Your IBANYS Team: 
Working Together To Make 2017 A Great Year 
For New York C ommun ity Banks !
In This Issue

Quick Links

Have You Contributed to NYSIBPAC This Year?
If is the time! We need your help in this statewide election year to support candidates and committees who understand community banks' needs. Can we count on you?
CLICK HERE for our 2016 PAC contribution form. Help support IBANYS' political action efforts in New York State.


December 21, 2016


A Message From President John Witkowski:
The Independent Bankers Association of New York State (IBANYS) welcomes 2017, and the challenges and opportunities that it holds for New York's community banks. With a new administration and Congress in Washington, D.C. and a new Legislature in Albany, we look forward to representing your interests in those two capitals in the legislative and regulatory arenas. 
The 115th Congress has been sworn in and has begun meeting, with four new members of the New York Delegation -- Democrats Tom Suozzi (D-3rd CD) and Adriano Espaillat (D-13th CD), and Republicans John Faso (R-19th CD) and Caludia Tenney (R-22nd CD) -- in place. House Republicans yesterday nearly unanimously re-elected  Speaker Paul Ryan (R-ILL), and House Democratic Leader Nancy
Pelosi of California was also easily re-elected Minority Leader.  President-Elect Trump will be inaugurated January 20.  Senate Majority Leader Mitch McConnell (R-KY.) announced Sen. Mike Crapo (R-ID) will chair the Senate Banking, Housing and Urban Affairs Committee, replacing outgoing term-limited  Chair Richard Shelby (R-AL). Three new GOP members were added: Sens. John Kennedy (La.), David Perdue (Ga.) and Thom Tillis (NC). Meanwhile, the tax-writing Senate Finance Committee also gained a new GOP member: Sen. Bill Cassidy (LA). Sen. Orrin Hatch (R-UT) remains chairman. These two committees will play key roles in 2017. Republicans plan a comprehensive tax overhaul and a roll back of Dodd-Frank.

House Speaker Paul Ryan swore in new member of the New York Congressional Delegation John Faso (R-Hudson Valley) as Mrs. Faso also participated.

The NYS Legislature returned to Albany today.  The State Senate is again led by incumbent Majority Leader John Flanagan   (R-LI), with the  support of the Independent  Democratic  Conference led by Sen. Jeff Klein (IDC-Bronx) and Brooklyn Democratic Sen. Simcha Felder. Senator Andrea Stewart-Cousins (D-Westchester) continues as the "regular" Democratic Leader.  The 2017 State Assembly is once again led by Speaker Carl  Beastie (D-Bronx), with Brian Kolb serving as GOP Minority Leader.  In a break from tradition,  Governor Cuomo will not deliver a formal State of the State Message to the Legislature.  He will instead deliver six regional addresses across the state:  Monday in New York City and Buffalo, Tuesday in Westchester and Long Island,  and Wednesday in Albany and Syracuse . The Governor must submit  his executive budget proposal by January 17. The Governor  announced  a  200-member task force  to "help educate businesses about the state's newly enacted minimum wage , and enforce any chronic violations of the law." He also proposed a "first-in-the-nation free college tuition " for full-time students in SUNY or CUNY schools if they or their family earns $125,000 or less annually.  Senate Republicans said they need to examine the details. 

IBANYS also has a busy year ahead for our committees, our peer groups, our conferences & educational programs. We held a planning call with our Compliance Group to discuss our upcoming Regional Compliance Seminars  March 22 and 23 in Rochester and the Capital District -- as well as for inclusion during such other IBANYS educational meetings as Lending, Directors, CFO/Senior Management & Annual Convention. Preliminary discussion focused on incentive compensation guidelines; HMDA; private flood insurance; AML/BSA, and vendor and third-party oversight/management. Overall risk management will also be featured.  Watch for news on specific program agenda and speakers. We will hold a similar planning call for our CFO group tomorrow to begin planning our CFO/Senior Management Conference June 7-9 at West Point. 

Of course, we're also working hard to continue providing important products and services under our member services initiative, with help from our new Innovation Committee, to benefit bankers and our associate members/ preferred providers. Stay tuned for all the details.  We have a full agenda for 2017, so together: Let's get to work!

