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Message From the President
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By John Witkowski, President & CEO
*Please Note:*
Next week's newsletter will be published Thursday, March 7.
Words have great power and influence. Ensuring the value and ideals of community banks are understood within Washington, D.C. can only be accomplished when people come together to provide a voice. Join IBANYS in attending
ICBA's Capital Summit on April 29 - May 1 in Washington, D.C. where we will participate in "hill visits" with members of our New York Congressional Delegation and hear from various speakers in the industry. The event will focus on activity and assorted issues in Washington, with the following ventures planned:
- We'll be meeting with our New York Representatives to discuss federal issues such as Bank Secrecy Act (BSA) modernization, the evolving competitive landscape with fintech companies, undue tax advantages of credit unions and Farm Credit System lenders, the need for data breach legislation, and much more.
- Our hill visits will be Tuesday, April 30 (additional opportunities Wednesday, May 1 if needed). We are scheduled to meet with New York Representatives on the Financial Services Committee, along with other important Committees. In addition, IBANYS will be meeting with your local Representatives. Please email Steve Rice if you plan to attend and tell us with which Representatives you would like us to schedule meetings with.
- An array of speakers will be speaking at the Summit, including Senate Banking Committee Chairman Mike Crapo (R-Idaho), the leading champion for community bank regulatory relief in the S. 2155 legislation. Jelena McWilliams, the new FDIC Chair, will also be addressing attendees.
The Capital Summit is a great way to bring your voice, priorities and concerns to the forefront in Washington. All voices matter.
- Hearings were held in the House Agriculture Committee and the Senate Commerce Committee. The House Agriculture Committee discussed the rural economy featuring Agriculture Secretary Perdue. The Senate Commerce Committee's hearing reviewed a federal data privacy framework.
- The Senate and Assembly Banks Committees will continue to meet to consider/report stand alone legislation. IBANYS' Government Relations Committee and staff are monitoring new introductions and preparing our position and response.
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IBANYS continues to keep our members informed through our educational conferences.
Full brochures and registration forms are available for our Compliance Conferences in Rochester, NY and Troy, NY in March - along with our Directors Conferences in Rochester, NY and Poughkeepsie, NY
(new location!)
in April. Brochures and registration forms will soon be released for our Security and Lending Conferences in May, our Annual Convention in June, and our Banking Executive Symposium in September, so be sure to save the dates!
IBANYS is also excited to add another location to our
Compliance Conference: New York City on April 9. This program is slightly different from our other two locations, however it offers the same valuable learning experience with timely topics from expert speakers. Gain insight into hot topics within Compliance while in one of the biggest financial capitals in the world! Download the
brochure and
registration form to secure a spot today!
IBANYS has recently welcomed new
associate members
/
preferred partners
to bring products and services to help community banks ensure a profitable future. We are excited to welcome:
TransGate Solutions provides a range of business solutions including Payroll Processing, Merchant Services, Workers Compensation Coverage, Point of Sale Systems, and more - all with no contract. InfoAgora, Inc. offers a variety of products including a Macroeconomic Scenario Generator, Loss Forecasting and Stress Testing, Capital estimation, Credit adjudication models, and a Credit and Deposit Price Optimizer.
We are always
seeking new associate members, so spread the word or submit us your information to become an associate member today!
If there is someone at your bank who is not currently receiving the e-newsletter,
send us their names and email addresses and we will add them to our list! Email Linda Gregware or Natalie Rowan to add additional recipients or for more information. In addition, ensure everyone is following IBANYS on Facebook, Twitter, Instagram and LinkedIn to stay-up-to-date with all IBANYS news.
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Follow IBANYS On Social Media!
Connect With Us Today!
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Get Ready For 2019 Annual Convention!
SAVE THE DATE
When:
June 10-12, 2019
Where:
5218 Patrick Rd, Verona, NY 13478
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Attend One of Our Educational Meetings!
Our 2019 Meeting dates and locations are now available! These educational conferences cover various subjects that are important within the community banking industry, spoken by the experts.
