June 9, 2021
IBANYS Weekly E-Newsletter
  • Visit our website at www.ibanys.net to review our daily updates on COVID-19.
The President's Message
By John Witkowski, President & CEO
Today and tomorrow are the final two scheduled session days of the 2021 session of the New York State Legislature, scheduled to adjourn Thursday, June 10. Legislation to allow credit unions access to municipal deposits is still pending. IBANYS has been working extremely hard to oppose the legislation in conversations and memos to key legislators and staff, including the chairs of the two legislative Banks Committees. Here is the actual text of the legislation and IBANYS' Memo in Opposition. The latest details are in today's newsletter in the Albany section. We are closely monitoring developments and will keep you fully informed as this process unfolds. Stay tuned.

  • Once the legislative session ends, IBANYS will carefully review the actions impacting New York community banks, and will provide a detailed look at the scope of the Legislature's actions next week.
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The FDIC has issued the lists of institutions scheduled for Community Reinvestment Act exams during the third quarter and fourth quarter 2021. The schedules are based on the best available information and are subject to change.

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The FDIC and OCC this month are hosting a virtual event on operating mutual depository institutions in the current environment. Scheduled for Tuesday, June 29, the 2021 Joint Mutual Forum will feature senior officers from mutual organizations and the agencies.

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Companies can require vaccines for employees returning to the office and incentives to encourage inoculation, according to recent guidance from the Equal Employment Opportunity Commission. Companies issuing a mandate must give the same legally required considerations as other companywide vaccine requirements and make accommodations for employees who cannot receive the vaccine, the agency said. Read the agency Q&A.

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As always, thank you for all you do every day for your local customers, communities, small businesses and our industry. . . and, of course, for IBANYS!
DFS Climate Control Survey

On October 29, 2020, the New York State Department of Financial Services (DFS) issued an Industry Letter relating to the financial risks from climate change. The Industry Letter outlined expectations for New York regulated financial institutions to start integrating the financial risks from climate change into their governance frameworks, risk management processes and business strategies, and to start developing their approach to climate-related financial risk disclosure. Developing supervisory practices, as well as guidance and best practices, require continued engagement with your institutions.

As a step towards this goal, DFS is requesting your institutions to complete a voluntary and anonymous (with the option to share your institution’s name) survey by July 16, 2021 to allow DFS better understand the current state of the industry regarding financial risks from climate change.

The survey covers four areas: (A) institutional profile, (B) the impact of climate change on your institution’s business, (C) your institution’s current initiatives and expected progress on managing the financial risks from climate change, and (D) how DFS can support you. The questions are intended to assist DFS in understanding your current thinking and processes relating to the financial risks from climate change.

Please direct any questions or comments on the survey or any supplemental materials you would like to share related to the survey to Dr. Yue (Nina) Chen, Director of Sustainability and Climate Initiatives, at climate@dfs.ny.gov.

Thank you very much for your cooperation!

SHAZAM's Christensen to serve second term as board member on US Faster Payments Council

DES MOINES, Iowa (June 2, 2021) — SHAZAM, Inc., a nationwide provider of financial services to community banks and credit unions, is proud to announce that Kevin Christensen, senior vice president of market intelligence and data analytics, was elected a second time to serve a three-year term as a member of the 2021 U.S. Faster Payments Council (FPC) board of directors.

Appointed in 2015, Christensen was the organization’s first executive director and chairman, and he currently serves on the executive committee and finance committee. Over the years, as a member of the Faster Payments Task Force, he led the interoperability work group and was a member of the editorial board. Following the work of the task force, Christensen was elected to the Governance Framework Formation Team. The work group was responsible for developing the operating vision for the U.S. Faster Payments Council, of which SHAZAM is a founding sponsor.

“Working with the FPC still energizes me,” said Christensen. “I’m proud to have helped lead this organization since its early formation and applaud our accomplishments that have positively impacted the industry over the last six years.”

“SHAZAM’s goal remains to ensure that any U.S. payment system that evolves — card, ACH, wire, faster payments or future systems — has a methodology in which all financial institutions and their accountholders can be assured to having open, nondiscriminatory access. My involvement in the FPC helps exemplify SHAZAM’s commitment to being an industry advocate for community financial institutions.”

“Kevin’s highly accomplished in the payments industry and his commitment to working with the U.S. Faster Payments Council is unmatched,” said SHAZAM chief financial officer Scott Dobesh. “His leadership positions allow him to utilize his knowledge to contribute to and shape our industry, which benefits the future progress of the community banks and credit unions SHAZAM serves.”

SHAZAM pioneered the PIN-debit point-of-sale transaction, still used worldwide today. We’re the only nationwide independent, member-owned debit network, processor and core provider supporting community banks and credit unions. Since we don’t answer to shareholders, we can reinvest profits in technologies our clients need as they serve the next generation of consumers. SHAZAM ensures our clients have the products and services they demand and expect in a cost-effective way. Founded in 1976 and headquartered in Iowa, we’re a leader in payments and financial technology, with a simple mission: Strengthening community financial institutions. Visit us today at shazam.net.
COCC is an award-winning client-owned financial technology company servicing financial institutions throughout the Northeastern United States for 50 years.
Launched in 1967, COCC was founded by its clients to provide them with more control over features, costs and the delivery of their technology needs. Many of these original founding financial institutions are still active COCC clients today. This unique cooperative structure has set COCC apart from the competition and is one of the driving forces behind the success of COCC and the financial institutions it serves.

