December 9, 2020
IBANYS Weekly E-Newsletter
  • Visit our website at www.ibanys.net to review all our daily updates on COVID-19 beginning on March 16.
The President's Message
By John Witkowski, President & CEO

  • The final days of the 2020 congressional session still include key unresolved issues. They include reaching agreement on the next round of coronavirus relief, funding the federal government, and passing the fiscal 2021 National Defense Authorization Act that includes a key step toward relief for community banks from "beneficial ownership" disclosure mandates by creating a Financial Crimes Enforcement Network database of company beneficial ownership information for use by law enforcement. The 2021 congressional session opens January 3.

  • Rep. Tom Reed (R-Southern Tier/Western NY) -- a strong supporter of community banking who has worked closely with IBANYS and our member banks during the pandemic -- co-chairs the 50-member bipartisan congressional "Problem Solvers Caucus" (PSC), which has played a pivotal role in crafting a legislative proposal for the next round of coronavirus relief. Here is a summary of the framework of the deal the PSC and members of the Senate have reached regarding COVID relief for your review.

  • Meanwhile, the New York State Legislature is preparing for its 2021 session, which opens January 6, includes plans for a 60-day session and is scheduled to adjourn June 10. The session will be mostly virtual, at least in the beginning, and use the remote voting plan employed this year.

  • The state faces severe fiscal and financial challenges in 2021. This week, the Tax Foundation evaluated New York’s options to solve its severe budget gap, and noted the intensity of the response depends on the pace of recovery, availability of additional federal aid and policy choices state officials make in a state that has borne the brunt of the pandemic. Legislators must "navigate between finding a way to meet the state’s revenue needs from the currently diminished tax base, without implementing policies that make those economic losses permanent." Read the full analysis here: https://taxfoundation.org/new-york-budget-gap-new-york-revenue-shortfall/

Clearly, our plates will be full with issues and challenges from Albany and Washington. We will again need the participation and input of New York community banks as we respond to initiatives, and craft a legislative agenda representing our industry's unique priorities and needs.

As always, thanks for all you do for community banking in New York State and your local customers and communities.

One final note: Each year, the New York State Joint Commission on Public Ethics unveils the state’s top lobbyists based on total compensation, and "City & State" produced an expanded list: New York State’s Top 50 Lobbyists. IBANYS is pleased to note that our lobbying firm, Dickson & Avella, was among the leading firms, ranked 16th. The firm, represented by our IBANYS Legislative Counsel Bill Crowell, does an outstanding job in Albany on behalf of our New York community banks, and we wanted to share the news with you.



IBANYS Preferred Partners & Associate Members
COVID-19 has impacted businesses across the nation, and those in low-to-moderate income (LMI) areas, as well as minority- and women-owned business owners (MWBE), have taken the hardest blow from pandemic-related closures. When your institution needs a partner to help these businesses, you can turn to a Community Development Financial Institute (CDFI), like Pursuit Community Finance.
 
Your bank can support CDFIs through grants for technical assistance, marketing campaigns, interest buy-downs, loan loss reserves, and other general operating support. This support is critical in helping CDFIs reach even more MWBEs and LMI entrepreneurs to provide them with deeper assistance. Our partnership with banks has been critical to our mission. Here’s a brief look at what this support has enabled us to do:
 
  • Through grant support from JPMorgan Chase, Pursuit has served hundreds of entrepreneurs of color and LMI small business owners in NYC’s most distressed neighborhoods, including the South Bronx.
  • Through a partnership with Bank of America that provides us with low-interest loan capital, Pursuit is able to fund loans to veteran entrepreneurs at 5.75%.
 
Your bank’s support can be easily tailored to geographic, demographic, and other parameters set by your institution. And, by providing this support your bank can receive significant CRA credit.
 
While Pursuit is fortunate to have many active bank partnerships, we encourage you to become more engaged with Pursuit and other CDFIs in your community.
 
If you’re interested in learning more, contact Rachel Van Tosh at rvantosh@pursuitlending.com. We look forward to growing our partnership with you.
  
