February 24, 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 

News and developments keep coming from both Albany and Washington. . . there are some important programs on the horizon for New York community bankers. . .and for your convenience, today's newsletter contains details on all that and more.

  • The New York State Legislature returned after its recess to deal with the controversy regarding the Governor's handling of the nursing homes during the pandemic. The State Senate passed a set of reform bills, and the Assembly will likely pass its own legislation. The Governor didn't say whether he or his top officials have received, or responded to, subpoenas as federal prosecutors probe New York’s handling of nursing homes during the COVID-19 crisis

  • IBANYS and a number of our member banks participated in a conference call with NYS Senate Banks Chairman James Sanders (D-Queens). The new Assembly Banks Chairman, Victor Pichardo (D-Bronx) and Khaleel Anderson (D-Queens), who chairs the Assembly Subcommittee on Banking in Underserved communities, also participated. The call sought to identify priorities and concerns, and served as a first step in what will hopefully be a continuing dialogue.

  • In Washington, The Biden administration announced several Paycheck Protection Program (PPP) reforms to target the program to the smallest businesses (those with fewer than 20 employees.)

  • ICBA joined 17 banking and consumer organizations in a letter to House and Senate leadership urging the inclusion of language exempting the third round of economic impact payments from garnishment in the American Rescue Plan Act of 2021.

. . . .

Industry News

FDIC: Community banks again outperform industry
According to the FDIC's Quarterly Banking Profile, community banks reported net income growth of 21.2% in the fourth quarter from a year ago, and a 3.6% increase in 2020 from the year before.

2020 Numbers: Community bank provision expenses increased 141.6% in 2020, while net operating revenue increased 10.8% on a 33.7% gain in noninterest income. The full-year pretax return on assets ratio declined by 13 basis points to 1.31% in 2020 because of an increase in average assets.

Fourth Quarter: A 159.1% increase in income from loan sales drove community banks' improved quarterly net income and offset a 38.1% increase in provision expenses. Net interest margin narrowed by 30 basis points from a year ago, while community banks experienced an 18.4% quarterly increase in total deposits.

Capital: Community banks also posted strong capital numbers, including a 10.3% average leverage ratio, 11.2% average Community Bank Leverage Ratio, and 14.4% tier-1 risk based capital ratio.

Overall Industry: The overall banking industry reported a 9.1% net income increase from a year ago and a 36.5 % decline from 2019. The share of unprofitable institutions remained relatively stable from a year ago at 7.3%, with the average return-on-assets ratio rising to 1.11% from 0.97% in the third quarter.

Deposit Insurance Fund: The DIF balance rose $1.5 billion from the third quarter to $117.9 billion, and the reserve ratio declined from 1.30% to 1.29% on rising insured deposits.

Mergers and Openings: During the fourth quarter, three new banks opened, 31 institutions were absorbed through mergers, and two banks failed. READ MORE

. . . .

If you have not yet registered for our upcoming IBANYS Virtual Bank Directors Conference on March 2, I encourage you to take a look at the brochure included in today's newsletter -- it includes both registration information and a preview of the agenda. . .Also, our two-day virtual "All Banks On Deck" association wide conference is set for April. It's a great opportunity to share important programming and content with your entire organization -- all for a single registration fee. Stay tuned for more details!

We also plan to participate (and hope you will as well) in ICBA's virtual convention,"ICBA Connect" March 9-10. Our own former IBANYS Chairman and current board member Bob Fisher (Tioga State Bank) -- a five-generation New York community banker -- will be elected ICBA Chairman for 2021-22! See additional details below.

ICBA offers "America Saves Week" resources. . .ICBA updated its Tell Your Story Marketing and Communications Toolkit with a customizable news release and blog post to help community banks recognize America Saves Week this week. More: America Saves offers its own digital toolkit with social media content, banners, flyers, payroll stuffers, and more. Background: ICBA’s Tell Your Story toolkit is a member benefit featuring best practices, interview tips, sample social media posts, and an editorial calendar to support community bank marketing plans while strengthening brand awareness.

Stay safe and healthy. . .and as always, thanks for all you do for New York community banking!

IBANYS 2021 Virtual Education Meetings
2021 Virtual Bank Directors Conference - Live Webinar
Tuesday, March 2, 2021
The role of a community bank director is one that is always changing and has never been more critical to the success of your bank. The 2021 IBANYS Virtual Directors Conference is an informative and engaging event designed to help you gain the tools essential to guide your bank’s growth and profitability and sustain its vision for the future. 

Mark Your Calendars & Save These dates -- More Information Coming Soon!!
  • Monday & Tuesday, April 19-20, 2021 - "All Banks On Deck" - Community Banks Mid-Year Conference - 8:30 a.m. - 2:00 p.m. each day

Watch your emails and the weekly newsletter for more information on these programs and additional dates to be added.
Tony Repanich, President & COO
500 Union Street #310
Seattle, WA 98101

Welcome Shield Compliance LLC
Shield Compliance is transforming the way cannabis banks and legal marijuana financial institutions manage risk, comply with regulations and satisfy operational demands across the United States.