Today, COCC is the fastest-growing financial data processing company in the United States and recognized as a leader in delivering innovation and the quality service financial institutions demand and deserve.
Effectively servicing over 100 billion dollars in assets with unmatched next-generation technology backed by superior customer service, COCC has established a track record second to none in delivering on their commitments.
COCC is the only financial technology company to have successfully migrated its entire client base from a proprietary legacy system to an open, next generation relational database core system. This migration has helped clients lower their operations costs, improve their ability to service their customers and position themselves to succeed in the increasingly competitive financial service market place.
No other company combines state-of-the-art technology and a client cooperative ownership structure. The result is that COCC’s clients have come to realize the best of both worlds: advanced technology backed by a 100% focus on superior customer service.

AUGUST 11-12, 2021
9 AM- 4:00PM CST

  • Employee Recruitment, Selection, and Placement
  • Structural and Behavioral Interviewing
  • Driving Employee Engagement
  • Creating and Accountability Culture

CPE/HRCI Credit available!
In Person: $695
Virtual (via zoom): $595
$100 for each additional employee at same bank
  • Human Resource Managers
  • Branch Managers
  • Department/
  • Division Managers
  • Management/
  • Hiring/Coaching/
  • Counseling
Instructor, Kerry Sauley, is the Marjorie B. Ourso Excellence in Teaching
Professor at Rucks Department of Management
Louisiana State University,
Baton Rouge, LA.
News from ICBA
Kevin Smith, CFA
Vining Sparks' Investment Product Strategies
Kevin has been with Vining Sparks since 2008 and currently serves as Director of Investment Product Strategies. He focuses on providing timely capital market solutions and delivering valuable tools and services to internal and external stakeholders. A graduate of Christian Brothers University in Memphis, TN, Kevin earned his degree in Finance and a minor in History. He holds the Chartered Financial Analyst (CFA) designation and is a member of the CFA institute.
ICBA Securities and its exclusively-endorsed broker/dealer, Vining Sparks, will present a webinar for the state associations that endorse ICBA Securities, as well as other community banks. This is the fifth in the 2021 webinar series. 
Agency backed mortgage investments are a meaningful allocation in many depository portfolios. The past 12-months has been interesting, to say the least, for mortgage investors. Fed intervention in the market continues while economic data largely paints a positive, but complicated, picture. Home prices rose sharply while mortgage rates declined drastically and still remain near all-time lows. With these points in mind, this webinar will cover current market trends, mortgage rates, prepayment expectations, and a look at relative value.
What you will learn:
  • Current market trends and expectations 
  • The importance of solid prepayment assumptions
  • Relative value in the mortgage market
  • Resources available to help you manage current and prospective positions

This webinar will last approximately one hour.
IBANYS Webinars

Are you participating in IBANYS webinars? Now is the time! IBANYS webinars provide timely, important information on subjects of interest to New York community bankers including human resources, business development, investment, compliance and security and much more. They are valuable not only for their content, but for their convenience and low-cost. Take part from the comfort and privacy of your office, without leaving the bank. 
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Once you have your Subscription Token code, you can immediately register for webinars by using the code at checkout! (Subscription tokens not applicable for full series registrations, or other specials.)
Albany Update

Latest On Credit Union/Municipal Deposits Legislation

There are just two days left in the 2021 state legislative session, which is set to adjourn tomorrow. As the Senate and Assembly move to the final home stretch, We are still closely monitoring late developments on a key proposal that would further disadvantage community banks while expanding credit union powers and authorities. Legislation currently in the Senate Finance and Assembly Ways & Means Committees would allow credit unions access to municipal deposits. IBANYS is working with the chairs of the Senate and Assembly banks Committees, other committees and legislative leadership and staff to explain why this legislation would be harmful not only to New York's community banks, but to the municipalities, small businesses and consumers we serve. We informed them that we oppose legislation to further help tax-exempt credit unions, which are not subject to any CRA mandates or requirements, while doing harm to taxpaying community banks which are subject to CRA mandates and which reinvest municipal deposits in their communities. Muni deposits played a big part in how community banks were able to lead the way in making PPP loans across the state, saving thousands of jobs and keeping local small businesses open during the pandemic.

IBANYS held a very productive Zoom meeting with Assembly Banks Chairman Victor Pichardo (D-Bronx), the bill's sponsor in the Assembly. We noted:

  • This legislation does not subject credit unions to the regulatory/CRA mandates and oversight that are required of banks, nor does it provide any way to monitor and/or track credit unions’ municipal deposits activity. (Banks' activity is  monitored and tracked under CRA.)

  • The credit unions’ position is they would use municipal deposits to serve unbanked, underbanked and minority communities if they gain access to municipal deposits. Yet, when they were granted access to the State Business Development District Program two years ago, they did not use the program to accomplish those stated goals.

