February 28, 2018

In This Issue: 
  • Latest Updates From Albany & Washington, D.C.
  • 2018 Meeting News
  • New Feature: Spotlight Member Bank
  • Follow IBANYS On Facebook, Twitter, LinkedIn and Instagram!

Message From the President
John Witkowski, President & CEO
The New York State Legislature is back in session this week after the presidents week recess, and Congress has also returned to Washington. There are  just 32 days until the April 1 deadline for the Legislature and Governor to pass a 2018-19 state budget.  Taxes -- specifically, how to position the state to counter the changes in federal tax law which the Governor believes will have a negative economic impact on New York -- are a key component in the state budget talks.  Meanwhile, there is growing momentum in the U.S. Senate for S.2155, the most meaningful regulatory relief for community banks since Dodd Frank was enacted in 2010.  Senator Schumer will play a key role in determining the fate of this bipartisan legislation. Community baks are reaching out to him to reiterate how important S.2155 is us -- and, why we are counting on him. Click here   to read the letter IBANYS' Board of Directors sent to him.


March begins tomorrow, and it launches a very bust spring season of meetings and conferences for New York community bankers. IBANYS will host a number of programs for community bank compliance officers, human resources officers, directors, and senior management teams. We're also preparing for our annual visit to Washington, D.C. to meet with our New York Congressional Delegation. 


Today's newsletter has more information on all the latest developments from our state's and nation's capitals, our upcoming meetings and trends and developments within our industry. 


IBANYS is YOUR association. Make it work for you!

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2018 Meetings
Regional Compliance Conferences

March 20 - Rochester/Pittsford, NY at the Hilton Garden Inn Rochester/Pittsford
March 21 - Troy, NY at the Hilton Garden Inn Troy

Presentations by OCC, NYS, DFS, industry experts and a peer bankers panel discussion.
Click here for program details and click here to register.  

CEO Forums

March 26
- Albany, NY at Pioneer Bank
March 27 - Syracuse, NY at DoubleTree by Hilton Hotel Syracuse
March 28 - Rochester/Buffalo, NY at Tompkins Bank of Castile

Click here for program details and    click here  to register. 

The 2018 ICBA Capital Summit

April 8- April 11- Washington, D.C.

ICBA and fellow community bankers gather to advocate for change in various areas such as access to capital, regulatory and tax relief, mortgage reform and agricultural lending through their Plan for Prosperity. 

"Hill visits" with the New York congressional delegation will take place on Tuesday, April 10 and Wednesday, April 11. 

Click here to learn more. 

Regional Directors Conference

April 10- Rochester/Pittsford, NY at the Hilton Garden Inn Rochester/Pittsford
April 11- Troy, NY at the Hilton Garden Inn Troy

Regional Human Resources Conferences

April 24- Rochester/Pittsford, NY at the Hilton Garden Inn Rochester/Pittsford
April 25- Troy, NY at the Hilton Garden Inn Troy

Bank Executive Symposium

May 7-9- Watkins Glen, NY at the Watkins Glen Harbor Hotel

Lending Conference

June 5-6- Fairport, NY at the Woodcliff Hotel & Spa

Regional Security Conferences

June 19 - Rochester/Pittsford, NY at the Hilton Garden Inn Rochester/Pittsford
June 20 - Troy, NY at the Hilton Garden Inn Troy

Annual Convention

September 25-27- Albany, NY at the Hilton Albany

Member banks:  Share this information  with your senior management teams, officers, directors, compliance, security and human resources  officers.  Preferred providers, associate members and business show exhibitors : Now is the time to plan to attend, participate, sponsor/exhibit.  Contact Linda Gregware: Lindag@Ibanys.net 
New Feature!
Spotlight Bank of the Week

Spotlight Bank of the Week is a new feature that we are adding 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!

To apply, just fill out our registration form and email it to Natalie Rowan at natalier@ibanys.net.