T
hey are also a great opportunity to network and earn CPE credits. Here is what we have planned for 2019:
March 12, 2019 March 13, 2019
1111 Jefferson Road 235 Hoosick Street
Rochester, NY 14623 Troy, NY 12180
CPE Credits Available = 7.5
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April 2, 2019
145 Killbourn Road
Rochester, NY 14618
*This forum is limited to 15 participants
**This forum is for IBANYS member banks only
***This event is sold out
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April 9, 2019
1185 Avenue of Americas, 38th Floor
New York, NY 10036
CPE Credits Available = 6
April 16, 2019 April 17, 2019
5257 W.
Henrietta Road
2361 South Rd.
Henrietta, NY 14467 Poughkeepsie, NY 12601
CPE Credits Available = 7
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May 7, 2019 May 8, 2019
5257 W. Henrietta Road 2361 South Rd.
Henrietta, NY 14467 Poughkeepsie, NY 12601
CPE Credits Available
= 7
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May 21-22, 2019
16 North Franklin Street
Watkins Glen, NY 14891
CPE Credits Available
= 7
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Banking Executive Symposium
September 9-11, 2019
200 Riverside Drive
Clayton, NY 13624
CPE Credits Available
= TBD
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Have an idea for one of our meetings? Want to see a meeting or forum on a different subject? We want to hear from you!
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IBANYS Education/Webinars
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The 2019 Webinar is now available!
The Independent Bankers Association of NYS (IBANYS) partners with CBWN to bring you more than 150 webinars each year covering compliance, lending, regulations, security, operations, new accounts, collections, fraud, security and other topics. Even better, each time you purchase a webinar, you support IBANYS, because a portion of your registration comes directly to us. Thank you!
You can view the 2019 Webinar Schedule here or by category here. In addition, CBWN has made some recent updates to provide better service to its consumers. Unfortunately, some changes may have caused you to miss important webinar announcements. Please read the IBANYS letter to view the updates and ensure that you do not miss another webinar.
NEW WEBINARS ADDED FOR 2019
CBWN has added more than 140 webinars to the IBANYS webinar calendar, covering all the essential topics. Start the new year off right by gaining the knowledge and tools to make 2019 the best year yet!
CBWN and IBANYS thank you for your continued support of the education in the community banking industry.
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2019 Webinar Series - Available Now
6 Webinars
for the Price of 5
or
10% off a 4-Part Series
Choose From The Following:
4-Part Series 6-Part Series
6-Part Series 6-Part Series
4-Part Series 6-Part Series
4-Part Series 4-Part Series
4-Part Series 4-Part Series
4-Part Series
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Reg relief makes most reciprocal deposits nonbrokered, providing banks the opportunity to attract even more deposits. Thanks to the newly signed regulatory relief bill, most reciprocal deposits are no longer brokered. This comes as banks face intense and increasing competition for deposits.
Join Promontory Interfinancial Network - the nation's leading provider and inventor of reciprocal deposit placement services - for a free webinar that outlines key provisions of the new law and the impact ICS®, Insured Cash Sweep®, and CDARS® can have on banks' balance sheets. The webinar will also cover how banks can use ICS and CDARS to capitalize on the opportunities at hand; presenters will discuss cost-effective ways to use the services to attract high-value relationships (even as deposit competition intensifies) and to lock-in more low-cost funding (even as interest rates continue to rise). This webinar is a "must" for decision-makers at banks of all sizes, especially for community banks that utilize collateralized deposits and/or listing services.
Numerous new banks are joining the Promontory Network. In order to give these newly on-boarded banks an opportunity to begin transacting, we have decided to extend this incentive program through March 31, 2019.
Choose a date and time that works for you!
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| Albany |
State Budget, Revenue Shortfall Take Center Stage
In Albany
 With the return of the legislature to Albany this week from February recess, budget talks are now intensifying ahead of the April 1 deadline to approve a new budget. The Joint Revenue Forecasting Conference is scheduled to meet Thursday, and a consensus forecast is required by Friday according to state law. If an agreement is not reached by Friday, state law hands the responsibility to State Comptroller Thomas DiNapoli. On March 13, the Assembly and Senate will pass their own, non-binding budget resolutions. The state's revenue shortfall has reached $5.9 billion, up from $4.6 billion previously.
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Governor Cuomo (left) & Tom DiNapoli (right)
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The Legislature and Governor Cuomo need to decide how much money is available for the upcoming year, as New York faces an unexpected revenue shortfall. Many new Democratic Senators campaigned promising to increase state spending. "I think the governor needs to think through how he works with a coordinated, two-house Legislature. I don't think he's had to deal with that ever," said State Senate Finance Chair Senator Liz Krueger (D-Manhattan), who has to create a state revenue estimate by March 5. He recently described the revenue picture as "increasingly challenged," reflecting concerns he previously raised in a joint appearance with the Governor when revenue projections for the state were revealed as being worse than expected. If the duty is handed of to Comptroller DiNapoli, it should be noted he recently state: "We should take an extremely cautious approach when negotiating next year's budget." Observers warn that negotiations could become "intense and volatile."
State Legislative Activity: Legislature Back
In Session
With the State Legislature back in Albany this week, the State Senate Banks Committee met Tuesday. The committee's agenda included a number of bills discussed at the most recent IBANYS Government Relations Committee, and two in particular were reported out of the committee.
