March 7, 2019


In This Issue: 
Message From the President

By John Witkowski, President & CEO
 __________


*Please Note:*
Next week's newsletter will be published 
Thursday, March 14


Get Ready For Our Compliance Conferences Next Week!

Next Tuesday is the beginning of IBANYS' 2019 meetings with our Compliance Conference! The conference on Tuesday, March 12 will be held at the DoubleTree by Hilton in Rochester; Wednesday, March 13 will be at the Hilton Garden Inn in Troy.

Compliance is essential to every community bank. It is one of the most critical and consuming responsibilities in the financial industry today. Both federal and state regulatory agencies expect banks to have comprehensive, well managed programs. Compliance officers are responsible for developing and maintaining those programs, which includes monitoring and training. With the abundance of  information and ever-changing regulatory environment, it is crucial to be well-prepared with tools to keep those programs relevant and operations running efficiently.  

The IBANYS Compliance Conference provide insight and instruction from regulators and various subject matter experts on developing and maintaining a solid compliance program. The agenda  was  developed with important input from the members of our Compliance Peer Group  - comprised of compliance officers from our member banks. The conference will examine topics such as:
  • "Best Practices" in Monitoring Programs - and, How to Report the Result
  • Tips to Improve Your CDD/EDD Beneficial Ownership Program
  • Marijuana: Headache or Opportunity?
  • TRID Trends-What's New and What Are Examiners Finding?
  • Update on CRA and Fair Lending
  • The Latest On BSA/AML
  • A Panel Discussion With Regulators
Attend the 2019 Compliance Conference and learn first-hand from the experts and have your most vital questions answered! Also take advantage of this excellent networking opportunity and earn up to 7.5 CPE credits!

If you haven't registered to attend one of these locations, there is still time to sign up. Download the brochure and registration form and send it to IBANYS as quickly as possible. 

*Don't forget there will be an a dditional Compliance Conference on April 9 in New York City. Read more.

Furthermore, IBANYS continues to keep our members informed through our additional educational conferences. Full brochures and registration forms are available for our Compliance Conferences in Rochester, NY and Troy, NY in March - along with our  Directors Conferences in Rochester, NY and Poughkeepsie, NY (new location!) in April.   Brochures and registration forms will soon be released for our Security and Lending Conferences in May, our Annual Convention in June, and our Banking Executive Symposium in September, so be sure to save the dates.



Make your voice heard in Washington D.C. on April 29 - May 1 at ICBA's Capital Summit! 
Community bankers from across the country will gather to express their priorities, concerns and ideas, as well as meet with various legislators. IBANYS will be participating in these "hill visits" with members of our New York Congressional Delegation. There are also excellent learning opportunities with a variety of speakers from Congress and federal agencies

With your help, we can present a strong, unified presence that community banking is essential to every community and our economy. IBANYS is putting a strong focus on our advocacy efforts, specifically in Washington as the legislative landscape continues to change.

The Capital Summit is a great way to bring your voice, priorities and concerns to the forefront in Washington. All voices matter. Register to attend with IBANYS today!


__________________________________________
 

If there is someone at your bank who is not currently receiving the e-newsletter, send us their names and email addresses and we will add them to our list! Email Linda Gregware or Natalie Rowan to add additional recipients or for more information. In addition, ensure everyone is following IBANYS on Facebook, Twitter, Instagram and LinkedIn to stay-up-to-date with all IBANYS news.

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2019 Meetings

Get Ready For 2019 Annual Convention!Convention19

 

SAVE THE DATE

When:

June 10-12, 2019


Where:

5218 Patrick Rd, Verona, NY 13478

__________________________________________________________________


Attend One of Our Educational Meetings! Meetings2019


Our 2019 Meeting dates and locations are now available! These educational conferences cover various subjects that are important within the community banking industry, spoken by the experts. T hey are also a great opportunity to network and earn CPE credits. Here is what we have planned for 2019:

ComplianceConf

                            March 12, 2019                             March 13, 2019
    DoubleTree by Hilton                              Hilton Garden Inn
                            1111 Jefferson Road                             235 Hoosick Street
                            Rochester, NY 14623                               Troy, NY 12180