IBANYS Education/Webinars
IBANYS Webinars

IBANYS' webinars provide timely, informative sessions on important topics and issues of interest for community bankers. They are valuable not only for their content, but for their convenience. Participants can take part from the comfort and privacy of their offices, without leaving the bank.  Take a look at the various series of webinars we offer by click each of the links below. 

Agencies Webinar on CECL For Community Banks

Yesterday, the FDIC and the Federal Reserve Board, in conjunction with the Financial Accounting Standards Board,  Securities and Exchange Commission, and the Conference of State Bank Supervisors hosted a webinar to discuss how smaller, less complex community institutions can implement CECL. "CECL Webinar for Bankers: Practical 
    Examples of How Smaller, Less Complex Community Banks Can Implement the Current Expected Credit Losses Methodol ogy" addressed loan loss rate methods that such institutions can use to implement CECL, as well as related data considerations and controls. ICBA President and CEO Cam Fine issued the  following statement on the webinar: "ICBA and the nation's  community banks commend the federal banking regulators for conducting today's webinar and confirming that community banks can continue using their understanding of their local markets to comply with the Current Expected Credit Loss standard, which for most community banks will be effective in 2021. Regulators and the Financial Accounting Standards Board are doing their best to address ICBA concerns and ensure that CECL's implementation is scalable and flexible for community banks and the communities they serve. Regulators today reaffirmed that community banks may use spreadsheet calculations, historical losses, qualitative adjustments, and loss-rate methods that are appropriate to their circumstances and risk profile. Rather than requiring local community banks to institute and maintain complex and expensive credit modeling systems, regulators are working to ensure local institutions can continue making localized financial decisions. I CBA will continue working with the banking regulators to ensure loan-loss reserve requirements are implemented by community banks with minimal expense and disruption to their local communities." The webinar will be archived for future viewing. Click here for details. 

Digital Small Business Lending Webinar From Thrive:
"Increasing Efficiency, Profitability & Improving Customer Experiences"
March 7th -- 9:00 AM 
In this webinar you will learn:
  • Why the digital experience is becoming essential for lending 
  • The tangible benefits of a digital first approach to small business lending
  • How the Thrive platform will enrich your small business lending program
Click here link to sign up. Conference details will be provided to registrants. 
Or, e-mail Kumal at Kunal Sehgal: kunal@tothrive.com
Government Relations

2018-19 Budget Update

The  State Legislature  returns this week from its one week recess, with just 32 days remaining until the April 1 deadline for enacting the 2018-19 state budget. The next two weeks will see the critical period of negotiations between the Legislature and Governor.  The Senate and Assembly are expected to release their respective "Economic and Revenue Reports" by today, and a consensus report is anticipated by tomorrow, March 1st. They will be releasing and approving their respective one-house budgets by March 14th, and then the final two weeks of budget talks will commence.

DFS Cybersecurity Regs Mark First Anniversary

Tomorrow, March 1, the NYS Department of Financial Services (DFS) cybersecurity regulations turn one-year old. DFS Superintendent Maria Vullo says her No.1 job is to protect New Yorkers. "They're buying insurance. They're banking. They're engaging in financial transactions. And in each of those activities, they're providing their social security information, banking information, etc. The companies that are obtaining that personal  information from New Yorkers must protect it as much as possible because a breach of that information is of great consequence to the average New Yorker." Several cybersecurity experts commented that New York's regulations could become a model of other industries or even policies at the national level. Last year, at least 42 states introduced more than 240 bills or resolutions related to various cybersecurity issues, according to the National Conference of State Legislatures. Since the DFS rules took effect in New York, financial regulators in Colorado and Vermont have followed New York's lead with cybersecurity regulations of their own. DFS oversees close to 10,000 state-lead chartered banks, credit unions, insurance companies, mortgage loan services, and other financial institutions, in addition to 300,000 insurance licensees. Their combined assets exceed $6 trillion. 

Washington, D.C.