- The Committee reported S. 727, Montgomery, which would permit state and federal credit unions to participate in the State Business Development District Program. This legislation passed the Assembly in previous years, but never the Senate. Democrats now hold a significant majority in the Senate and a seven-to-four majority on the Senate Banks Committee, and the legislative agenda is different and level of support for credit unions' involvement in municipal deposits business and related areas appears to be higher. While there is no companion bill yet in the Assembly, this action does reflect potential movement on this issue. IBANYS will again submit our Memo in Opposition to S.727, based on the fact that credit unions pay no income taxes to NYS and should not receive the benefits funded by taxpayer dollars.
- The committee also reported S. 2106,Sanders would require banks to disclose negative consequences of establishing alternative payment schedule on a loan (e.g., due to renegotiation, default). For example, providing a disclosure that the transaction could have a negative consequence on their credit score. There is no companion bill in the Assembly. IBANYS will work with the legislature to seek modifications to the bill, such as restricting the application to consumer mortgages and consumer loans, not commercial loans, and perhaps inserting the disclosure as an add-on.
- Another introduction, S.133 (Carlucci)/A.5635 (DenDekker), was proposed at the request of State Attorney General James. It would expand current data breach notification areas to include biometric data, credit and debit cards, and emails with passwords/security questions. It includes a limited exemption for banks who notify of breaches (under the federal Gramm-Leach-Bliley Act) to avoid duplicate obligations.
Attorney General James Announces Affordable Housing Funding
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Letitia James
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State Attorney General Letitia James announced $8 million in new funding that is now available to create and expand below-market housing for first-time buyers in eight New York counties, including Nassau and Suffolk.
The "Community Land Trusts Capacity Building Initiative" will allow municipalities and counties, through nonprofit Community Land Trusts, or CLTs, to make affordable housing available to buyers who make less than 80 percent of the area median income. James noted: "While the financial crisis may be behind us, we continue to feel and see the effects of the housing crash each and every day. . .New Yorkers need real, permanent solutions that allow them to have the stable, economical housing they deserve."
Governor Cuomo Leads Multi-State Effort To Repeal "SALT" Cap
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Governor Cuomo |
Governor Cuomo is leading a multi-state effort to overturn the Trump administration's tax cap they say unfairly targets Democratic states. Cuomo
joined with New Jersey Governor Murphy, Connecticut Governor Lamont, among others in Washington in an effort to convince Congress to make changes to the State and Local taxes ("SALT") cap on federal deductions for state and local taxes. Cuomo blames it for a $2.3 billion shortfall in the state's estimates for personal income tax revenue. State Budget Director Robert Mujica estimates the cap directly impacts some 1.7 million tax filers in New York and notes if they choose to move elsewhere the repercussions would be felt by everyone in the state.
New York and three other high tax states sued the Treasury Department, Internal Revenue Service and Trump administration last year, claiming the deduction cap infringes upon states' rights. In a meeting with Cuomo on taxes earlier this month, the President
said he's open to possibly amending the GOP tax law, but also blamed New York's tax environment, saying of upstaters: "If New York isn't gonna treat them better, I would recommend they go to another state where they can get a great job."
IBANYS Members: Have You Reached Out To Your New State Legislators
&
Members Of Congress?
There are 39 new members of the State Legislature and 5 new members of the new York Congressional Delegation. IBANYS has provided lists of all the new State Senators, Assembly Members and Congressional Representatives, as well as talking points to help them understand and appreciate the importance of community banks to New York's state and local economies and communities (see below) as part of our
outreach program to all member banks and encouraged you to meet with your new members of the State Senate, State Assembly and New York Congressional Delegation. The program materials include:
- Talking points for your use in your meetings, emails and phone calls to introduce yourselves and to help inform them about New York's community banks.
Please contact your new state and federal lawmakers, then let us know the results by emailing John Witkowski and Steve Rice.
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Washington, D.C.
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The House and Senate are back in session this week.
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Fed Chairman Powell Reports To Congress On Monetary Policy
& State Of Economy
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Jerome Powell
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Federal Reserve Chairman Jerome Powell delivered
"The Semiannual Report to Congress on
"Monetary Policy and the State of the Economy" this week to the Senate Banking Committee (Tuesday) and
the House Financial Services Committee (Wednesday). A prepared report of his remarks reinforces the Fed decision last month to halt interest rate hikes in light of slower consumer spending and business investment, a weakened housing market, and increased concerns about the global outlook. The report and testimony noted:
- The Fed is "in no rush to make a judgment" about how to change interest-rates.