State DFS Delays, Revises Proposed 
Cybersecurity Reg
In late December, the New York State Department of Financial Services formally delayed the scheduled effective date for its new proposed cybersecurity regulation from January 1 to March 1, 2017.  They have now issued revised requirements for financial institutions. The initial Certificate of Compliance to be submitted to DFS is required on February 15, 2018 and then annually thereafter. IBANYS testified (together with senior compliance and risk officials from Pioneer Bank) on this issue at a NYS Assembly Banks Committee hearing in late December. We told the Committee " of the biggest challenges facing local community banks is "the excessive burden of regulation compliance. This includes the growing problem of duplication in state and federal regulation. While the large banks have separate departments and consultants to coordinate their compliance demands, too often community banks must rely upon an existing employee who already wears several other hats.Too often, we find our resources must be applied to meet compliance needs, instead of lending in our community. For every compliance officer hired, that's a lending or business development or consumer loan officer not hired, or retained.That's not healthy situation for New York's communities or consumers."

IBANYS also provided a joint comment letter (with the ICBA) to DFS, and co-signed a letter to the Governor's office as well. 
  • To read the announcement information from DFS, visit then click on the information under the "current news" section (Dec. 28, 2016 date).  
  • CLICK HERE to read IBANYS & ICBA comment letter to DFS on cybersecurity
  •  CLICK HERE to read the joint Business Council letter to DFS co-signed by IBANYS. 
  • CLICK HERE to read the joint letter to the Governor's office co-signed by IBANYS.
Update: Calculate Your Exemption From New State DFS " Zombie Properties" Regulation
As you know, IBANYS also submitted a comment letter  last fall  to DFS on the proposed regulation on vacant and abandoned ("zombie") properties.
Click here  to read that letter.  The final regulation  (3 NYCRR 422) for maintaining vacant and abandoned property took effect Tuesday, December 20, 2016).  Section 422.3(a) of the regulation places the burden of establishing an exemption on the financial institution.  For the 2017 calendar year, an exemption must be filed by 2/28/17 on a form provided by the Superintendent. 

To access data to calculate whether a bank qualifies for an exemption on the DFS website, click on the link below, or cut and paste it into your browser: 

2017 IBANYS Education Calendar:
(Save These Dates. . .Share with colleagues) 

March 22, 2017 - Compliance Conference - Rochester

March 23, 2017 - Compliance Conference - Albany

April 11, 2017 - Directors Conference - Rochester

April 12 2017 - Directors Conference  - Albany 

April 30-May 3, 2017 - ICBA Capital Summit, Washington D.C. ( meetings "on hill" with New York Congressional Delegation)

May 9-10, 2017 - Lending Conference - Syracuse (tentative)

June 7-9, 2017 - CFO/Sr. Managment Conference - West Point, NY

September 25-27, 2017 - 43nd Annual Convention - Niagara Falls, NY  

October 24, 2017 - Security Conference - Rochester, 

October 25, 2017 - Security Conference - Albany

IBANYS Board of Directors Meetings:
IBANYS will hold meetings of our Board of Directorson the following dates:
  • March 2, 2017 
  • June 9, 2017
  • July 20, 2017 (conference call meeting)
  • October 19, 2017
To view details on our 2017 education calendar, visit, click on education tab, then on upcoming meetings for full details.


"Muni Madness:
A lot of variables affect tax-free performance"
By Jim Reber, President & CEO, ICBA Securities

