDI Act prohibits banks from hir-

ing persons with certain crimes on their Kelly Goulart is IBAT’s Regulatory Compliance record. Recently, the CFPB has indicated Manager that criminal records (from consumer reporting agencies) should not go back past seven years. That is important under the Fair Credit Reporting Act. Unfortu- nately, there is no comparable seven years

January/February 2013 www.ibat.org ★ 45 THE COMPLIANCE GUY

By Kelly Goulart

Working on Your Behalf: Community Bank Charter Task Force he Independent Bankers Association of risk. Specifically, we are seeking relief from Texas (IBAT) has long championed the escrow requirements, a loosening a bifurcated regulatory process on the repayment ability require- for community banks built ments for balloon notes under the upon the premise that the “High Priced Mortgage Loans,” an community bank model is exemption for mortgage registra- very different. A separate tion requirements, and a simpli- and distinct regulatory structure for fied set of appraisal and evaluation Tcommunity banks would acknowl- standards for rural areas. Having edge that the simple “one size fits community banks exempted all approach” is neither good for from those requirements banks and their customers nor would allow some banks that the economy as a whole. The have been forced out of the current single-model approach also prevents community banks mortgage loan business to begin to offer those valuable services from serving their customers effectively and efficiently, greatly once again, particularly in rural areas. These rules, more than increases their costs and needs a major overhaul. most, were designed to protect institutional investors and not I recently had the pleasure of joining the IBAT Community consumers. Bank Charter Task Force in Dallas to discuss just such a process Other compliance requirements we are seeking relief from and what it would mean to the regulatory compliance function include the elimination of the Annual Privacy Notices under for community banks. I was literally surrounded by some of the the Gramm-Leach-Bliley Act; a carve-out for community banks brightest and best minds in community banking in Texas. The from the Small Business Data Collection requirements imposed feeling was unanimous — we need to work diligently to reduce under Dodd-Frank; either an outright exemption from HMDA the regulatory burden faced by community banks and thereby reporting requirements or the establishment of a de minimis reduce the cost of compliance. number of transactions before reporting would be required; and In order to accomplish its objective, the Task Force had to an exemption from Municipal Advisory Registration. first define exactly what is a “community bank” and second, and In addition, the Task Force would like to see changes to the perhaps more important, why does the risk profile of a commu- regulatory process itself. Community banks should have access nity bank justify a separate regulatory structure. to an expedited appeals process for enforcement actions. For On the first question, just what is a community bank, we many smaller banks, the cost of fighting a protracted fair lend- decided to work with the definition of a community bank already ing charge, despite the fact the bank may be right, is just not developed by the Federal Deposit Insurance Corporation, with a financially feasible. There should also be a means for community few changes. Size would be an immediate qualifier below a cer- banks to file grievances against large “systemically important” tain amount but would not be a disqualifier over that amount. banks. The focus would not be the size of the bank necessarily, but what While there are no doubt other issues that need to be activities it is involved in. For example, does it use core deposits addressed, these provide a framework for dialogue on a bifurcated to make loans in the local communities? It’s the activities of the regulatory program that recognizes that the business model for a bank, not necessarily its size that determine the risk profile. community bank differs significantly from a diversified financial The Task Force is giving a high priority to seeking compli- institution that operates in most if not every state. The distinc- ance relief for banks that would qualify as a community bank. tion should be based upon the risk profile of the bank, and those Of particular importance is getting an exception for community banks that adhere to the tried and true model of community banks to the onerous rules on residential mortgage loans if those banking should not be squeezed out of business by a “one size fits loans would be held “in portfolio.” In other words, if the origi- all” regulatory approach to the entire banking industry. nating bank is going to keep the loan in its portfolio, the bank That is our mantra here at the Independent Bankers should make decisions about the reasonableness of the credit (Continued on page 45)

46 ★ The Texas Independent Banker January/February 2013

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