 
-The Pursuit Team 
Marty Mosby
Director of Bank Advisory & Strategic Services

Marty directs community bank strategic advisory and investment banking services and provides bespoke analytics to large cap equity investors. He was a bank research analyst for the last 7 years covering 20 of the largest U.S. banks. Prior to covering banks, Marty was an executive manager at a large regional bank where during his 20-year career he served as Chief Financial Officer, Head of Investor Relations and Strategic Planning, ALCO Chairperson and Chief Economist.
December 10, 2020 - 10:00 A.M. CST

While the U.S. economy seems to be rebounding recently, we believe some earnings pressure may still lie ahead in 2021-‘22 and another round of regional, mandatory shut-downs this winter seems almost inevitable. As a result, we currently estimate that U.S. Bank earnings could fall meaningfully over the next two years. With this in mind, we believe every community bank management team should focus on operating their bank through an extended downturn. Consequently, this means shifting from earnings growth to defending your bank’s current dividend and its tangible book value while building its loan loss allowance for a reasonable amount of future loan losses. 
In this Webinar we will highlight:
  • How to create a strong estimate for year-end loan loss allowance
  • How to measure if your current dividend could fall under pressure
  • What level of credit losses could jeopardize your excess capital
  • Strategies to offset the upcoming net interest margin compression

The webinar will last approximately one hour.
COMPLIMENTARY WEBINAR
Stress Testing: Best Hedge Against
COVID Credit Risk Uncertainties 
 
Select from these dates:

Wednesday, Dec. 16 at 2:00-2:45 pm ET
Thursday, Dec. 17 at 11:00-11:45 am ET

*Please forward to your lending team.
 

As we move into 2021 and a more challenging economic period, how can you start preparing to minimize losses. Knowing how your portfolio might be moving, and how it performed during the last crisis, is a critical and important first step. Be proactive. Join this Stress Testing webinar and learn about five effective ways to help safeguard your credit portfolio from adversity. 
We'll explain how each one of these simple approaches can help you plan for, measure, and control your bank's exposure to events that can send credit risk soaring.
1.    Stressed Portfolio Loss Rates Method
2.    Reverse Stress Testing
3.    Scenario Analysis 
4.    Loan Migration Analysis
5.    Transactional Sensitivity Analysis
This time around, minimize your losses by knowing where your portfolio might be moving and what type of capital cushion you have. Attend this webinar to learn how. 
Can't make either date? Contact me for more information.

Sincerely,

Melissa Wallace
Senior Account Executive
800.285.8626 ext. 4062
We'd like to introduce our newest associate member who can offer the New York banking community a great solution! Upgrade recently joined the Independent Bankers Association of New York State Association as an associate member. Upgrade partners with community banks to provide access to prime credit quality consumer assets. Upgrade is a marketplace platform, founded in 2016. Upgrade currently employs 357 nationwide and has facilitated origination of ~$3 billion in loans since inception. Upgrade offers affordable and responsible credit products to mainstream consumers through personal loans, auto refi and lines/cards and will be launching a HELOC product next year. Their unsecured assets yield 5-6% NET returns to community banks for prime credit borrowers and allows the bank to customize their credit box in either a national or geo-targeted footprint. They also offer free credit monitoring, credit alerts, and credit education to their user base through the Upgrade Credit Health product. Please contact Jim Quinn jquinn@upgrade.com or 415-940-7688 for more information!   

2020 compensation survey available!
We know 2020 has been a challenging year. To keep your community bank competitive, you need the best talent, and to attract and retain the best talent, you need the right tools.
 
The recently released 2020 Crowe Financial Institutions Compensation and Benefits Survey is the tool you need to succeed in 2021 and beyond. With responses from 405 banks, the report provides key information on salary and benefit trends, turnover, and director compensation.

WEBINARS
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. 
Subscription Tokens
The More You Buy, The More You Save
 
How does it work:
Tokens can be used to purchase live or recorded webinars anytime, with no expiration! Tokens for both live and recorded webinars are available for an additional fee. (What’s the difference? Click here for the full description.)
 
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

  • The NYS Legislature released its session calendar for 2021. The session opens January 6, and is scheduled to adjourn June 10. There are currently 60 session days scheduled. As in 2020, the session will be primarily virtual. This year, the Legislature changed its rules to allow for virtual/remote voting and meetings, and a similar model will likely be used in 2021. As of now, it appears that the State Capitol will remain closed to lobbyists and the general public.