Enhanced, cloud-based tools empower compliance officers with rich information and timely reporting.
  • Transaction amounts reconciled across multiple data sources
  • Detailed transaction level reconciliation of against client financial statements
  • Transaction verification with online invoice and receipt collection
Welcome Onovative
Onovative, an automated marketing and communication software provider, put controls back in the hands of bank marketers. Onovative’s affordable marketing software for planning, automation and execution empowers you to manage data for strategizing throughout the consumer lifecycle and engage with consumers through multiple channels. With software that integrates directly with your existing core banking systems, Onovative helps banks drive results by bolstering growth with their current account holders and within their markets.
Cynthia Glover, Vice President of Business Partnerships
118 East Main St., 6th Floor
Louisville, KY 40202
(866) 380-4816

Amy Feminella, Director of Marketing
411 South State Street, 3rd Floor
Newtown, PA 08940
Phone: 267-291-2130
Email: afeminella@newcleus.com

Welcome Newcleus, LLC
Newcleus is the premier benefit plan and financing strategy provider in the banking industry. Our size and tenure allow us to provide our clients and advisors with the best products, services, administration, and regulatory compliance support available.

Our proprietary MINTS platform currently services over 45,000 policies for more than 750 financial institutions throughout the U.S.

Our Year of the Pandemic: An Industry Review
Thursday, February 25, 2021 • 11:00 - 11:45 a.m. ET
Presented by: Karl Nelson, CEO & Founder, KPN Consulting

Despite the very difficult operating environment driven by the pandemic, many FHLBNY members actually increased profits in 2020. Join us for a look at the pandemic, the current and future state of our industry, and how to apply the lessons learned over the past year to navigating 2021 and beyond.
After registering, you will receive a personal confirmation email containing system requirements and a link to view the webinar. If you do not receive this email or have issues registering, please contact Alissa Elfant at alissa.elfant@fhlbny.com.
Should you have any questions, contact your Relationship Manager at (212) 441-6700.

Save the date for the next webinar in our 2021 series, Balance Sheet Strategies with 2020 Hindsight: Margin & Earnings Pressures Intensifying - Prepare Now for the Inevitable, presented by Frank Farone, Managing Director, Darling Consulting Group on Thursday, March 11th from 11:00 - 11:45 AM.
Federal Home Loan Bank of New York | 101 Park Avenue | New York | NY | 10178 | www.fhlbny.com
News from ICBA
ICBA is pleased to announce ICBA Connect to be held on March 9-10, 2021. Get ready for a virtual experience unlike anything you’ve seen before!
This event will bring together great minds from across the nation to celebrate and focus on community banks. Through diverse topics ranging from leadership and strategy, to innovation and inspiration, ICBA Connect will dive into the content that matters most today – all through the lens of community banks. Connect is a chance to discover how community banks are not only navigating the current landscape but leading the way for their communities.

Robert Fisher, President & CEO of Tioga Bank, former IBANYS Chairman and longtime IBANYS board member, is Chairman-Elect. We hope you will join IBANYS and attend virtually as we congratulate Bob, a fifth generation New York community banker.
Do’s, Don’ts, and Maybes
A set of simple rules to streamline portfolio management in 2021.
By Jim Reber
If my recent aggregate conversations with investment managers are an indication, there is still a lot of seat-of-the-pants decision making going on out there when it comes to portfolio strategies. And I hasten to add this is not a criticism; it’s merely an observation. Why should we expect anything else?

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
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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 New York State Senate passed 10 nursing home reform bills Monday. However,Speaker Heastie indicated the State Assembly may pass its own set of reform bills, which means both houses will need to come to an agreement before any bill can be signed into law. Read More. Republicans spent the Legislature's first day back after recess fuming that Democrats were unwilling to join them in taking immediate action against Governor Cuomo. However, more than a week after many Democrats said they favor reducing the governor’s ability to unilaterally issue directives with the force of law, there has yet to be any concrete action on that front. 