"Now that interest rates have finally risen..." is a phrase I wrote in jest, a mere six months ago, in this very column.  I can now use these words in sincerity.  And your collection of investments is potentially the better for it.  We have contended that while the discussion of portfolio performance in the board room and among the investment committee is more pleasant if your bonds have net unrealized gains, it will take a rate environment that creates unrealized losses before your yields will be on the way up. Such is the scenario we now have.  The late-2016 bond market selloff has caused bank investments, on balance, to be under water.  This produces a myriad of issues to consider when purchasing, some of which are specific to tax-free municipals.  None of these are new; it's just been the better part of a decade since they've been relevant.  So here's a list of factors to keep in mind, when you're shopping for munis for your portfolio.  
Hallmark of Performance
Let's first take a look at why municipal bonds are so popular among community banks.  As industry profitability has returned to near pre-recession levels, there's more income to be shielded from taxation.  The muni market, particularly the subset known as "bank qualified," has had few credit hiccups recently.  And, even given the lack of supply, yields have remained historically wide relative to benchmarks like the U. S. Treasury curve.  Currently, about 28 percent of all dollars invested in a typical community bank bond portfolio is of the tax-free variety.  This represents a high-water mark, as a decade ago only about 18 percent was in munis.  Since this is the highest-yielding sector in a typical portfolio, the weighting of munis has a direct correlation to the entire portfolio's percentile ranking.  The top 25 percent of bank portfolios have an average allocation of almost one half to municipals.  
Beware of Discounts
Which brings us back to today's issues.  As prices have fallen since November, there are a lot of bonds that are being offered at prices below par, which originally came to market at or above 100.00.  There is a proviso in the tax code that creates capital gains tax liability on the portion of the yield that is attributable to the discounted price.  This is another argument, incidentally, for you to prefer or insist on purchasing high coupon munis.   The higher the coupon, the higher the price, all other things being equal.  That alone will help ensure that the market price, even if it has fallen from its peak in 2016, will stay comfortably above par. And since most munis have a call feature at some point during their life, the higher coupon will help keep the average duration shorter.  The advice here is to be sure you are shown the "after tax" yield on any municipal that you are offered that has a market price less than 100.00.
BQ Benefits
Only about seven percent of the muni market is of the bank qualified ("BQ") variety.  Bankers will almost always limit themselves to the BQ sector, as they get to deduct the majority (80 percent) of the cost of carrying that type.  The 20 percent "disallowance" is also known as the TEFRA penalty.  Sometimes there are temporary opportunities to buy non-BQ bonds, also known as general market paper, at sufficient yields to make up the 100 percent disallowance hit. One condition is a muni market sell-off in which general market yields improve much more than do BQ yields.  That occurred in late 2016.  Another is that cost of funds is, at least temporarily, compressed.  As of September the average cost of funds for U. S. banks was all of 38 basis points (0.38 percent).  While today a case can be made that general market munis can create superior tax-equivalent yields to the BQ sector, extreme caution needs to be exercised.  The exiting of general market positions, if a long-term trend of rising rates prevails, could end up costing a community bank more than the up-front benefits it realized.  So now that interest rates have finally risen (!), my advice is to take time to understand the nuances that attach to tax-free municipal bonds. This includes capital gains liabilities, premiums versus discounts, and the risks and potential benefits of general market paper. Proper application of these strategies can place your community bank's investment portfolio solidly in the top quartile of your peers.
* * * * *
Vining Sparks, ICBA Securities' exclusive broker, has issued a Strategic Insight on muni bond investing, "A Tale of Two TEFRAs."  For your copy, contact your Vining Sparks sales rep or visit
Vining Sparks Webinar 
Tuesday, January 17
2016 was anything but "ordinary". It was one full of surprises, from record-low Treasury yields to record high stock prices and from unexpected referendum results in Great Britain to an unlikely Presidential election outcome here at home. The outworkings of the 2016 developments have created a divergence in expectations for global monetary policy and economic activity. Speculation of a business-friendly paradigm shift in Washington has forged a newfound optimism for U.S. economic activity and chances for faster inflation while an overhang of uncertainty still exists for economies in Asia and Europe. In this webinar, presenter Craig Dislike (Chief Economist for Vining Sparks) will quickly recap 2016 and look ahead to what the shift in sentiment could mean for growth, inflation, monetary policy and interest rates.  This free-of-charge webinar was designed for Portfolio Managers, CFOs, CEOs/Presidents.
To register, visit:

Federal Call Report Relief
Federal financial regulators have finalized changes to the call report for community banks with assets under $1 billion, reducing it from 85 to 61 pages for approximately 5,200 institutions. ICBA has noted that more relief is still needed to reduce call report burdens and has urged regulators to implement a short-term call report that community banks could file in the first and third quarters of every year.