  • Community banks reinvest the funds to reinvest in local municipalities, small businesses and local initiatives. During the pandemic, community banks were able to move quickly to access the Paycheck Protection Program (PPP) to protect thousands of local jobs and keep local small businesses open across the state – without having to delay making the loans until federal funding was available.

  • Community banks nationally made over 60% of all PPP loans, and 70% of PPP loans to minority-and women-owned small businesses. Comparatively, credit unions’ participation in the PPP lending program was negligible, to the point of being nearly non-existent.

  • Losing municipal deposits to tax-exempt credit unions could pose a serious safety and soundness issue for community banks, many of which have up to 25% to 30% of their core deposits in municipal deposits. 

(Unlike credit unions, thrifts and mutuals are taxpaying institutions and are subject to CRA requirements, and IBANYS strongly believes they should be included in the legislation.) IBANYS will keep you fully informed as this process continues to unfold.

Other Legislative Updates

There are also other bills still in the legislative process we are following. These would seek to establish a state/public bank (IBANYS' Memo in Opposition), and allow credit unions into the State Linked Deposit Program allow credit unions to participate in the State Linked Deposits Program, (Read IBANYS' Memo in Opposition here).

If and when these bills reach the floors of the full Senate and Assembly for votes, we may need your help in launching a grassroots effort opposing them. Stay tuned. Here is the NYS Assembly Directory: https://nyassembly.gov/mem/search/. . . and, here is the NYS Senate Directory: https://www.nysenate.gov/registration/nojs/form/start/find-my-senator

  • IBANYS has written a Memorandum in Support of S.7090 (Thomas) A.7924 (Pichardo), which would extend the State Charter Advisory Board for an additional five years. The State Charter Advisory Board was part of the Financial Services Law which was enacted in 2011, when the former Banking Department and Insurance Department were merged to form the Department of Financial Services. It was established to focus on the importance of the benefits of the dual charter system.

  • A7650 (by Assembly Banks Chair Pichardo) would require reporting overdraft fees to consumers every 180 days. The bill is at the bottom of page 6 and goes into page 7 of this document.

  • The Second Circuit Court of Appeals ruled against the New York State Department of Financial Services' (DFS) challenge to the OCC's decision to begin accepting applications for special-purpose national bank charters for fintechs that do not accept deposits. The court ruled the DFS didn't have standing to bring the suit and remanded the case back to the District Court with instructions to dismiss it without prejudice. The decision reverses an earlier ruling by the lower court, which found that the OCC had exceeded its statutory authority under the National Bank Act, which requires national banks to engage in deposit-taking. ICBA filed an amicus brief in support of the New York DFS’ appeal. NYDFS Superintendent Linda Lacewell issued a statement following the 2nd Circuit’s decision, reiterating the importance of “guarding against any encroachment on the state regulatory system” and urged the OCC to reconsider its policy.
Washington Update

  • ICBA and other groups again urged House members to oppose a Senate-passed resolution to repeal the OCC’s “true lender” rule. In a joint letter to the House following a similar message last month, the groups said repealing the OCC rule would create significant legal impediments to creating a more robust framework for providing safe and affordable credit. Instead, they said the OCC should be allowed to modify the rule. The OCC rule, which ICBA supported in a comment letter last year, creates a standard to determine when a bank is the “true lender” when partnering with a third party. Under the rule, banks are deemed true lenders if they fund the loan or are named as the lender in the loan agreement on the origination date. The Senate resolution, which the Senate passed by a 52-47 vote last month, would repeal the rule under the Congressional Review Act, which allows lawmakers to invalidate federal rules and limits agencies’ ability to issue a similar rule in the future.

  • Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) pushed back against a Biden administration proposal that would require financial institutions to report information on account flows to the IRS. In a statement at a hearing on the IRS budget, Crapo said he opposes turning banks and brokers into government tax collectors and has strong concerns about the IRS collecting such data, noting that some existing reporting is duplicative. The American Families Plan proposes requiring financial institutions to report to the IRS on account flows, including bank loans, on accounts over $600. ICBA strongly opposes the proposal. In a statement and joint letter to the committee and in press reports, including Politico, ICBA has said the plan would create complex new reporting burdens, expose banks to penalties for inadvertent errors, and channel more information into the IRS than it can process.

  • ICBA is encouraging community bankers to call on Congress to hold hearings on credit union acquisitions of taxpaying community banks. (IBANYS urged members of the New York Congressional Delegation to support this effort during our recent grassroots calls.) ICBA’s Be Heard grassroots action center makes it easy for community bankers to contact their members of Congress.  Community bankers can continue the campaign against the credit union tax exemption at this month’s ICBA Capital Summit, which is set to livestream April 27 with remarks from top policymakers and virtual meetings with congressional offices. CONTACT CONGRESS

  • The Consumer Financial Protection Bureau issued frequently asked questions on unauthorized transfer and error resolution provisions under the Electronic Fund Transfer Act and Regulation E. The FAQs address situations where consumers are fraudulently induced by a third party to provide account information or private network rules that conflict with the regulation.