  • With New York facing a $15 billion budget gap, legislators and the Governor are still considering ways to close it. One solution: a multi-billion-dollar federal aid package from Congress. New York’s on track to get $50 billion in a variety of federal relief from the next coronavirus stimulus package — enough to likely avert the steep state budget cuts threatened by Governor Cuomo. House Speaker Pelosi outlined for the state's Democratic House members the specifics of the federal dollars coming to New York -- which reportedly could include $12.6 billion in budgetary bailouts for state governments, $10.6 billion for local governments and $8.8 billion for ‘New York Area Transit’ — most of which is for the Metropolitan Transportation Authority. Estimates are that President Biden's COVID-19 relief/economic stimulus plan could provide New York State "a two-year reprieve" from a damaged budget." Another approach to resolve the budget gap could be to impose tax increases, perhaps on those making more than $5 million annually. Governor Cuomo has resisted the idea, but recently proposed his own version "if necessary". Other ‘revenue actions’ proposed included a new state and local sales tax on the vacation home rental industry. The Fiscal Policy Institute's chief economist Jonas Shaende reviewed options facing New York officials in the coming weeks, and how they include more than just a straight tax rate increase on upper income earners.  https://www.gothamgazette.com/opinion/10156-biden-plan-new-york-state-reprieve-budget-crisis

  • The Legislature continues to review Governor Cuomo's Annual Budget Message, which presented two potential paths for this year’s financial plan: One which he says would result in stability and regrowth if the federal government fills the $15 billion budget gap he’s projecting, and another he says would result in tax increases and significant, longstanding debt if Washington provides only $6 billion. 

Regulatory Update:

  • The New York State Department of Financial Services (DFS) is warning New Yorkers about a cybersecurity fraud alert. DFS said it was issuing an alert because there's a new effort by cyber criminals to steal private information that would give them access to fraudulently apply for pandemic and unemployment benefits. DFS noted there have been several claims of unsuccessful or attempted data theft from websites like auto insurance rate quotes. The Department is urging all "regulated entities" that have instant quote websites to immediately review their websites for any evidence of hacking.

  • The law firm of Gibson, Dunn & Crutcher LLP has issued a summary overview of recent developments at the NYS Department of Financial Services. To review it, click the link below:

IBANYS will monitor developments, and will keep you fully informed.

Washington Update
The Biden administration announced several Paycheck Protection Program reforms to target the program to the smallest businesses. The administration also said it: has revised the PPP loan applications to encourage self-reporting of demographic data; will conduct stakeholder outreach on PPP challenges, and that the SBA will launch an initiative allowing lenders to submit PPP recommendations and questions and streamlining resolutions. Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.

Here's the press release from the Small Business Administration.

Release Date:  February 22, 2021     
SBA Prioritizes Smallest of Small Businesses
in the Paycheck Protection Program    
Steps to Promote Equitable Relief for Mom-and-Pop Businesses 
WASHINGTON – Building on a month of strong results, the Biden-Harris Administration and the U.S. Small Business Administration are taking steps with the Paycheck Protection Program to further promote equitable relief for America’s mom-and-pop businesses. 
The latest round of Paycheck Protection Program funding opened one month ago and already the Biden Administration has succeeded in making major improvements to the program’s implementation:
  • For businesses with fewer than ten employees, the share of funding is up nearly 60%
  • For businesses in rural communities, the share of funding is up nearly 30%
  • The share of funding distributed through Community Development Financial Institutions and Minority Depository Institutions is up more than 40%
“The SBA is a frontline agency working to create an inclusive economy, focused on reaching women-owned, minority-owned, low- and moderate-income, rural, and other underserved communities in meaningful ways. While reported data illustrates we have made real strides in ensuring these funds are reaching underserved communities, we believe we can still do better,” says SBA Senior Advisor Michael Roth. “The important policy changes we are announcing further ensure inclusivity and integrity by increasing access and much-needed aid to Main Street businesses that anchor our neighborhoods and help families build wealth. 
These simple progressive steps by the Biden-Harris Administration further demonstrate the commitment to racial and gender equity, reaching low and moderate-income, rural, urban, and other underserved areas. The SBA will:
  • Establish a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees
  • Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants
  • Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal
  • Eliminate PPP access restrictions on small business owners who have struggled to make federal student loan payments by eliminating federal student loan debt delinquency and default as disqualifiers to participating in the PPP; and
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
The 14-day exclusivity period will start on Wednesday, February 24, 2021 at 9 a.m., while the other four changes will be implemented by the first week of March. The SBA is working on the program changes and will communicate details throughout this week.
These actions will help to lay the foundation for a robust and equitable recovery for small businesses across the country. Small businesses employ nearly half of the American workforce; they create 2 out of 3 net new private-sector jobs; they reinvest 68% of revenues to build and sustain communities. Borrowers can apply for the Paycheck Protection Program by downloading the First Draw PPP loan application or Second Draw PPP loan application and working with a participating PPP lender through the SBA Lender Match tool.
Through SBA’s nationwide district offices, the Agency will work in close partnership with the Administration to further leverage its resource partner network and expand on multilingual access and outreach about the PPP. Updated PPP information, including forms, guidance, and resources is available at www.sba.gov/ppp and www.treasury.gov/cares.