Maloney Bill Would Set New Standards For Data Breaches

Congresswoman Carolyn Maloney (D-Manhattan), a member of the House Financial Services Committee, is lead co-sponsor of a bipartisan data security bill to establish federal data breach notification standards for breaches affecting 5,000 or more consumers. It would also create standards for how businesses protect the personal data they handle. For depository institutions, compliance with the prudential regulators' data standards under the Gramm-Leach-Bliley Act will be deemed the same as compliance with the new law, if enacted. Rep. Maloney, a Ranking Democrat of the Financial Services Subcommittee on Capital Markets, Securities, and Investment, also serves on the Subcommittees on Financial Institutions and Consumer Credit, and Terrorism and Illicit Finance. She is also Ranking House Democrat (and past Chair) of the Joint Economic Committee.

Other News From Washington

  • Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney said the business cost of complying with rules will receive increased attention at CFPB under the current administration. The CFPB has to consider the cost its rules imposed on industry as part of cost-benefit analyses required by Congress.   
  • A new report by the Treasury Department states that the Dodd-Frank Orderly Liquidation Authority mechanism for the resolution of failing banks should be kept, but changed to address  "serious defects."  Treasury officials, who would rather see such banks resolved using bankruptcy code rather than OLA, believe eliminating the liquidation mechanism outright could lead to chaotic conditions if a major global firm should fail.
  • Congresswoman Louise Slaughter (D-Monroe County) has announced she will seek a 17th term this November. New York's longest-serving U.S. Representative, she was first  elected in 1987. If re-elected, she could potentially become the oldest person to ever serve in the House. (She turns 89 a few weeks before the election.) She previously served in the NYS Assembly from 1982 to 1986. 
  • ICBA issued a statement on today's Government Accountability Office report on community bank regulatory burdens. "ICBA and the nation's community banks appreciate the Government Accountability Office's attention to the massive regulatory burdens harming community banks. Today's report supports what community banks have long said: that ever-increasing federal regulations increase compliance costs and reduce credit availability in local communities. Click here to read the full text.
Action Alert

S.2155 Moving Toward Senate Vote: Support IBANYS' Grassroots Outreach to Senator Schumer

The bipartisan Senate regulatory relief bill (S.2155) , crafted   by Senate Banking Chairman Mike Crapo (R-ID) and supported by 12 mostly moderate Senate Democrats and 12 Republicans --  may be brought to the floor of the Senate for a vote by Majority Leader Senator Mitch McConnell (R-KY) as early as next week.  However, the timing may be delayed into March due to other pressing Senate business.  Including Democratic support, the bill reportedly may already have the 60 votes needed to pass the Senate. The challenge before the Senate is to pass the legislation without any changes that could risk the bipartisan support it currently enjoys -- and then, to work to obtain House passage of the bill as is. IBANYS is conducting a grassroots outreach effort with Senator Schumer (D-New York, Senate Democratic Leader) to seek his support and his agreement to allow his Democratic colleagues to vote for the legislation. Senator Gillibrand (New York's junior U.S. Senator) opposes the bill. 

  • Read IBANYS' letter to Senator Schumer: click here
  • Read talking points in support of the bill: click here
  • Contact information for Senator Schumer's district offices: click here
*    *    *    *    *
We need to reach out to Senator Schumer's district offices thrioughout New York State to reiterate how important regulatory relief is to the New York community banking industry. Please help!

Industry Trends & Updates
FDIC Quarterly Banking Profile: Community Banks Outperform Industry

C ommunity banks reported $4.1 billion in net income in the fourth quarter, declining 14.2 percent from last year due to one-time income tax charges from the new tax law. Excluding those charges, net income would have increased by 17 percent from a year ago.  

Community bank net operating revenue increased 7.2 percent, while net interest income rose 9.4 percent, noninterest income decreased 0.6 percent, and loan-loss provisions declined 3.5 percent.  Overall, FDIC-insured institutions reported a 40.9 percent decline in net income from a year ago due to the one-time tax charges. Excluding those charges, net income would have decreased 2.3 percent in the fourth quarter. For the full year, net income dropped 3.5 percent, but would have risen 7.2 percent without the tax charges. Also in the fourth quarter, the FDIC's Problem Bank List declined from 104 to 95, the lowest level since the first quarter of 2008. The Deposit Insurance Fund balance increased $2.2 billion to $92.7 billion, with the DIF reserve ratio rising to 1.30 percent from 1.28 percent at the end of September. Estimated insured deposits rose 0.8 percent.