- The U.S. economy maintained "solid" growth through the second half of 2018, likely expanding "just under" 3 percent for the year, though consumer and business spending had begun to weaken.
- "Consumer spending expanded at a strong rate for most of the second half ... though spending appears to have weakened toward year-end."
- Business investment grew as well, though growth seems to have slowed somewhat."
- The recent 35-day partial shutdown of the U.S. government "likely held down GDP growth in the first quarter of this year."
- Consumer and business confidence remains "favorable," but "some measures have softened since the fall."
- "Domestic financial conditions for businesses and households have become less supportive of economic growth."
- The Fed will continue to reduce the size of its balance sheet, which had declined by about $260 billion since its last report to lawmakers and ended the year at close to $4 trillion.
- The Fed remains open to adjusting "any of the details" of its balance sheet plan if economic and financial conditions warrant.
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There is some underlying economic strength, with "ongoing improvements in the labor market," and solid growth in disposable income fueled by the administration's tax cuts, boosting household consumption.
- "It would be great to have clarity" from Congress on how banks and insurers can serve cannabis-related businesses amid conflicting state and federal laws.
- Criticized the modern monetary theory (MMT) - which argues since America borrows in its own currency, it can always print more dollars to cover obligations, run sustained budget deficits and rack up an ever-increasing debt burden. Powell and refuted the suggestion the Fed would ever help combat spiraling deficits by keeping interest rates low.
Late last month, the Fed stated the U.S. financial system is "substantially more resilient' than it was before the 2008 financial crisis, although business debt has expanded and weaker lending standards remain.
Fed Vice Chair Randal Quarles said last week the Fed remains committed to its dual mandate of full employment and keeping inflation at a healthy level. "The normalization of the balance sheet is not a competing goal. If ever it appears that our plans for the balance sheet are running counter to the achievement of our dual-mandate objectives, we would quickly reassess our approach to the balance sheet."
FDIC Chair McWilliams Sounds Cautionary Note
Amid Positive Industry News
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Jelena McWilliams
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The FDIC reported the number of institutions on its "problem bank list" fell to 60 in 2018 from 71, the lowest level since 2007. 2018 was also the U.S. banking sector's first casualty-free year since 2006. Nevertheless, FDIC Chair Jelena McWilliams said the current lack of bank failures is "not the new normal," and further noted: "When you go from a relatively long period with no bank failures, things can only go worse from here."
In the current report, community banks reported another positive quarter, with net income of $6.8 billion, as well as a 29.4 percent increase in net income to $26.1 billion in 2018.
U.S. bank profits more than doubled in the fourth quarter of 2018 to $59.1 billion, largely due to one-time charges from the 2017 tax law. For the entirety of 2018, banks reported a 44 percent jump in net income to $236.7 billion, which included the benefits of a lower tax rate. McWilliams noted:
"While results this quarter were positive, the extended period of low interest rates and an increasingly competitive lending environment continue to lead some institutions to 'reach for yield'. With the recent flattening of the yield curve, new challenges for institutions in lending and funding may emerge."
Proposed FDIC Assessment Changes
 The
FDIC has proposed changes to its deposit insurance regulation
to apply the community bank leverage ratio framework to the deposit insurance assessment system. Under the proposal, the
FDIC would assess all banks that elect to use the CBLR framework as small banks. Each bank would have the option to use either CBLR tangible equity or tier 1 capital for its assessment base calculation. Banks would also be given the option of using either the CBLR or the tier 1 leverage ratio for the leverage ratio that the FDIC uses to calculate an established small bank's assessment rate.
The FDIC website would provide an assessment estimation tool that estimates deposit insurance assessment amounts under the proposal. Comments are due by April 22, 2019.
Calabria Nomination To Head FHFA Moves Forward
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Mark Calabria
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By a 13-12 party-line vote, the Senate Banking Committee yesterday approved the nomination of Mark Calabria for Director of the Federal Housing Finance Agency. The nomination now goes to the full Senate, where it is expected to be approved.
Calabria, who would take over for Acting Director (and Comptroller of the Currency) Joseph Otting, would play a key role in the debate over reforming Fannie Mae and Freddie Mac. He has said he would follow the lead of Congress in housing-finance reform.
The committee also approved Bimal Patel to serve as the assistant Treasury secretary of financial institutions, as well as Rodney Hood and Todd Harper to serve on the National Credit Union Administration board.
House Financial Services Committee's Sets
Upcoming Hearing Calendar
In its newly released hearings calendar, the U.S. House Financial Services Committee announced it plans to hold hearings next month on Consumer Financial Protection Bureau (CFPB) oversight, ""Holding Megabanks Accountable: An Examination of Wells Fargo's Pattern of Consumer Abuses," and National Flood Insurance Program reauthorization. The hearings calendar also includes hearings on deterring financial crime, disaster recovery, and Securities and Exchange Commission rules.