  • The House appears on track to pass President Biden’s $1.9 trillion coronavirus relief package by the end of this week, facing the need to deliver aid also an unemployment benefits deadline looming in mid-March (3/14). The House Budget Committee met to "tee up" the legislation for a floor vote on Friday or Saturday. The action then moves to the Senate as early as next week, then the chambers will need to reconcile differences in their bills before sending a final version to the president.  One big obstacle in the Senate continues to be the minimum wage debate. Biden reportedly told a group of mayors and governors his minimum wage proposal isn't likely to be included due to Senate reconciliation rules -- but said he's "not going to give up" on the measure. Meanwhile, Senate Majority Leader Schumer said he’s working to keep thousands of local restaurants afloat by pushing for a $25 billion relief fund baked into the proposed $1.9 trillion COVID-19 stimulus package. (See below for summary of major components of the Biden administration's proposal)

  • Treasury Secretary Yellen said the country's economy is "digging out of a deep hole" and defended the size of President Biden's proposed $1.9 trillion aid package, saying a large stimulus bill is needed to address the economic pain in the country as a result of the pandemic. Yellen said inflation is a risk, but has been low for years and that the Fed could counter inflation if necessary by raising interest rates.

  • ICBA recently outlined its 2021 community banking agenda in an open letter to Congress, calling for a pragmatic agenda of regulatory relief and a more competitive landscape to promote a dynamic economy. IBANYS looks forward to continuing to work closely with ICBA on federal policies and priorities. READ ICBA RELEASE

  • ICBA urging congressional grassroots on PPP reform. As Congress considers the next pandemic relief package, ICBA is calling on community bankers to urge lawmakers to make needed improvements to the Paycheck Protection Program. The custom grassroots alert on ICBA's Be Heard action center calls for relief from restrictions related to first-draw loan increases, second-draw eligibility, self-employed farmers and ranchers, and live-action venues. Contact Congress today.

  • The Biden administration recently extended the foreclosure moratorium and mortgage forbearance on certain loans through the end of June. The extension—which applies to FHA, VA, and USDA Rural Housing loans—also provides up to six months of additional mortgage payment forbearance to borrowers who entered forbearance on or before June 30, 2020. The FHFA last week said Fannie Mae and Freddie Mac will extend until March 31 the moratoriums on single-family foreclosures and real-estate-owned evictions for enterprise-backed mortgages.

As a reminder, the administration's proposed "American Rescue Plan" includes:
  • Direct payments of $1,400 to most Americans, bringing the total relief to $2,000, including December’s $600 payments
  • Increasing the federal, per-week unemployment benefit to $400 and extending it through the end of September
  • Increasing the federal minimum wage to $15 per hour. (The President indicated he's willing to negotiate on his $15 minimum wage proposal, e.g., that lowering it to $12 or $13 per hour could have some upside or a longer phase-in period than the current proposal of five years is possible. He acknowledged it's "totally legitimate" for small business owners to be concerned, he does still support a $15 minimum wage.)
  • Extending the eviction and foreclosure moratoriums until the end of September
  • $350 billion in state and local government aid
  • $170 billion for K-12 schools and institutions of higher education
  • $50 billion toward Covid-19 testing
  • $20 billion toward a national vaccine program in partnership with states, localities and tribes
  • Making the Child Tax Credit fully refundable for the year and increasing the credit to $3,000 per child ($3,600 for a child under age 6)

CFPB announces plans to rethink QM rules
The Consumer Financial Protection Bureau said it expects to propose a rule to delay its Qualified Mortgage rule’s July 1 mandatory compliance date. QM Rules:In a statementandblog post from CFPB Acting Director Dave Uejio, the bureau also said it is considering whether to initiate a rulemaking to revisit the QM rule and a separate rule creating a new category of "seasoned" QMs. GSE Patch:The CFPB also indicated that the "GSE patch," which exempts Fannie Mae and Freddie Mac mortgage loans from parts of the QM rule, will remain in effect until a new mandatory compliance date is set. Background:The CFPB's general QM rule replaces the 43 percent DTI limit with an approach based on loan pricing. The "seasoned" QM rule would allow non-QM mortgages to “season” into QMs based on strong performance over 36 months. ICBA Position:ICBA has repeatedly expressed concerns with the QM rule's use of loan pricing to determine the borrower's ability to repay a loan, which favors the largest mortgage lenders. Instead, ICBA has advocated a hybrid approach that retains a range of DTI thresholds.

ICBA urges garnishment exemption for EIPs
ICBA and other groupsurged Congressto include language in the next stimulus package exempting the third round of Economic Impact Payments from garnishment. Background:Unless this language is included, depository institutions will be obligated to comply with court orders and forced to pay some creditors who attempt to garnish and freeze bank accounts. More:This language mirrors ICBA-supported language included in the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 affecting the second round of EIPs. Take Action:With Congress considering the next pandemic relief package, ICBA is calling on community bankers to urge lawmakers to make needed improvements to the Paycheck Protection Program. Contact Congress today.