New Home Sales Down 7.8% in January

Sales of newly built homes are falling, a decline attributed primarily to higher mortgage rates and the loss of homeowner tax breaks in some of the nation's most expensive markets, including New York. Sales fell again in January when mortgage rates moved higher. Sales are now at their lowest level since August of 2017. Higher home prices are also contributing to the decline, as the median price of a newly built home rose to $323,000, a 2.5 percent gain compared with January 2017. 

Mortgage Applications Rise 2.7%

After rising sharply for several weeks, mortgage interest rates briefly steadied last week. The Mortgage Bankers Association seasonally adjusted report showed total mortgage application volume increased 2.7 percent from the previous week. However, volume was still down 2.7 percent from a year ago. Mortgage applications to purchase a home rose 6 percent for the week (but were just 3 percent higher than a year ago). Applications to refinance a home loan fell 1 percent for the week (and were down nearly 10 percent from a year ago).

Possible Future of Fannie, Freddie?

According to a position paper prepared by a group of analysts from some conservative think tanks, President Trump could unwind the federal government's control of Fannie Mae and Freddie Mac as an alternative to bipartisan legislation to overhaul their status. Trump could also name a new director of the Federal Housing Finance Agency who could eliminate the GSEs by gradually lowering loan limits for mortgage securities they package, and by barring them from buying certain types of loans 

Fed Chair Powell Testifies Before Congress

- Fed plans to hike rates three times this year, and perhaps four
- Fed has to be careful as stock market prices continue to rise
- Supports raising SIFI threshold

Federal Reserve Chairman Jerome Powell this week testifies before 
the House Financial Services Committee and Senate Banking Committee for the first time since assuming his position earlier this year. He was in the House yesterday, and will appear be in the Senate  tomorrow. He downplayed concerns over market volatility, said the Fed remains on course for more interest rate hikes and emphasized the job market remains robust, consumer spending solid and wage growth is accelerating.

 "After easing substantially during 2017, financial conditions in the United States have reversed some of that easing." At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong." Powell reiterated that "further gradual increases" in the federal funds rate would likely be warranted, a phrase officials are using to emphasize their growing conviction in that projection without boxing them in to a certain number of hikes. Powell also supported for a provision in a bipartisan Senate bill to raise the threshold at which banks are subject to tighter oversight. It would raise the threshold for designating a bank as a "systemically important financial institution" to $250 billion in assets from the current $50 billion, but give some amount of discretion to the Fed for banks in the $100 billion to $250 billion range.

Fed's Quarles: Inflation Should Not Deter 
Rate Increases

Federal Reserve Governor  Randal Quarles, the newest Fed Governor, commented the fact that inflation is running a little below target should not stand deter rate increases. The Fed is widely expected to raise rates at least three times during 2018. Quarles supports a continual gradual pace of increases. 
"After assessing the recent data, my take is that the current shortfall in inflation from target as most likely due to transitory factors that will fade through 2018, pushing inflation back up to target.  Suffice to say, a deviation from our target of a few tenths of 1 percentage point, especially one I expect to fade, does not cause me great concern."  Quarles is President Trump's first appointment to join the Fed Board of Governors, which still has four vacancies. Economist Marvin Goodfriend has been nominated, but is not yet confirmed.

Credit Union CEO: "Tax Large Credit Unions That Operate Like Banks"

A credit union CEO called for large credit unions that operate like banks to be chartered and taxed like them. In an op-ed, Idaho State University Credit Union President and CEO Rob Taylor wrote that many large credit unions-enabled by the National Credit Union Administration-are expanding to the detriment of smaller institutions that have stayed true to their original fields of membership.  "When does 'large enough to survive' become too large to be considered a tax-exempt credit union, especially when they operate in the same manner as taxable banks? The largest bank headquartered in my home state of Idaho holds $1.3 billion in assets, which is less than half the size of the largest credit union based here."

