October 28, 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
  • IBANYS is saddened to pass along news that longtime New York community banker Ron Denniston (Chairman, President & CEO of 1st National Bank of Dryden, and a Director and subsequently Director Emeritus of IBANYS) passed away this past weekend. Ron was the epitome of a community banker, and a valued leader of our industry and trade association. He will be missed. To read Ron's obituary, click here.

  • Please be on the lookout later this week for an industry letter from DFS on climate change discussing regulatory expectations.

  • Today's newsletter includes important updates on the latest developments in Washington and Albany, and news from the OCC.

  • We also spotlight our three newly elected IBANYS Directors, whose terms on our board officially begin next week.

  • Finally, I would like to congratulate Mike Smith, President and CEO of NYBA, on his retirement as of December 1, 2020, and Clare Cusack for being named as his successor.


Please watch for IBANYS' dues renewal notices soon -- outlining our 2020 activities, our 2021 objectives and our fiscal and financial update.

IBANYS Newly Elected Board of Directors
The officers and directors of the Independent Bankers Association of New York State congratulate Dan Reininga, David DeMarco and Bob Fisher upon their election to the IBANYS board of directors, effective November 1, 2020.
Their commitment and willingness to share their time and vision as leaders of New York's community banking industry is greatly appreciated. Their insight and expertise will benefit our association and the industry we represent -- as well as the local customers and communities we all serve.
We look forward to working together in the coming year as we continue to build on the strong foundation IBANYS has established on behalf of community banks from throughout the state.
Once again, welcome aboard!
Lake Shore Savings Bank
Dunkirk, NY
Saratoga National Bank
Saratoga Springs, NY
Tioga State Bank
Spencer, NY
IBANYS Preferred Partners & Associate Members
Welcome -- IBANYS New Associate Member
Hitachi Capital - Business Finance ("HBF") is an independent, non bank finance company specializing in providing innovative working capital solutions for small private owned companies. With the financial strength and capital support of Hitachi, Ltd, HBF assists companies that seek restructuring, growth and operating liquidity that can support business cycles that many companies encounter at one time or another.
HBF starts financing from $500,000 and can lend up to $8MM with the ability to fund larger transactions on a one off situation. With experience in financing manufacturers, distributors, service related companies and staffing operations, HBF delivers working capital solutions when other traditional sources cannot.

Contact: Mark Simshauser, Senior Origination Leader
Email: msimshauser@hitachibusinessfinance.com
Phone: 516.660.4501

Piper Sandler served as financial advisor to ConnectOne Bancorp, Inc. in this transaction.
This transaction represents Piper Sandler’s 39th bank branch transaction since January 1, 2015. During that time period, Piper Sandler has advised on branch transactions comprising 239 branches and $12.6 billion in deposits, more than any other investment bank. ¹
Poughkeepsie, New York and Englewood Cliffs, New Jersey, October 26, 2020 - Rhinebeck Bancorp, Inc., (NASDAQ: RBKB), the holding company of Rhinebeck Bank, and ConnectOne Bancorp, Inc. (NASDAQ: CNOB), the holding company of ConnectOne Bank, announced today an agreement under which Rhinebeck Bank will acquire two leased branch offices in Orange County, NY and their related deposits, from ConnectOne Bank. The branch offices are located in Monroe and Warwick, New York. The transaction is expected to add more than $50 million in deposits for Rhinebeck Bank. 

“This transaction accelerates our previous stated goal of expanding our presence in Orange County. We are excited to enter this new market and bring our relationship-based banking model to this vibrant community,” said Michael J. Quinn, President and Chief Executive Officer. “Both financial institutions are committed to providing a smooth transition with minimal impact for all stakeholders.”

“This transaction reflects another step in ConnectOne’s branch rationalization strategy in order to meet evolving client demands while scaling best-in-class efficiency,” said William S. Burns, EVP & Chief Financial Officer of ConnectOne. “We’ll continue to move away from traditional retail branches towards more robust banking hubs supported by digital tools and resources.”

The transaction is expected to close late in the fourth quarter of 2020 or early in the first quarter of 2021, subject to regulatory approvals and satisfaction of customary closing conditions. Terms of the transaction were not disclosed. 
¹ Majority and minority transactions; Excludes terminated transactions and self-advisory roles.
Source: S&P Global Market Intelligence, Company documents, Press Release.
Luse Gorman Served as Legal Counsel to Rhinebeck Bank in its
Proposed Branch Acquisition with ConnectOne Bank
On October 26, 2020, Rhinebeck Bank, Poughkeepsie, New York, entered into an agreement pursuant to which it will acquire two branch offices in Monroe and Warwick, New York from ConnectOne Bank, Englewood Cliffs, New Jersey. The transaction is expected to add more than $50 million in deposits for Rhinebeck Bank.
Luse Gorman served as legal counsel to Rhinebeck Bank in the transaction. The Luse Gorman team consisted of Scott Brown, Jeff Cardone and Ellie Cook.
Luse Gorman has extensive experience representing financial institutions in corporate transactions, equity and debt offerings, and corporate governance, regulatory and employee benefits matters. To learn more about our practice, please visit our website.
Things You Never Thought You’d Say
COVID-19 has created a lot of first-ever conversations.
By Jim Reber
It may be a gross oversimplification to say this, but in many ways, community banks deal with their favorite broker the same way you deal with your dry cleaner. For one thing, there’s repeat business; we’re not a durable goods vendor that you visit every three years. For another, fixed-income brokers sell a set of relatively fungible products. For another, since there are plenty of us out there, we’re obliged to stay pretty much on-market with our prices.