Meet With the New York Congressional Delegation at the
ICBA Capital Summit
The 2019 ICBA Capital Summit will be held April 28 - May 1 in Washington. Community bankers from around the nation will travel to Washington to meet with their Members of Congress in their offices "on the hill" and hear federal financial regulators to discuss key issues. We'll hear firsthand from financial and policy leaders, and work to influence the policy-making process. New York community bankers: Mark your calendars and save the dates. U.S. Senate Banking Committee Chairman Mike Crapo, a champion of the S.2155 regulatory relief bill that provided the most comprehensive relief for community banks since Dodd-Frank's enactment in 2010, will be a featured speaker at the Capital Summit.
IBANYS will be scheduling meetings with members of the New York congressional delegation. With a Democratic House of Representatives, a new agenda in the House Financial Services Committee,
five new Representatives from New York and
six New Yorkers on the House Financial Services Committee, it is more important than ever to
bring our New York community bankers' voices, priorities and stories to the forefront. Email
John Witkowski or
Steve Rice
to confirm your participation and indicate which Representatives with whom you would like us to arrange meetings with.
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Industry Trends & Updates
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Mortgage Rates Continue Decline
 According to the latest data released last week by Freddie Mac, the 30-year fixed-rate average declined to 4.35 percent, with an average 0.5 point, as their steady decline is making purchasing a home more affordable just ahead of the spring buying season.
The 30-year fixed-rate average fell to 4.35 percent, with an average 0.5 point. (It was 4.37 percent a week ago and 4.40 percent a year ago.) The 30-year fixed rate has fallen 16 basis points since January 1. The 15-year fixed-rate average slipped to 3.78 percent with an average 0.4 point. (It was 3.81 percent a week ago, and 3.85 percent a year ago.) The five-year adjustable rate average dropped to 3.84 percent with an average 0.3 point. (It was 3.88 percent a week ago and 3.65 percent a year ago.) Mortgage applications to purchase a home rose 6 percent for the week and were 3 percent higher annually. Applications to refinance a home loan increased 5 percent from the previous week and were 3 percent lower annually.
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Existing Home Sales Also Down, But Economic Expectations Up
Meanwhile, economic expectations have jumped the most in a decade, erasing much of the drop during the recent government shutdown and stock-market plunge, according to the Bloomberg Consumer Comfort Index. According to the Case-Shiller indexes,
home-price growth continued to slow at the end of 2018 and reached a four-year low.
The national index grew by 4.7 percent in December, down from 5.1 percent the previous month. The Census Bureau said h
ousing starts plummeted 11.2 percent in December and were down 10.9 percent from a year ago,
However, more recent data indicates a rebound from the end of 2018, with the
Conference Board's
Consumer Confidence Index jumping to 131.4 in February from 121.7 in January.
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Mortgage Applications Are On The Rise
 According to the latest data from the Mortgage Bankers Association, mortgage applications have started to pick up. The market composite index (a measure of total loan application volume) increased 3.6 percent from the previous week.
The refinance index rose 6 percent from the previous week, while the purchase index grew 2 percent.
The refinance share of mortgage activity accounted for 41.7 percent of all applications. Purchase mortgage applications reversed course, rising nearly 2 percent over the past week and 2.5 percent from a year ago.
In other mortgage news, application volume increased 5.3 percent from the previous week and was 0.4 higher than a year ago according to the Mortgage Bankers Association of America
.
Low rates appear to be the driver of both refinance and purchase volume. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.65 percent from 4.66 percent, with points remaining unchanged at 0.42 (including the origination fee) for loans with a 20 percent down payment.
Mortgage applications to purchase a home rose 6 percent for the week and were 3 percent higher annually.
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Fintechs Help Boost US Personal Loan Surge To Record $138 Billion
 A
ccording to new data from TransUnion, a growing number of Americans are turning to fintech firms instead of traditional banking options as they increase their personal debt.
The unsecured personal loan market hit an all-time high in 2018, up 17 percent year-over-year to $138 billion. The report noted d
igital-first financial technology companies were largely responsible for that momentum. TransUnion spokesman Jason Laky noted: "The rapid growth in consumer loans sits squarely on the shoulders of fintechs. They continue to be the main driver." Last year, fintech companies issued 38 percent of all U.S. personal loans, according to TransUnion. That's up from 35 percent a year earlier and just 5 percent as recently as 2013. Banks' market share however, is heading in the other direction.
