. . . IN THIS WEEK'S ISSUE:
  • Just Over Two Months Until IBANYS' Annual Convention: The Power Of Community Banking  September 25 - 27 In Niagara Falls 
  •  We Need Your Help On Special ACTION ALERT Urging Your Representatives To Support the CLEAR Relief Act
  • Invite Your Local Representatives To Your Bank This August
  • New Guest Column By Jim Reber Of ICBA Securities
  • And Much More!

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 not...now 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 2017 PAC contribution form. Help support IBANYS' political action efforts in New York State.

Partner

July 5, 2017
IBANYS Hopes You Enjoyed A Happy, Safe & Healthy Independence Day!

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Believe It Or Not. . .The Heat Of July Means There's Just Over Two Months Until. . .
IBANYS' 2017 ANNUAL CONVENTION!
   
SEPTEMBER 25-27 IN NIAGARA FALLS 
Join leaders of New York's community banking industry, IBANYS preferred providers, associate members and an outstanding array of speakers. Watch this space for details (coming soon) on program and registration, and on sponsorship opportunities. This once-a-year conference will be a must-attend event!

Niagara Falls provides a truly spectacular venue for our conference.  Click here to learn more about the many activities available!

Convention Trivia: What do financial journalist Jane Bryant Quinn, former Yankees,  Giants and Dodgers major league pitcher Sal "The Barber" Maglie and former NYS Senate Majority Leader Earl Brydges have in common? (Answer next week.)   

   
ALBANY UPDATE

What's Next In Albany?
Governor Cuomo signed the omnibus legislation passed by the Legislature during its extraordinary session last week. The bill included  extension of sales taxes in more than 50 counties, mayoral control of New York City schools,  renaming the new Tappan Zee Bridge after former Governor Mario Cuomo and providing flood relief for Lake Ontario communities. The New York State Legislature is not expected to return to Albany until next January, when the 2018 session will convene. This session,  606 bills were approved by both chambers between January and June. That was  down slightly from the 618 bills approved  last year. Gov. Cuomo has acted on 84 bills, and has three currently on his desk. That leaves more than 500 bills still in the pipeline. As for when they may be forwarded to the Governor, t he chamber that first passed a bill has the authority to send the measure to Cuomo when it wishes. T raditionally, the Legislature sends over batches of bills in orderly fashion before the next legislative session begins in January. IBANYS will closely monitor gubernatorial action as events unfold, and keep members fully informed.


WASHINGTON UPDATE

New York Community Bankers:
Contact Your Representatives On CLEAR ACT
IBANYS and the Independent Community Bankers of America (ICBA) are working to advance the CLEAR Relief Act , which would provide community banks in our state meaningful regulatory relief. H.R. 2133 (Luetkemeyer) and S. 1002 (Moran, Tester) include many provisions from ICBA's "Plan for Prosperity" regulatory relief program that IBANYS has strongly endorsed. If enacted, the CLEAR Act will allow community banks to better promote and support entrepreneurship, job creation, homeownership and economic growth in New York's local communities. To support this effort, we need you to send a letter to members of Congress 1) thanking sponsors of this legislation, and 2) encouraging non-co-sponsors to sponsor and support this legislation.  ICBA has set up a pre-written action alert (see below) that you can use to send your messages . IBANYS encourages New York community banks to customize the letter, and talk specifically about your bank and community. You can reference specific statistics on community banks by state and congressional district through the ICBA's Community Bank Footprint page:  https://www.icba.org/advocacy/ grassroots-be-heard!/advocacy-toolbox/state-and-congressional-district-community-bank-footprint Thank you for doing your part to help advance regulatory relief and support the passage of the CLEAR Relief Act!
Invite Your Congressional Representatives 
To Visit Your Bank During August
With summer at hand, we're only a few weeks from the August congressional recess, when Members of Congress return to their districts to meet with constituents. IBANYS joins ICBA in urging New York community bankers to invite your local Representatives (and their staff) to visit your banks to see first hand  the challenges of today's regulatory environment. You can help them to see the urgent need to find solutions to the regulatory overreach that hinders your ability to serve your local customers and communities -- and to understand the importance of community banking to their constituents.  To help you prepare, ICBA has developed a "Meeting on Main Street" guide to  help with planning and logistics for bank visits/in-district meetings.  T ake a step toward meaningful community bank regulatory relief. With questions, contact ICBA's Josh Habursky: Joshua.habursky@icba.org, (202)821-4355



IBANYS' John Witkowski Elected To NYBDC's 
Excelsior Growth Fund Board 
IBANYS' President & CEO John Witkowski has been elected to the Board of Directors of the New York Business Developmen Corporation's Excelsior Growth Fund (EGF). NYBDC President & CEO Pat MacKrell welcomed Mr. Witkowski's election and noted that he looks forward to "adding your perspective to the EGF Board." EGF, an NYBDC affiliate endorsed by IBANYS, can provide online loans up to $100,000 in just five business days.  