  • The state faces a deficit of nearly $15 billion due primarily to the pandemic. Governor Cuomo has held back 20% of state aid that is due to schools and local governments, and said the state would be forced into hiking its income tax on its wealthiest earners if Congress does not pass a federal aid package. (Negotiations continue in Washington.) Even the potential revenue from such a tax hike would likely not cover the gap. The possibility of a combination of tax increases, spending cuts, borrowing and government employee layoffs have all been discussed. Local government budgets are also being cut.

  • Gov. Andrew Cuomo yesterday defended the waiting game for federal assistance, and said addressing the state's budget problem would come down to two options: Passing a budget that increases taxes and cuts spending now, or waiting until early 2021 to see if the new Biden admnistation can secure a good deal for the state. He concluded: "I am banking on the federal government provides assistance." Taxing wealthier people by raising rates on millionaires and billionaires would be a relative drop in the bucket. "That gets you about tops $2 billion. You now have a $13 billion hole. That is thousands of layoffs."


  • Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) was reelected by her conference, and will lead a veto-proof "supermajority" with control of 43 of the chamber's 63 seats. Speaker Carl Heastie (D-Bronx) was also reelected to his leadership position, and also leads a veto-proof supermajority in the Assembly with 107 of the 150 seats. This could have a significant impact on the state’s budget, and allow the Legislature -- considered among the most liberal in the country -- to pursue a wide range of progressive measures -- which could include higher taxes on the wealthy --with no concern about possible vetos

  • The Senate and Assembly Democratic majority conferences re-elected their leaders for the 2021 session: Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) and Assembly Speaker Carl beastie (D-Bronx). Stewart-Cousins became Majority Leader in 2018 when Democrats took the majority. Heastie was first elected Speaker in 2015.


Washington Update

ICBA called on Congress to enact pandemic relief legislation before the close of the 116th Congress, saying any package should:

  • Simplify Paycheck Protection Program loan forgiveness;
  • Fully forgive Economic Injury Disaster Loan advances.
  • Exclude PPP loans from regulatory asset thresholds.
  • Extend bank capital and accounting relief, including extending TDR relief.
  • Reform PPP terms for any new round of lending.

ICBA continues calling on community bankers to use its Be Heard action center to urge Congress to pass these reforms during the lame-duck session.

The rollercoaster of coronavirus relief negotiations continues, with many of the same issues that have stalled talks for months (e.g., direct payment, state and local cash and liability) still unresolved. 

  • Senate Republicans are holding out for liability shields for businesses to last for four additional years beyond 2020, as proposed in a $908 billion bipartisan stimulus plan crafted by the Problem Solvers Caucus co-chaired by Rep. Tom reed (R-NY).

  • Senate Majority Leader McConnell suggested the best way to reach a stimulus deal in the lame duck session is to drop discussions over state and local aid and liability provisions. 

  • Treasury Secretary Mnuchin proposed a $916 billion package that would send $600 direct payment checks to most Americans, but eliminate a $300 weekly enhanced employment benefit backed by a bipartisan group of senators.

  • House Speaker Pelosi and Senate Minority Leader Schumer prefer to let a bipartisan coalition of lawmakers, which has already negotiated a $908 billion framework, continue to take the lead in stimulus talks. 
 
  • The SBA released a myth vs. fact document addressing misconceptions about the Paycheck Protection Program. The document notes that the vast majority of PPP funds supported American small businesses, 87% of all loans were $150,000 or less, and the PPP reached historically underserved communities through community banks, including Community Development Financial Institutions and Minority Depository Institutions.

  • The congressional race in Central New York's 22nd C.D.between incumbent Rep. Anthony Brindisi (D) and former Rep. Claudia Tenney (R) remains undecided, with Tenney currently holding a twelve-vote lead. A state judge has ordered eight counties to fix ballot-tracking errors in order to tabulate precise vote counts. The court will not declare a winner, only ensure the vote counting laws have been followed. Whoever prevails, expected a challenge to the likely razor-thin margin in court. Lawyers are scheduled to meet on Dec. 18.

  •  ICBA, joined by IBANYS, is calling on community bankers to continue pressuring Congress to include PPP reforms in the next economic stimulus package (e.g., simplifying forgiveness, addressing the conflict with EIDL advances, and excluding PPP loans from regulatory asset thresholds.) ICBA and IBANYS are asking community bankers to urge Congress to pass much-needed economic stimulus measures during the lame-duck session by using ICBA's Be Heard grassroots action center to reach their lawmakers.

