December 2, 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

In 2020's final month, the pandemic is still an all-too dominant force in our lives with the numbers of new cases and hospitalizations climbing in all parts of our state. While so far there is no plan to reinstitute a second iteration of the "New York Pause" ordered by the Governor last spring, new restrictions are being imposed and a new "five point plan" is underway. Thankfully, there is a light at the end of the tunnel in the form of vaccines that will hopefully be approved and distributed in the near future.

The pandemic's impact on the economy also continues, as we wait to see whether Congress can find a way to provide some form of coronavirus relief/economic stimulus package -- hopefully including PPP reforms such as simplifying forgiveness, addressing the conflict with EIDL advances, and excluding PPP loans from regulatory asset thresholds. Yet this is still uncertain.

We also wait to see whether any package will include aid to state and local governments, which could help New York State address its budget gap of up to $15 billion that has been exacerbated by the pandemic. If it doesn't, will the New York State Legislature hold a special "lame duck session" to consider other budget/revenue raising options? And would such a lame duck session also address additional forbearance legislation?

As we all prepare for the holidays and look to 2021, the issues and challenges of 2020 are not easily left behind. Let's all work together and stay safe and healthy as we deal with what lies ahead.


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Senior Lending Summit
December 3, 2020
10:00 - 4:00 p.m. EST
Who's it for
Community Bank Presidents, Senior Credit Officers, Commercial Portfolio Managers, Loan Administration/review Managers, Senior Bankers responsible for lending functions.
 
What will it be like?
This will be an all-virtual event. Great lectures, roundtable discussions, numerous case studies, and opportunities to network.
  • Discussion and updates on PPP
  • Review of Current Industries and Economic Trends
  • Loan Pricing and Structuring
  • Internal Loan Review
  • Portfolio Management and Trouble Asset topics

5 hours of instruction are scheduled

IBANYS Preferred Partners & Associate Members
The Bonadio Group Financial Institutions Virtual Seminar
Tues. & Wed., Dec. 8 and 9, 9am – 11am |
4 CPE Credits
The Bonadio Group along with special guest speakers from M&T Bank, Luse Gorman Law, and Piper Sandler & Co., will deliver informative presentations and industry updates on:
  • LIBOR & SOFR
  • Year End Financial Reporting 
  • Community Bank Capital Management During and After COVID-19
  • Strategic Considerations for Board Members and Senior Management Regarding Recent Bank Performance, Capital Raising & M&A
 
Featured Speakers
Arne Monson, President,
Holtmeyer & Monson
David Ruffin, Principal,
IntelliCredit
REGISTER FOR WEBINAR:
2021 Business Lending: Why Wait and See Is Not A Strategy

Wednesday, December 9 at 2:00 pm ET
Duration: 45 minutes

The best way to prepare for 2021 is by knowing ways to handle what’s likely to come. This can’t-miss webinar will help you do just that. Join us as industry experts Arne Monson of Holtmeyer & Monson and David Ruffin of IntelliCredit clarify where lending is headed. We’ll discuss: why SBA products are now vital to meet borrowers’ (and community bankers’) needs; trends and warning signs that should be on your credit risk radar; what’s ahead for COVID-affected loans and how to meet examiners’ expectations; and much more. Join us to write your own script for the new year. Before customers, regulators, and circumstances do it for you.
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.
Asset Protection/Wealth Preservation,
Tax And Estate Planning
2020 Year End Notes

As this unprecedented year comes to a close, we offer some planning tips to our clients, colleagues and friends of the firm regarding their assets, tax and estate concerns. Foremost, there are some time-sensitive ways to save taxes that could result in much more money for your family. 
How to use current law to save significant taxes and get more money to your family, less to the IRS. The law may change as a result of the election. Use the current opportunity. 
  1. Is your planning up to date, in light of Coronavirus and other challenges?
  2. 2020 Asset Protection developments.
  3. Offshore issues.
  4. Proper maintenance of FLPs and LLCs.
  5. NYC landlords and Real Estate clients: new NY landlord/tenant laws are decidedly anti-landlord and necessitate Asset Protection.
3rd Quarter NY Community Bank Landscape
Attached are the Northeast Community Bank Landscapes for the most recent quarter. These reports present a significant amount of information for their respective regions. 

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 is still deciding whether to hold a lame-duck session to discuss pandemic-related economic problems -- including 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. Even the potential revenue from such a tax hike would likely not cover the mutl-billion dollar budget gap. The Governor and Legislature have raised the possibility of some mix of tax increases, spending cuts, borrowing layoffs of government workers. Meanwhile, local government budgets are being pared down in the wake of financial strain from the pandemic and the uncertainty over federal aid.


  • Democrat John Mannion won the open seat in the 50th State Senate District, which includes the suburbs outside Syracuse and parts of Onondaga and Cayuga counties. Democrats now control 43 of the senate's 63-seats, surpassing the 42-seat threshold needed to achieve supermajority “veto proof” status. The Assembly Democrats already hold a supermajority, controlling 107 of the 150 seats. This could weaken Governor Cuomo’s sway over the state’s budget and over major legislative initiatives, and allow the Legislature -- one of the most liberal in the nation -- to pursue a range of new progressive measures (perhaps including higher taxes on the wealthy) without fear of a veto from the governor.