Clayton Nominated As SEC  Chair; New Fed 
Governor Also Coming Soon?
President-Elect Trump today named Jay Clayton, a financial industry lawyer who has represented Goldman Sachs Group and Barclays Capital, is reportedly a leading candidate to serve as the next chair of the Securities and Exchange Commission in the Trump administration. He is a partner at Sullivan & Cromwell and specializes in public and private mergers and offerings.  Mr. Trump called Clayton "a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules at the same time...We need to undo many regulations which have stifled investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers." Clayton 
said if he is confirmed, he will work with key stakeholders in financial systems to provide investors and companies confidence to invest.
"We will carefully monitor our financial sector, as we set policy that encourages American companies to do what they do best: create jobs." 

President-Elect Trump is also reportedly considering several names for  a Federal Reserve Board of Governors vacancy that would include designation as vice chairman and head of banking regulation, a position left technically unfilled since it was mandated by Dodd-Frank. (The assumption with the appointment of the new Fed bank regulator is that the current unofficial holder of the position, Daniel Tarullo, would resign.) Candidates reportedly include  John Allison, former was CEO of  BB&T.  Others mentioned are Thomas Hoenig, currently FDIC Vice Chair and a former Fed official, and John Taylor, Stanford economist who developed the oft-cited "Taylor rule" for where interest rates should be based on economic indicators.    Like Mr. Trump, Allison (who reportedly may be the favorite for the spot) opposes Dodd-Frank, but also believes in a "no-nonsense approach" to banks that become systemically dangerous.


Home Sales Down Nationally,
Up Slightly In Northeast
Higher mortgage rates hit home sales, driving the National Association of Realtors Pending Home Sales Index down 2.5% in November from October, the NAR reported Wednesday. Analysts had forecast a 0.4% gain in the index, which is now 0.4% lower than a year ago.  The Realtors blame the drop on the low supply of available homes and rising mortgage rates. Regionally, only pending home sales in the Northeast saw a slight gain, up 0.6 percent in November and 5.7 percent from a year ago.



IBANYS initiatives can provide value and bottom line benefits to New York community banks. Take a moment to review them. We hope you take full advantage of these exciting opportunities. . .

New York Community Banks: 
Check Out This Health Care Option! 
It's approaching the time to sign up for health benefits for 2017. We suggest you take a look at our healthcare partner, My Wellness Resource" as an addition to your existing benefit package. The Teledoc program is an exciting new way to provide value to your institution and employees. It provides 24/7/365 access to a doctor through the convenience of phone or video consults. It is an affordable option for quality medical care.  Click here to read how high deductibles can lead to health care avoidance,  and here  to learn how this program can help you in planning your health care benefits package.  Community banks can take advantage of a low-cost, non-traditional program to help save time and money, and offer employees on demand health care. It's an exciting new way for community banks to provide additional health care benefits options, reduce cost and retain employees -- designed to improve productivity, decrease absenteeism and boost morale without straining your bottom line.   Contact Alan Justin, Managing Partner at (716) 907-5500 or call the IBANYS office at (518) 436-4646.  For more details on the benefits of the My Wellness Resource Card, visit: 

 Discover .BANK Toolkit & Digital Campaign. . .
IBANYS encourages New York community banks to take a look at  a digital campaign that fTLD has put together to raise the visibility of .BANK  in the marketplace.  ICBA asked us to pass along this opportunity for banks to join in with ICBA, ABA and the Financial Services Roundtable to promote .BANK. To view the campaign, view the toolkit and read nine different ads available for use, click on the link below, or cut and paste it into your browser. Click below:
E x celsior Growth Fund (EGF): 
IBANYS' Online Lending Partner
EGF is  a nonprofit Community Development Financial Institution formed by New York Business Development Corporation (NYBDC). EGF is endorsed by IBANYS as exclusive online lending 
partner for our 
members. EGF  provides innovative financial solutions and business advisory services to underserved small businesses in New York State through a fast, simple and secure online lending platform. Its core product is the EGF SmartLoan™, which features amounts up to $100,000, approvals within one-to-two days, and disbursements within one week. Importantly, interest rates a fraction of those typically offered by online lenders.  EGF offers banks a unique customer retention solution when a customer either does not qualify for a bank's loan offerings, or seeks the fast,  transparent process available through online lenders. To facilitate retention, EGF shares performance information on the referred loan portfolio on a quarterly basis and offers the opportunity for the bank to purchase referred loans at par at any time.  Additional details on the EGF SmartLoan, including eligibility criteria, are available at:
For details, or to make a referral, contact Bryan Doxford, Chief Lending Officer at Excelsior Growth Fund: or  (212) 430-4512.