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
On Election Day next Tuesday, all the seats in the State Assembly, State Senate and New York Congressional Delegation will be on the ballot. Democrats currently hold 106 of the 150 Assembly seats, 40 of the 63 senate seats and 21 of the 27 seats congressional delegation. One significant thing to watch: State Senate Democrats only need to "flip" two Republican-held seats to achieve a two-thirds "supermajority" in the chamber, as currently exists in the Assembly. No party has done that for at least a century. New York would join California, Rhode Island and Hawaii as the only states where Democrats have a governor and two-thirds of the seats in both houses of the legislature. A supermajority for Democrats in both chambers would change the political landscape of Albany: There would be implications for the balance of power between the Legislature and Governor Cuomo, since a supermajority can override a governor’s veto. IBANYS will provide details on election results in next week's newsletter.

With Election Day less than a week away, the next time the NYS Legislature reconvenes this year will clearly be in a "lame-duck" post-election session. The agenda would almost certainly include consideration of additional forbearance legislation for residential investment properties and commercial retail space mortgage payments. IBANYS opposes the legislation, and is working with the Legislature and the NYS DFS. To access the legislation, and IBANYS' Memo in Opposition: Click here to read the legislation. Click here to read IBANYS Memo in Opposition.

The major focus of the Legislature will be on the state's financial and fiscal situation. Governor Cuomo continues to hope for eventual federal assistance, but the Legislature may explore other options to raise revenue, including eliminating the rebates the state currently provides on stock transfers; enacting higher income taxes on those with more than $1 million in annual income, and creating a new tax on super wealthy people with more than $1 billion in assets. There is also talk of the “pied-à-terre” property tax surcharge on qualifying non-primary residences within the state. https://www.natlawreview.com/article/covid-19-real-estate-revival-new-york-pied-terre-tax.