  • Assembly Democrats and Republicans have re-elected their leaders for the 2021 session. Both conferences met virtually. Assembly Democrats reelected Speaker Carl Heastie (D-Bronx), who was first elected Speaker in 2015. Assembly Republicans re-elected Will Barclay as Minority Leader for the second time. 
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State Comptroller DiNapoli reported that after losing more than 1.9 million jobs in March and April, New York State saw steady gains, averaging over 174,000 jobs in each of the following five months. However, that progress nearly halted in October, when statewide employment rose by less than 11,000. That brought the State’s job total to nearly 8.8 million, a cumulative increase of 881,000 since April—but, still, nearly 1.1 million below pre-pandemic levels in February.

  • Of the State’s nearly 1.1 million net jobs lost from February through October, over 344,000 or almost one-third were in the leisure and hospitality sector.
  • The “financial activities” sector accounted for 3.4% of the cumulative employment decline from February - October.

For more on the impact of the COVID-19 pandemic on the State’s finances and economy, visit 

The Census Bureau’s Small Business Pulse Survey collected data for over six months on the challenges small businesses are facing during the COVID-19 pandemic. Nearly 54 percent of New York small businesses believe more than six months will pass before the business returns to its normal level of operations relative to a year ago, compared to just over 47 percent nationally. Another 10 percent of respondents in New York do not believe the business will ever return to its normal level of operations, 2.4 percentage points higher than the national figure.



Washington Update

  • There was some momentum this week around a new economic stimulus package, but it's unclear if Republicans and Democrats are closer to a compromise before the holidays. House Speaker Pelosi and Senate Minority Leader Schumer floated a new, private proposal to Senate Majority Leader McConnell, but he circulated a bill to his GOP colleagues which he proposes as the basis of negotiations. McConnell wants to pass a smaller “targeted relief bill” this year, and said a must-pass spending bill and pandemic relief provisions will “all likely come in one package.” He may try to attach his bill to the funding measure to force Democrats to try to remove it or vote it down.

  •  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.

  • President-Elect Biden has nominated his "economic team" on Tuesday, led by former Fed Chair Janet Yellen as Treasury Secretary; Former CFPB chief of staff, deputy director of the National Economic Council and deputy national security advisor Wally Adeyemo as Deputy Treasury Secretary; Neera Tanden as OMB Director; Cecelia Rouse to chair the Council of Economic Advisors; BlackRock executive Brian Deese as Director of the National Economic Council. Mr. Biden has called on Congress to pass a ‘robust’ stimulus package.
 
  • In testimony a congressional hearing Tuesday, Federal Reserve Chairman Powell said the Fed's actions to backstop a range of credit markets after the coronavirus convulsed Wall Street this past spring had unlocked almost $2 trillion to support businesses, cities and states, and that the Fed's unprecedented steps to stabilize financial markets had largely succeeded in restoring the flow of credit from private lenders.

  • 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
Additional Information
News Release | NR 2020-163 December 1, 2020
 
WASHINGTON— The Office of the Comptroller of the Currency (OCC) is reducing the rates in all Fee Schedules by 3 percent for the 2021 calendar year.
 
The 2021 reduction is in addition to the 10 percent reduction to all Fee Schedules in 2020 and to the General Assessment Fee Schedule in 2019. The reduction reflects increased operating efficiencies that the agency has achieved over the last several years. The 2021 assessment level provides sufficient resources that enable the agency to recruit, train, and retain the talent and experience necessary to perform its important mission and continue to invest in initiatives that improve the agency’s ability to ensure the safety, soundness, and fairness of the federal banking system.
 
The reduced assessments go into effect January 1, 2021, and will be reflected in assessments paid on March 31, 2021, and September 30, 2021.
 
Related Links:

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Bulletin | OCC 2020-105 November 30, 2020

To
Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies of Foreign Banks; Department and Division Heads; All Examining Personnel; and Other Interested Parties
 
Summary
On November 30, 2020, the Office of the Comptroller of the Currency (OCC) published instructions and technical specifications for preparing and submitting quantitative measurements relating to section 13 of the Bank Holding Act, commonly known as the Volcker rule. On November 14, 2019, the OCC, the Board of Governors of the Federal Reserve System, the U.S. Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, and the U.S. Securities and Exchange Commission issued a final rule revising the regulations implementing the Volcker rule, including the regulatory requirement to submit certain quantitative measurements. See OCC Bulletin 2019-56, “Volcker Rule: Final Rule.” The compliance date for this final rule is January 1, 2021. Under the final rule, banking entities with significant trading assets and liabilities must submit certain quantitative measurements on a quarterly basis and in accordance with the XML schema posted on the OCC’s “Volcker Rule Implementation” web page. The instructions and technical specifications conveyed by this bulletin provide the relevant XML schema and additional guidance on how to prepare and submit quantitative measurements relating to the Volcker rule.
 
Note for Community Banks
Banks that have total consolidated assets equal to $10 billion or less and total trading assets and liabilities equal to 5 percent or less of total consolidated assets are generally exempt from the Volcker rule. See 12 CFR 44.2(r)(2) and OCC Bulletin 2019-32, “Volcker Rule: Final Rule.”
 
Further Information
Please contact Roman Goldstein, Risk Specialist, Treasury and Market Risk Policy, at (202) 649-6360 or Mark O’Horo, Counsel, Office of the Chief Counsel, at (202) 649-5510.
 
Related Link

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News Release | NR 2020-161 November 30, 2020
 
Joint Release
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
 
WASHINGTON—The Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency today issued a statement encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021, in order to facilitate an orderly—and safe and sound— LIBOR transition.
 
Related Link