We also joined the  "Cure the Blue" effort to raise funds and awareness regarding prostate cancer in New York State. We are partnering with the Buffalo Bills Alumni Foundation, and hope to see a number of IBANYS members participate. Please join us in supporting this worthwhile cause. Visit to get involved!  

IBANYS 2017 Webinars Designed 
For  New York Community Banks 
In 2017, New York's community banks will face an array of challenges -- and, opportunities! Bank officers, board members and employees must be sure they are fully informed and up-to-date on their responsibilities -- and, about their potential liabilities. Community bankers require the proper information and tools to effectively meet their responsibilities, execute their business and strategic plan, and prepare the bank for the future.  One important -- and convenient --way to do so is by regularly participating in  IBANYS' 2017 webinars. These presentations are specifically tailored to the needs of New York community banks. The programs are effective and cost-effective, and to participate couldn't be easier! Community bankers can do so directly from their own offices. Over the past few years, the number of New York community bankers participating in IBANYS' webinars has dramatically increased.  Is your bank among those who have benefited? If not, why not find out why so many of  your industry and association peers are taking advantage of these timely webinars? Take a moment to r eview our upcoming programs by clicking the link below:

. . . T. Gschwender & Associates, Inc. 
T. Gschwender & Associates, Inc. is a privately held company that was started by Tom Gschwender on November 9, 1984 and purchased by Bharpur "Bo" Singh on April 1, 2008. This diversified consulting company has been providing services to financial institutions and businesses in the Northeast United States since 1984. Their financial institutional clients include small community banks and credit unions with less than $100 million in assets, to much larger regional institutions with over $5 billion in assets.  For financial institutional clients, they serve as a highly sophisticated "Credit Department," able to handle all functions from initial borrower due diligence to collateral liquidation, and everything in between. The goal is to provide these services in a timely and cost effective manner, allowing clients to tap into resources they would not otherwise be able to employ internally. T. Gschwender & Associates, Inc. is best known for their loan review service. But we do more than just loan reviews. Credit analysis, field audits, TDRs, ALLL, equipment evaluations, appraisal reviews, business valuations, environmental remediation, and problem loan management are just a few of the services we provide.  Their consultants all have extensive banking and corporate management experience. Some Associates have been with the company since it was started, and current staff provides a wide depth of experience, holding high level positions within banking, accounting, and regulatory institutions. With expertise spanning "both sides of the street", the company's Associates provide a well balanced and thorough approach to all that they do. 

For details, contact:  Bharpur "Bo" Singh,  President & Owner, at  (315) 701-1293, Or, visit the website at


. . .That House Speaker Paul Ryan was re-elected Tuesday. Did you also know only two New Yorkers have served as Speaker? 
John Taylor (1820-21 and 1825-27), and Theodore Pomeroy (1869).  Pomeroy was Speaker due to the resignation of Vice President-elect  Schuyler Colfax  March 3, 1869 until the session adjourned  sine die . Pomeroy  returned to politics as Mayor of  Auburn, New York  from 1875 to 1876, then as a member of the  New York State Senate  in  1878- 79 .


New York community banks play a key role in our state and local economies. Help spread the good news among your customers, business and elected leaders and media!

Click here for quotes from Governor Cuomo and DFS Superintendent Lawsky extolling the performance and value of New York community banks.

Click here for the full NYS Study on community banking.

Click here to read IBANYS President & CEO John Witkowski's comments on the new tax changes and benefits for New York community banks as approved in the 2014-15 State Budget.


Click here for IBANYS' letter to the Editor of Consumer Reports Magazine correcting failure to mention community banks as an alternative to using "big banks."


John J. Witkowski
President and Chief Executive Officer
Stephen W. Rice
Director of Government Relations and Communications

Linda Gregware
Director of Administration and Membership Services 

William Y. Crowell, III
Legislative Counsel