Banking News
FHLBNY Announces Dividend

The Board of Directors of the Federal Home Loan Bank of New York (FHLBNY) has approved a dividend for the fourth quarter of 2017 of 6.50% (annualized). The dollar amount of the dividend will be approximately $102.5 million, and the cash dividend was distributed February 16. José R. González, President and Chief Executive Officer, noted:  "We achieved very strong performance during 2017 and this is reflected in our quarterly dividend payments. Dividends paid from 2017 income totaled $361.6 million - a full-year dividend rate of 5.76 percent. We believe that providing a consistent and reasonable dividend enhances the value of membership, and we are proud to have provided our members with a strong return on their investment in our cooperative in 2017.

Online Lending

Excelsior Growth Fund (EGF) is NYBDC's nonprofit Community Development Financial Institution and IBANYS' exclusive online lending partner. Their  mission is to help businesses in New York, New Jersey and Pennsylvania grow by providing small business loans and advisory services. As a nonprofit organization and a U.S. Treasury-certified Community Development Financial Institution  (CDFI) , they're a responsible lender you can trust. Their  products are affordable and flexible, and their advisory services can help you reach your business goals. Their signature product, the EGF SmartLoan™, provides up to $100,000 through a streamlined online platform.  Loans are approved in 1-2 days and funded in a week.  For more details, please visit: http://excelsiorgrowthfund.org/egf_smartloan/ 

Spotlight Bank of the Week

Saratoga National Bank and Trust Company, celebrating its 30th anniversary in 2018, is a one-stop shop for all banking needs. This community bank provides a full suite of financial services across the Capital Region - including checking and savings, cash management, commercial insurance, small business loans, group health, retirement plans and more. 
Recognized as one of the strongest financial institutions in the nation, Saratoga National Bank has been designated as a 5-star Superior bank by BauerFinancial, Inc. for 35 consecutive quarters. The Bank was also recently named the "Top Small Community Lender" by the U.S. Small Business Administration for the Capital Region for the fourth consecutive year. 
Saratoga National Bank employees combine the highest level of financial expertise with first-hand knowledge of their own communities to offer personal attention, smart banking options and competitive rates. Local management and decision-making are just some of the key elements that differentiate Saratoga National Bank from other financial institutions.
Saratoga National Bank is continuing to expand in the Capital Region. Most recently, the Bank opened its 10th location at 251 State Street in Schenectady.
Serving the organizations that make the region a great place to live and work has always been an important part of the company culture. The Bank is committed to investing in the community and proudly supports dozens of not-for-profits through sponsorships, volunteerism, donations and education. 
For more information, please visit saratoganational.com.

IBANYS Spotlight Is On...
The Federal Home Loan Bank of New York

FHLBNY is part of a government-sponsored enterprise, owned by its stockholders, that provides wholesale liquidity to member community lenders in New York, New Jersey, Puerto Rico and the U.S. Virgin Islands to help them more effectively meet the needs of their customers and CRA responsibilities. The FHLBNY is committed to operating a financially safe and sound organization and fostering diversity at all levels by ensuring the inclusion of minorities, women, and individuals with disabilities in employment, in its business activities, and in service contracts. The mission of the Federal Home Loan Bank of New York is to advance housing opportunity and local community development by supporting members in serving their markets. The FHLBNY meets our mission by providing our members with access to economical wholesale credit and assistance through our credit products, mortgage finance program, housing and community lending programs, and correspondent services to increase the availability of home finance to families of all incomes.
For further information, contact 
Adam Goldstein, SVP and Head of Sales & Business: adam.goldstein@fhlbny.com or visit www.fhlbny.com.

IBANYS Endorsed Services

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:
"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 

Did You Know?

. . .That the Federal Home Loan Bank of New York was established as part of the  The FHLBank System, chartered by Congress in 1932? FHLBanks were established by the Federal Home Loan Bank Board pursuant to the Federal Home Loan Bank Act of 1932.
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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