  • IBANYS previously urged New York Congressional Delegation To Support PPP Changes. As the stalemate between Congress and the Trump administration regarding the next coronavirus legislative package continues, IBANYS has written to the New York Congressional Delegation (and shared the letter with the NYS Legislature as an FYI) urging support of a number of important changes ICBA has suggested be made to the Paycheck Protection Program. Read IBANYS' letter to Congress. Read IBANYS letter

  • The House voted 335-78 to pass a compromise defense spending bill that includes a key step toward ICBA-advocated relief from "beneficial ownership" disclosure mandates. The fiscal 2021 National Defense Authorization Act—which the Senate is set to take up next—would create a Financial Crimes Enforcement Network database of company beneficial ownership information for use by law enforcement. In a letter to House and Senate Armed Services Committee leaders last week, ICBA said the provision would deter the use of shell companies while marking a good start toward needed relief from onerous reporting requirements. ICBA has worked closely with lawmakers to include the beneficial owner language in the defense bill as part of its push to modernize the BSA/AML regime.
 
  • House Democrats announced their committee chairmanships this week. Rep. Greg Meeks (D-Queens) will chair the prestigious House Foreign Affairs Committee, succeeding Rep. Eliot Engel (D-Bronx), who lost his primary race earlier this year. Rep. Sean Maloney (Hudson Valley) will lead the Democratic Congressional Campaign Committee as it prepares for the 2022 midterm elections.
 
  • Meanwhile, the House GOP named Rep. John Katko (R-Central New York) as Ranking Republican on the House Homeland Security Committee, giving him a major role overseeing domestic security and anti-terrorism efforts in the United States. 

Additional Information
News Release | NR 2020-168 December 7, 2020
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today announced the appointment of two executives to the agency’s Executive Committee.
 
Sydney Menefee has been selected to fill the Senior Deputy Comptroller for Midsize and Community Bank Supervision on a permanent basis, and Greg Coleman will become the next Senior Deputy Comptroller for Large Bank Supervision.
 
“The agency and the federal banking system are lucky to have career executives of the caliber of Sydney and Greg, who demonstrate the utmost competence and professionalism in their duties and even more importantly a passion for this agency and our employees,” said Acting Comptroller of the Currency Brian P. Brooks.
 
As Senior Deputy Comptroller for Midsize and Community Banks, Ms. Menefee will lead a team of 1,600 people in the supervision of more than 1,000 national banks and federal savings associations. In addition to being a member of the OCC's Executive Committee, she will serve on its Committee on Bank Supervision.
 
Ms. Menefee has served as Acting Senior Deputy Comptroller for Midsize and Community Bank Supervision since June 2020. Prior to that, she served as Deputy Comptroller and Chief Accountant since August 2018. She joined the OCC in 2009 as a Professional Accounting Fellow and held various roles in the Office of the Chief Accountant and Midsize Bank Supervision. She was commissioned a National Bank Examiner in 2016. Ms. Menefee worked in public accounting and banking prior to joining the OCC. She graduated from the University of Texas at Austin with a bachelor’s degree in business administration and a master’s degree in professional accounting. She is also a certified public accountant. She assumes these duties immediately, filling the vacancy created when Blake Paulson assumed the functions of Chief Operating Officer earlier this year.
 
As Senior Deputy Comptroller for Large Bank Supervision, Mr. Coleman will direct nearly 800 employees in overseeing the country's largest and most complex national banks and federal branches and agencies, which hold more than $10 trillion in total consolidated assets. He will also serve as a member of the agency's Executive Committee and the Committee on Bank Supervision.
 
Mr. Coleman has more than 30 years of experience at the OCC supervising banks of all sizes and has been a Deputy Comptroller for Large Bank Supervision since 2015. He has been an important part of Large Bank Supervision leadership and that of the agency for a significant amount of time. During his career, he has also served as Examiner-in-Charge of Capital One and E*TRADE, and as director within the Credit and Market Risk division and as the lead for the capital markets team at JPMorgan Chase. He joined the OCC in 1989 and earned his National Bank Examiner Commission in 1994. Greg is a Chartered Financial Analyst and holds a bachelor of science degree in business administration from the University of Nebraska-Lincoln. Mr. Coleman will transition into these duties at the end of this year and follows Maryann Kennedy in this role, who is retiring.