Consumer Sentiment Down In June
U.S. consumer sentiment has fallen to a seven-month low, according to a survey from Thomson Reuters/University of Michigan. C onsumer sentiment fell to 95.1 in June, sinking 2.1% from May and hitting the lowest level since November 2016. Economists expected the measure of consumer attitudes to fall further to 94.5. ( Consumer sentiment remained relatively stagnant in May at 97.1, a 0.1 point increase from April.) A Thomson Reuters survey of economists expected the index to grow to 97.5 in May.  Still, consumer sentiment is holding on to historical highs in the first half of 2017. The first six months of the year yielded the highest average for the index since the second half of 2000.

Banker Best Practices: Managing 
Cyber-Threat Risks
State banking regulators and U.S. Secret Service released banker best practices for managing risks of certain cyber-threats. Community bankers participated in the development of the best practices through Bankers Electronic Crimes Task Force. The best practices -- available at ICBA's cybersecurity webpage (sign-in is required) --focus on four cyber-threats identified by the bankers as requiring continued attention: 
  • unauthorized large-value funds transfers 
  • ransomware, which uses malicious software to encrypt devices and demand payment for access
  • distributed denial-of-service, which prevents users from acessing information or services, and
  • ATM jackpotting and cash-out fraud.
Small Business Hiring Down, But Wages Up
The Small Business Jobs Index decreased 0.24% to 100.10 in June. That is its lowest level since late 2011. Small business hiring fell for the fourth-straight month, but wages rose, according to a report issued today by the human resources firm Paychex. National hourly earnings for the month were $25.82, increasing 2.88%, or 72 cents, year over year. Tennessee was the top-ranked state in small-business job growth, while Washington state and Arizona had the highest weekly earnings growth, up more than 4%.

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ICBA SECURITIES
"The Great Liquidity Squeeze of 2017
Cash Dries Up As Loan Demand 
Continues To Grow"
By Jim Reber

This article is in the be-careful-what-you-wish-for category:  Community banks have returned to their traditional business model, after being in a figurative bunker for nearly a decade, and old issues have begun to arise.  Nationally, community banks' loans have expanded nearly eight percent since last year. This is over twice the rate of banking in general.  Loans as a percentage of assets are at their highest level since 2009.  What has been the result of these developments is that, in addition to improved earnings, the means for funding this demand is becoming a challenge.  To be sure, these are issues that a community banker would prefer to tackle compared to a slowdown in loan demand, or worse, a deterioration of credit quality.  Still, since this is the first time in a decade that liquidity management has focused on finding adequate sources, instead of employing suitable uses, it's a worthwhile exercise to review the expectations and make some suggestions.
CLICK HERE Rules are the same
The last time the coalition of bank examiners, the FFIEC, saw the need to publish a joint policy statement on the matter was way back in 2010 when it issued guidance on Funding and Liquidity Risk Management.  In that Financial Institution Letter, the council identified six components of effective liquidity management:
  • Accurate cash flow projections
  • Diversification of funding sources
  • Stress testing
  • A formal contingency funding plan
  • A cushion of liquid assets, and
  • An early warning system
There is a good chance that your community bank has access to help in measuring your compliance with, or creating policies and procedures for, each of these criteria.  For example, a sample liquidity policy is a standard document that any full service broker-dealer or consultant should have ready for your use.  Also, interest rate models should assist in quantifying how much cash flow will naturally be available from the current mix of assets and liabilities, given an assumed future interest rate path.
Bonds for cash flow
If your community bank finds itself in a situation in which it is looking for more liquidity in the near future, there are a number of strategies relating to the investment portfolio that can be easily employed.  And, we hasten to add, without any incremental risk to credit quality, your asset/ liability posture, or your earnings.  First, you could purchase investments that have a high likelihood of being called within a year. These will be investments such as agency securities whose stated interest rates are above current levels, and have call dates in the near future. You will probably have to pay a price above par for them, in which case you will have bought a "cushion bond."  When the call date arrives, if your bond doesn't get taken away from you, your investment yield will rise.  Hence the cushion against rising rates.  A variation of this recipe is to buy a mortgage-backed security (MBS) that has a high enough borrowers' rate ("Gross WAC") to improve the chances that there will be some prepayment activity.  Currently, a 15-year MBS with a Gross WAC of 4.00 percent or higher could see some near-term refinancing. Your brokers can find some candidates that check these boxes.  
Other home-grown sources
You also may be surprised to learn that there is an active secondary market for high quality non-conforming loans.  Many sellers of these loans have accumulated some type of concentration risk in their loan portfolios-interest rate, loan sector, and geographic are some examples.  If your community bank has a homogenous set of $5 million or more in performing credits, my recommendation is to have an intermediary work up an estimated price for your consideration.  These transactions can be structured for the seller to either retain or release the servicing. And don't forget the wholesale funding option. Recently there have been opportunities to lock in rates on brokered deposits that are longer in duration and lower in cost than a lot of community banks can accomplish in their traditional footprint. And from the looks of the FHLB's balance sheet, which now has more outstanding advances than at any time since 2009, a lot of your fellow community bankers have been availing themselves of that option once again.  
 