County leaders say they have billions of dollars to lose in a federal stimulus-free future. Revenue losses for 62 counties across the state could range from $2 billion to $3 billion this year, according to the New York State Association of Counties (NYSAC). This includes $600 million in state reimbursements and “significant reductions in hotel occupancy tax collections, lower gaming revenues and uncollected fees for services,” according to the latest edition of the NYSAC monthly magazine. Local officials would have to raise property taxes by something like 55% to make up for a potentially 11% total cut in county revenues. “It took time to get through the consequences of the Great Depression, and it will take us all time to get through this pandemic,” warned NYSAC Executive Director Acquario.
Washington Update
New legislation introduced by Sen. Lee (R-Utah) would protect borrowers and lenders from regulatory penalties associated with the Paycheck Protection Program (PPP) after ICBA raised the issue with policymakers. The Protections for Good Faith PPP Borrowers and Lenders Act (S. 4875) would remove PPP loans from asset calculations to prevent lenders from crossing asset-size thresholds and incurring additional regulatory burdens. It also would protect lenders from various penalties and enforcement actions and remove PPP loans from the CFPB's purview. The Senate bill follows the release of ICBA-advocated House legislation directing regulators to exclude PPP loan balances from bank and bank holding company regulatory thresholds within 30 days. That bill (H.R. 8675) applies to community banks with $15 billion or less in total assets. Additionally, the FDIC last week released an interim final rule that allows community banks to use their 2019 asset sizes for 2021 auditing and reporting requirements under Part 363, which will help up to 290 community banks avoid new regulatory costs caused by PPP lending.In a letter responding to calls for agencies to act on the issue, Comptroller of the Currency Brian Brooks cited his support for the FDIC rule as a member of the board and said the agencies are working to address other regulatory thresholds not covered by the Part 363 rule. ICBA has repeatedly told Congress and federal regulators that the surge of PPP loans has swelled the balance sheets of community banks, inadvertently subjecting them to additional supervision, regulations, and costs.
ICBA called on community bankers to contact Congress and engage small-business customers on the growing conflict between PPP loans and Economic Injury Disaster Loan advances.ICBA's Be Heard grassroots page features action alerts for community bankers and small-business owners to help them contact lawmakers on the issue, which is leaving borrowers with unexpected debt and community banks with loan balances for EIDL advances originated by the SBA."If you haven't bumped into this yet, more than 1 million PPP borrowers are beginning to realize that SBA-originated EIDL advances are not the grants they expected," Romero Rainey wrote. "Rather, if EIDL advance recipients have also received a PPP loan, the advance amount is deducted from their loan forgiveness amount."While legislation to address the issue has been introduced in Congress, ICBA is urging community bankersandsmall-business owners to ensure this problem gets the attention it deserves in Washington.
ICBA released a summary of recent Paycheck Protection Program guidance, including a simplified forgiveness process and guidelines on Economic Injury Disaster Loan advances.The document details the simplified Form 3508S application and instructions for borrowers with PPP loans of $50,000 or less; An SBA update to its frequently asked questions on the extended deferral period for borrower payments on PPP loans, and SBA's announcement that lenders can now see if the agency will deduct an EIDL advance from final forgiveness payments. ICBA continues to offer aguide on SBA lien requirementsrelated to EIDLs and additional information on the federal pandemic response on its COVID-19 frequently asked questions. ACCESS ICBA SUMMARY
ICBA and IBANYS urged policymakers to advance the economic recovery despite the stalled negotiations, noting bipartisan "Paycheck Protection Small Business Forgiveness Act (H.R. 7777/S. 4117) to simplify PPP loan forgiveness will help small businesses dedicate more of their resources to paying workers and supporting local economies. ICBA (and IBANYS) have urged Congress to pass legislation to simplify forgiveness for loans of $150,000 or less. (The SBA recently announced a simplified process for loans of $50,000 or less.) Community bankers are urged to call their members of Congress and enlist the support of small-business contacts on behalf of a standalone PPP forgiveness reform bill. ICBA's "Be Heard" grassroots action center includes call alerts for small-business owners and community bankers on behalf of legislation to forgive PPP loans of $150,000 or less. COMMUNITY BANK ALERT; SMALL-BUSINESS ALERT
Earlier this fall, IBANYS 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 members of 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
If Democrats gain control of the U.S. Senate next Tuesday, based on committee seniority the Democrat next in line to chair the Senate Banking Committee is Ohio's Sherrod Brown.
Additional Information
Bulletin | OCC 2020-91 October 27, 2020
Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
The Office of the Comptroller of the Currency (OCC) today published the first semiannual Interest Rate Risk Statistics Report. The report presents interest rate risk data gathered during examinations of OCC-supervised midsize and community banks and federal savings associations (collectively, banks). The statistics are for informational purposes only and do not represent OCC-suggested limits or exposures.
Note for Community Banks
The publication contains information collected from banks supervised by the OCC’s Midsize and Community Bank Supervision department. The report is for informational purposes only.
The report provides statistics on interest rate risk exposures and risk limits for different midsize and community bank populations, including
  • all OCC-supervised midsize and community banks with reported data.
  • banks by asset size.
  • banks by charter type.
  • minority depository institutions.
The publication is intended as a resource to the industry, examiners, and the public.
Further Information
Please contact Christopher Sadej, Risk Specialist, or Lindsey Trussell, Risk Specialist, Market Risk Policy, at (202) 649-6360.
Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy
Related Link


News Release | NR 2020-139 October 27, 2020
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today issued a rule that determines when a national bank or federal savings association (bank) makes a loan and is the “true lender,” including in the context of a partnership between a bank and a third party.
Banks’ lending relationships with third parties can facilitate access to affordable credit. However, increasing legal uncertainty regarding such relationships may discourage banks and third parties from partnering, limit competition, and chill the innovation that results from these partnerships. This may ultimately restrict access to affordable credit.
After carefully considering the comments, the OCC is adopting a final rule to resolve this uncertainty. The rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan.
The rule also clarifies that as the true lender of a loan, the bank retains the compliance obligations associated with the origination of that loan, thus negating concern regarding harmful rent-a-charter arrangements.
The rule takes effect 60 days after publication in the Federal Register.
Related Link


Bulletin | OCC 2020-92 October 27, 2020
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested Parties
On October 27, 2020, the Office of the Comptroller of the Currency (OCC) submitted for publication in the Federal Register a final rule to determine when, including in the context of a relationship between a national bank or federal savings association (collectively, banks) and a third party, the bank makes a loan and is the “true lender.” Under this rule, a bank makes a loan and is the “true lender” if, as of the date of origination, the bank (1) is named as the lender in the loan agreement or (2) funds the loan. The rule provides certainty about key aspects of the legal framework that applies to loans made as part of banks’ relationships with third parties.

Note for Community Banks
The rule applies to community banks.

Banks’ lending relationships with third parties, such as marketplace lenders, can be effective tools to facilitate access to affordable credit. These relationships, however, have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks from entering into lending relationships, which, in turn, may limit competition, restrict access to affordable credit, and chill the innovation that can result from these relationships.
The rule resolves this uncertainty by specifying that a bank makes a loan when, as of the date of origination, the bank (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan and is the “true lender.”

Further Information
Please contact Andra Shuster, Senior Counsel; Karen McSweeney, Special Counsel; Alison MacDonald, Special Counsel; or Priscilla Benner, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490.
Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Link