Traditional banks' share of those loans is down to 28 percent from 40 percent five years ago. Credit unions are down to 21 percent from 31 percent in the time period. While their market share shrank, they still saw overall growth in total loan balances.
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FDIC, ICBA Remind Banks Of "America Saves Week"
 The FDIC is reminding consumers and its member banks about available resources that can help evaluate short and long-term financial goals during "America Saves Week" February 25 - March 2.
New York community banks interested in being involved in the effort can contact ICBA for a customizable press release as part of its "Tell Your Story" toolkit to help promote community bankers as a resource to help their customers achieve their financial goals.
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CFPB Launches Savings Initiative
 The Consumer Financial Protection Bureau (CFPB) has launched its "Start Small, Save Up" program - a new initiative to promote the importance of savings.
The program provides tips, tools and inform-ation that can help consumers develop a saving habit as a secure financial foundation.
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Recession By End Of 2021?
According to the National Association for Business Economics (NABE), approximately three of four business economists surveyed expect an economic recession by the end of 2021. The NABE's latest semiannual survey found that 42 percent of respondents expect a recession by next year, and nearly three-quarters believe that the Federal Reserve's current monetary policy is "about right
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Vining Sparks & ICBA Securities Balance Sheet Academy
Registration is now open for Vining Sparks and ICBA Securities' Balance Sheet Academy seminar in Memphis, Tennessee from Monday, April 29 to Tuesday, April 30 2019. This
advanced seminar is designed to expose seasoned community bank portfolio and balance sheet managers to advanced products and concepts. The objective is to enable the attendees to consistently outperform their peers. The dynamics of a community bank balance sheet require an investment professional to be versed in a wide range of topics.
Balance Sheet Academy
provides discussion and practical classroom exercises to equip the attendees for these demands. Examples of these topics include:
- Advanced interest rate risk management strategies;
- Low cost funding strategies; and
- Strategies for serving bank customers while managing interest rate risk.
Attendees will learn how the changing economic data impacts market interest rates from Vining Sparks' Chief Economist. The Balance Sheet Academy is structured for more experienced investment managers, particularly those who have attended Bond Academy.
It incorporates balance sheet strategies into the day-to-day management of an institution's investment portfolio, wholesale funding and interest rate risk management. Bank personnel with an intermediate level of understanding of investments who are integral to the investment and balance sheet management process will benefit the most from this advanced course. New directors serving on the investment or asset-liability committee will also find this course beneficial.
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CEIS Quarterly Newsletter - Q1
New
York,
February 15, 2019
- CEIS Review Inc. is a Commercial Loan Portfolio Consulting firm serving the needs of Commercial Lending Institutions. In this issue of our newsletter, we discuss
potential areas of concerns as observed throughout our Loan Review findings 2019 and how hybrid
asset-based
loans involve a unique credit structure designed to solve certain credit needs of customers by combining cash flow and
asset-based
lending in one credit facility.
ON MY MIND ...
Indicators available to CEIS show that credit quality is generally sound, in planning for 2019 we see issues from our perspective that are potential concerns. Specific areas of concern based on our reviews are - a modest but gradual rise in criticized and classified assets, general loosening in underwriting standards for many loan types as evidenced in the increased level of policy waivers, the level of interest only transactions on stabilized properties, increased covenant compliance violation rates, and an observed complacency in managing portfolio risk and its potential direction. These observations and others may show an accumulated risk in portfolios that contain a notable level of borrowers that are not yet tested in adverse scenarios beyond the statistical models.
Read the full newsletter.
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Hybrid Asset Based Lending: Controls Are Necessary
Senior Consultant With CEIS Review, Inc.
John has over 35 years' experience in the commercial banking industry and is an experienced manager and senior credit officer.
As an independent loan review provider to approximately 150 foreign and domestic lending institutions, CEIS Review has the benefit of being able to gain insights towards the emerging and prevalent developments within the banking arena regarding commercial lending activities. One such is the entrance or expanded interest of some banks to engage in hybrid asset-based lending operations with varying levels of success and effectiveness. While portfolio and income fee diversification is important, the increased activity should be fully vetted before the additional risk is added to the portfolio.
Hybrid asset-based loans involve a unique credit structure designed to solve certain specific credit needs of customers by combining cash flow and asset-based lending in one credit facility. While the portion of the loan approved on a cash flow coverage basis is often managed with financial covenants, the asset-based loan portion is supported by collateral coverage that is monitored with a monthly borrowing base. Read the full article.
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Further Your Education at Barret Graduate School of Banking
Barret and IBANYS are aligned with a common interest: to represent the interests of the industry through effective advocacy and high quality educational offerings.