To conclude, liquidity management has really come full circle in a decade.  No longer are community banks awash in idle funds.  We have, finally, found ourselves in a part of the business cycle in which a comprehensive liquidity policy should be ready to complement the needs of the core earning assets of the balance sheet.
*  *  *
(Jim Reber is president and CEO of ICBA Securities. Contact him at 800-422-6442 or jreber@icbasecurities.com.)

Liquidity Policy Makeover
Vining Sparks, ICBA Securities' exclusive broker, is equipped to assist any community bank in developing a robust liquidity policy.  Included is a policy template, customized cash flow reporting, and consultation on a contingency funding plan.  For more information, contact your Vining Sparks sales rep or visit www.viningsparks.com .
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Have You Contributed To NYSIBPAC?
This year brings a challenging legislative session, with new chairmen of both the State Senate and State Assembly Banks Committees. Many of our competitors within the financial services industry operate very well-funded political action committees, and we need your support to ensure community banks remain an important part of the political process and debate. We have placed an updated 2017 NYSIBPAC contribution form in the column along the left border of this newsletter.  Can we count on your support?

MEMBER SERVICES & BENEFITS

 
IBANYS identifies offers products and services  that provide value to your banks, companies, employees communities. These brief summaries provide links for information. Please contact IBANYS President John Witkowski with questions. 

Health & Wellness 
The health and wellness landscape continues to evolve. "My Wellness Resource" can be a nice addition to your existing benefit package.   C ontact Alan Justin at (716) 907-5500  or visit:  http://nbibanys.phecard.com.

. . .An IMPORTANT UPDATE: 
We are pleased to inform HR & Benefits Representatives of IBANYS member banks about a new offer available to their banks.  Offered through IBANYS' partner at My Wellness Resource is a unique program providing a $500 rebate on any new Fiat, Chrysler, Dodge, Jeep, Ram or Hyundai vehicle. Those firms comprise approximately 19% of all car and truck sales in the US market.  The rebate is independent of, and may be combined with, any other offer available to your employees, so it's a true cash rebate that is not available through dealerships. Employees negotiate their best deal at the dealership of their choice including other rebates, cash back offers, etc., then apply for and receive this $500 rebate after their new car purchase or lease. The program may only be  offered though individual banks, not through IBANYS itself. Therefore, if it's something you think your bank and employees might be interested in, drop a line to us and we will forward it to our contact at My Wellness, Alan Justin, who will reach out to you with  the details.

We only ask that if you are not currently participating in the My Wellness Resource program, that you take a fair & objective look at the program!

Secure, Enhanced Internet Presence
The .bank program by fTLD operates trusted, verified, more secure, easily-identifiable internet locations for financial companies and their customers. V isit  www.icba.org/SRPArticles < http://www.icba.org/SRPArticles > page  

Online Lending
Excelsior Growth Fund (EGF) is NYBDC's nonprofit Community Development Financial Institution and IBANYS' exclusive online lending  partner . Visit 

Battle Against Prostate Cancer
Cure the Blue" raises funds and awareness regarding prostate cancer in New York State. Visit www.curetheblue.com to get involved!  
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IBANYS Webinars  For  New York 
Community Banks:
. . .Is YOUR Bank Participating? 
New York's community banks face an array of challenges -- and, opportunities! Bank officers, board members and employees need to stay fully informed and up-to-date. . . on their responsibilities -- and, their potential liabilities. Community bankers need the proper information and tools to effectively do so, and to execute their business and strategic plan to prepare for the future.  Here's one important, convenient way to do this:  IBANYS' 2017 webinars. These presentations are designed to meet the needs of New York community banks. The programs are both effective and cost-effective. . . and participating couldn't be easier! Community bankers can do so from their own offices. The number of participants has dramatically increased over the past few years. Is your bank among those who have benefited?  If not, find out why so many of  your industry and association peers are taking advantage of these webinars. R eview upcoming programs link below:
https://financialedinc.com/a/ibanys/category/live




Finastra. . .
Finastra unlocks the potential of people and businesses in finance, creating a platform for open innovation. Formed in 2017 by the merger of Misys and D+H, Finastra provides the broadest portfolio of financial services software in the world today- spanning retail banking, transaction banking, lending, and treasury and capital markets. Through their open, secure and reliable solutions, customers are empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to meet the changing needs of their customers. 48 of the world's top 50 banks use Finastra technology. For further details, contact Kevin Paugh : (800) 989-9009, ext. 6653,

 
. . .That when IBANYS was formed in 1974, New York State's two U.S. Senators were Republican Jacob Javits and Conservative James Buckley. Our Congressional Delegation totalled 39 Members (22 Democrats and 17 Republicans). The last remaining Representative from that year (Rep. Charles Rangel, D-Harlem) retired last year after serving from 1971-2017. Today, we have two Democratic Senators (Schumer and Gillibrand), and our 27-member House Delegation includes 18 Democrats and 9 Republicans. 

 

 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."

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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