*********

News Release | NR 2020-166 December 3, 2020
 
WASHINGTON—The Office of the Comptroller of the Currency today announced the release of the Project REACh Minority Depository Institution (MDI) Pledge.
 
In doing so, Acting Comptroller of the Currency Brian P. Brooks encouraged all large and midsize banks to consider the pledge to develop meaningful partnerships with MDIs to help them remain a vibrant part of the economic landscape and better promote fair, equal, and full access to financial products and services in their communities.
 
"MDIs are critical pieces of their communities and enjoy trust and relevance other institutions do not," Acting Comptroller Brooks said. "Their unique status makes them well-suited to help improve financial services for minority and underserved communities and create meaningful economic opportunities. Unfortunately, MDIs also face significant obstacles of their own. The Project REACh MDI Pledge draws attention to these issues and affirms the commitment by larger banks to support the health and function of these institutions."
 
In announcing the pledge, bank members of Project REACh are the first to sign on, including Citibank, Flagstar, Huntington, Texas Capital, and Wells Fargo.
 
By making the pledge, a bank commits to
  • investing in an MDI,
  • providing technical assistance,
  • identifying business opportunities targeted to expand the MDI's reach and impact within its communities,
  • supporting executive development, and
  • committing resources to support the MDI's operations and customers.
 
"We applaud the OCC for not only recognizing the important role that MDIs play in creating economic opportunities for individuals and small businesses located within low-to-moderate income communities," Chief Executive Officer of Broadway Financial Corporation Wayne Bradshaw commented, "but also for creating Project REACh to help MDIs obtain the vital equity capital and other resources that they need to fulfill their potential. Each dollar of additional equity capital creates a multiplier effect of seven to 10 times that amount, which in turn leads to greater job opportunities and income within underserved communities."
 
"Citi strongly believes that financial institutions of all sizes are needed to serve a broad spectrum of customers and client needs. By partnering with MDIs, we can combine scale with local market expertise, community knowledge and long-established relationships to serve communities of color in a more effective way than banks of either size could do on our own," said Michael Corbat, CEO of Citi, and Project REACh Founding Member and Co-Chair of the MDI working group. "Through this pledge and existing commitments such as our $1 billion Action for Racial Equity initiatives, we're focused on MDIs' growth and revenue generation, helping to close the racial wealth gap and increasing economic mobility in the United States."
 
"Flagstar welcomes the opportunity to support Project REACh and enthusiastically agrees to adopt the pledge to strengthen MDIs," said Alessandro DiNello, President and CEO of Flagstar Bank. "We have been and will continue to be a strong supporter of MDIs, and we commend the OCC on taking a leadership position. This support will be instrumental to the promotion of fair, equal, and inclusive access to financial products and services."
 
"We embrace the Project REACh MDI Pledge because it reflects banks' shared commitment to providing full access to banking and economic opportunity to those who need it most," said Steve Steinour, Huntington's Chairman, President, and CEO. "Our communities are uplifted and our industry is made stronger through our support of MDIs and the partnerships that enable us to leverage our expertise, capabilities and scale for the benefit of these important banks and their customers."
 
"Supporting the prosperity of communities is the core of our mission at Texas Capital Bank, and we are proud to be a founding partner of Project REACh," said Larry L. Helm, Executive Chair and Chief Executive Officer of Texas Capital Bancshares, Inc., and Texas Capital Bank. "By helping to increase capacity for our MDI partners, this project will have long-reaching effects in underserved communities nationwide, and we look forward to seeing the results in expanded small businesses, homeownership, and more."
 
"MDIs have a vital role in the U.S. financial ecosystem by providing ready access to capital and credit in minority and underserved communities, supporting neighborhood revitalization and driving economic opportunity," said Kleber Santos, Head of Diverse Segments, Representation and Inclusion at Wells Fargo. "We are proud to build on our recent commitment of up to $50 million to African American MDIs by signing the Project REACh MDI Pledge and contributing capital, connections, and expertise to help them grow so the communities they serve will prosper."
 
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