Located in Memphis, TN, Barret Graduate School of Banking offers a comprehensive graduate learning program for professionals in the financial services field. IBANYS has established partnerships with key industry educators including the Barret Graduate School of Banking. The school provides community bankers with an opportunity for a graduate degree in banking.
We are currently endorsed by ICBA, ICBA Securities, Arkansas Community Bankers, CBAofGA, Indiana Bankers Association, CBAofKS, MIBA, CBAofOH, CBAofWV - with a couple more on the way.
To learn more about Barret Graduate School of Banking, please visit
www.barret.ws.
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Keep The Door Open For Your Small Business Customers
Excelsior Growth Fund (EGF) is NYBDC's nonprofit Community Development Financial Institution and IBANYS' exclusive online lending partner. Join the growing number of banks that work with EGF to offer their customers an affordable and responsible option when they do not qualify for traditional financing. EGF offers loans up to $500,000 with a convenient, digital process. Loans under $100,000 are disbursed within 5 business days.
EGF's experienced team can work hand-in-hand with yours to develop a customized process to make referring seamless. To learn more about offering your customers a second look through EGF contact Bryan Doxford, SVP, at [email protected] at at (212) 430-4512.
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Spotlight Bank of the Week
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Fairport Savings Bank - 1962
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The year 1888 was historic both in America and in Rochester.
It had been only 23 years since the end of the Civil War. Thomas Edison filed a patent for the Optical Phonograph- the first movie. George Eastman patented the first roll-film camera and registered the "Kodak" name. And in May, Fairport Savings Bank was born.
In its 130 years, Fairport Savings Bank (FSB) has seen marked growth in its products, services, and locations, but remains, at its core, an effective and strategic community bank. "As we continue to grow, our purpose, philosophy, and commitment to meeting our customers' needs has remained," says Kevin Maroney, President and CEO as of January 1. "And we're proud that our size and flexibility truly allows us to be a 21st-century 'we say yes' bank."
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Fairport Savings Bank - 2017
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Last May, all FSB branches celebrated with family events, anniversary cakes and special giveaway items throughout the month.
Customer Julie Scott Stryker is representative of a multi-generational family with an FSB relationship beginning with her great-grandparents, through our great-aunt, her parents, her and her husband, and now their 10-month old son. "I use the online banking service daily," she said. "It's relevant and completely up-to-date."
Julie has chosen to continue with FSB and is a big fan. "We know we can completely trust our banking relationship with Fairport Savings Bank," she added. "If ever there was an issue, we could call and speak directly with someone who would be there to help." Julie's confidence also stems from knowing FSB from the inside. For several years she worked at the bank in various departments, noting "it was a wonderful place to work."
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Interior - Fairport Savings Bank
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With assets of more than $300 million, FSB now has five full-service branch locations, five dedicated mortgage offices, an expansive ATM network, broad offerings of online and mobile banking e-services, and two subsidiaries- Fairport Wealth Management and FSB Insurance Agency for investments and insurance. Maroney notes that FSB is still about "cultivating extraordinary relationships" with its new and longtime customers and its nearly 100 employees, and providing its personal Fairport Savings Bank experience.
Maroney began with FSB in 2004 as executive vice president and chief financial officer during the company's strategic growth period. Upon the retirement in December 2017 of longtime President and CEO Dana C. Gavenda- now the current chair of the board of directors- it seemed fitting that Maroney be appointed to that position.
We have a long and proud history and legacy, and Kevin Maroney is perfectly positioned to carry that legacy forward," said Gavenda. "He knows to look at today's world from both a personal and business perspective not only to stay relevant, but to expand and extend our reach. He knows that we succeed if our people succeed."
Another important addition to the FSB "family" is Michael Giancursio, named in October as executive vice president and chief lending officer. This Fairport native has more than 20 years experience in commercial credit, lending, and deposits. Thanks to FSB's many products, Giancursio looks forward to growing both commercial and residential lending. He also has a unique perspective on commercial banking, having been a bank examiner for the Office of the Comptroller of the Currency in Syracuse.
FSB prides itself on core values which include, among other points, community involvement and support. Its culture encourages volunteerism and community event sponsorship; Maroney himself has been the treasurer of the Boys and Girls Clubs of Rochester for five years.
"Fairport Savings Bank may have a long history," notes Maroney, "but we are not your typical, purely transactional bank. As a community bank, we all roll up our sleeves and do what needs to be done. We really do want to earn our tagline, 'love your bank.'"
To learn more, please visit www.fairportsavingsbank.com.
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About Spotlight Bank of the Week
 Spotlight Bank of the Week is a new feature that we have added to our website and e-newsletter. It is an opportunity to promote anything about your organization, such as fun facts, organization news, special events, etc. The Spotlight Bank of the Week will be featured on our homepage slider, e-newsletter, and our social media platforms for one week. So don't miss out on this exceptional opportunity to showcase your bank to thousands of people!
View banks that have been featured as our Spotlight in the past!
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IBANYS Spotlight Is On...
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Freed Maxick CPAs, P.C. is one of the largest accounting and consulting firms in Western New York and a Top 100 largest CPA firm in the United States. Serving closely held businesses, SEC companies, governmental and not-for-profit clients across New York as well as nationally and internationally.
Freed Maxick mobilizes high-performance professionals to guide client growth, compliance, security and innovation. From accounting and tax to specialized risk management and consulting services, their industry specialists serve banks and savings institutions, trust organizations, credit unions, mortgage companies, and finance and leasing companies nationwide. Clients range from newly chartered institutions to established institutions managing billions of dollars in assets. They help these organizations manage an array of business challenges, including ensuring regulatory compliance, identifying and mitigating risk, monitoring asset quality and strategic planning for the future.
For details, contact: Mark Stebbins, Director
Email: [email protected]
Phone: (716) 847-2651
Website: www.freedmaxick.com
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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
My Wellness Resource & TELADOC 
The health and wellness landscape continues to evolve. "My Wellness Resource" can be a nice addition to your existing benefit package.
Teladoc can save your banks time and money, and provide real value to your employees as this testimonial from a New York community bank CEO proves:
HERE'S WHAT YOUR FELLOW NEW YORK
COMMUNITY BANKER SAYS. . .
"I wanted to let you know that some of our employees and I have been using "Teladoc" and it is one of the best things we have done for the bank. We all love it: We are saving time, avoiding waiting in an urgent care center or a doctor's waiting room for non-emergency related illnesses
. . .and it is easy to use and convenient. Once you use it, you are hooked! This was a great find! Would recommend it to all banks."
Mario Martinez
Chairman & CEO
Catskill Hudson Bank
Contact Alan Justin: (716) 907-5500.
"Cure the Blue" Helps Banking Industry Battle Prostate Cancer!
The "Cure the Blue" program sponsored by the Buffalo Bills Alumni Foundation allows New Yorkers to participate in one of the most comprehensive efforts to help promote prostate cancer awareness and research in the United States.
Lake Shore Savings Bank has provided prostate cancer literature and Cure the Blue information at all eleven of its  branches and their headquarters in Dunkirk. The bank also offered Cure the Blue ceramic lapel ribbon pins for a $5.00 donations to Cure the Blue to all their customers. "We fully understand the severity of this disease and the devastating effect it can have on families" said Lake Shore Savings Bank President and CEO Dan Reininga. "Our support of the Buffalo Bills Alumni Foundation's "Cure the Blue" initiative is something that we are taking very seriously and are proud to support." Buffalo Bills Wall of Famer and Alumni Foundation President Booker Edgerson, a two time prostate cancer survivor, said the bank has been a tremendous longtime supporter, noting: "They have really stepped up to the plate with their unwavering support of our Cure the Blue initiative."
IBANYS urges all of our member banks, associate members and allies to join the effort. Cure the Blue" raises funds and awareness regarding prostate cancer in New York State. Visit
curetheblue.com
to get involved! Of all new cancer cases in the nation, prostate cancer represents 9.6%. In 2017, there were an estimated 161,000 new cases, and more than 26,000 fatalities due to the disease. Support IBANYS' "Cure the Blue" campaign to help New Yorkers participate to promote prostate cancer awareness and research.
Secure, Enhanced Internet Presence
The .bank program by fTLD operates trusted, verified, more secure, easily-identifiable internet locations for financial companies and
customers. www.icba.org
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. . .That in 1974, the year IBANYS was formed:
- The Speaker of the U.S. House was Carl Albert (D-Oklahome);
- The Senate Majority Leader was Mike Mansfield (D-Montana);
- The Chief Justice of the U.S. Supreme Court was Warren Burger;
- The U.S. Senate had 57 Democrats, 40 Republicans, 1 Conservative (James Buckley of New York), 1 Independent and 1 vacancy;
- The U.S. House had 235 Democrats, 182 Republicans and 18 vacancies?
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New York community banks play a key role in our state and local economies. Help spread the good news among our customers, business, elected leaders and the media!
John J. Witkowski
President & Chief Executive Officer
Stephen W. Rice
Director of Government Relations & Communications
Linda Gregware
Director of Administration & Membership Services
William Y. Crowell III
Legislative Counsel
Natalie Rowan
Marketing & Social Media Assistant
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