                            View Brochure                          View Registration Form

CPE Credits Available = 7.5


____________________________________________________________

CEOForum

April 2, 2019
145 Killbourn Road
Rochester, NY 14618

                           View Brochure                          View Registration Form

*This forum is limited to 15 participants

**This forum is for IBANYS member banks only

***This event is sold out

____________________________________________________________

NYCCompliance

April 9, 2019
1185 Avenue of Americas, 38th Floor
New York, NY 10036

                            View Brochure                         View Registration Form


CPE Credits Available = 6


DirectorsConf
             
                           April 16, 2019                                     April 17, 2019
                    RIT Inn & Conference Center                    Hampton Inn Poughkeepsie
                       5257 W.  Henrietta Road                                   2361 South Rd.
                          Henrietta, NY 14467                            Poughkeepsie, NY 12601

                          View Brochure                          View Registration Form

CPE Credits Available = 7

____________________________________________________________

SecurityConf
                   
                           May 7, 2019                                         May 8, 2019
                 RIT Inn & Conference Center                     Hampton Inn Poughkeepsie
                      5257 W. Henrietta Road                                   2361 South Rd.
                         Henrietta, NY 14467                              Poughkeepsie, NY 12601

CPE Credits Available  = 7

__________________________________________________________________

LendingConf 

May 21-22, 2019
16 North Franklin Street
Watkins Glen, NY 14891

CPE Credits Available  = 7

__________________________________________________________________


Banking Executive SymposiumBankExecSymposium

September 9-11, 2019
200 Riverside Drive
Clayton, NY 13624

CPE Credits Available  = TBD

__________________________________________________________________

Have an idea for one of our meetings? Want to see a meeting or forum on a different subject? We want to hear from you! 
Contact Linda Gregware or John Witkowski with your thoughts and/or comments.

IBANYS Education/WebinarsWebinars
  WebinarSchedule2019

The 2019 Webinar is now available! The Independent Bankers Association of NYS (IBANYS) partners with CBWN to bring you more than 150 webinars each year covering compliance, lending, regulations, security, operations, new accounts, collections, fraud, security and other topics. Even better, each time you purchase a webinar, you support IBANYS, because a portion of your registration comes directly to us. Thank you!  

You can view the 2019 Webinar Schedule here or by category here. In addition, CBWN has made some recent updates to provide better service to its consumers. Unfortunately, some changes may have caused you to miss important webinar announcements. Please read the IBANYS letter to view the updates and ensure that you do not miss another webinar.

NEW WEBINARS ADDED FOR 2019NEWWebinars19

CBWN has added more than 140 webinars to the IBANYS webinar calendar, covering all the essential topics. Start the new year off right by gaining the knowledge and tools to make 2019 the best year yet! 


CBWN and IBANYS thank you for your continued support of the education in the community banking industry. 

________________________________________________________________


IBANYSWebinarsBIGSavings

2019 Webinar Series - Available Now

6 Webinars  for the Price of 5

or

10% off a 4-Part Series


Choose From The Following:

            Credit Analysis & Underwriting Series                        Regulation E-Series
                             4-Part Series                                                     6-Part Series 

                       ACH Specialist Series                            Mortgage Lending Hot Spots Series
                             6-Part Series                                                     6-Part Series

                     Board Reporting Series                                     Teller Training Series
                             4-Part Series                                                     6-Part Series

                               BSA Series                                                      C-Suite Series
                            4-Part Series                                                      4-Part Series

                          Call Report Series                                       Consumer Collection Series
                             4-Part Series                                                      4-Part Series

                               IRA Series
                             4-Part Series

________________________________________________________________






Reg relief makes most reciprocal deposits nonbrokered, providing banks the opportunity to attract even more deposits. Thanks to the newly signed regulatory relief bill, most reciprocal deposits are no longer brokered. This comes as banks face intense and increasing competition for deposits.

Join Promontory Interfinancial Network - the nation's leading provider and inventor of reciprocal deposit placement services - for a free webinar that outlines key provisions of the new law and the impact ICS®, Insured Cash Sweep®, and CDARS® can have on banks' balance sheets. The webinar will also cover how banks can use ICS and CDARS to capitalize on the opportunities at hand; presenters will discuss cost-effective ways to use the services to attract high-value relationships (even as deposit competition intensifies) and to lock-in more low-cost funding (even as interest rates continue to rise). This webinar is a "must" for decision-makers at banks of all sizes, especially for community banks that utilize collateralized deposits and/or listing services.

Numerous new banks are joining the Promontory Network. In order to give these newly on-boarded banks an opportunity to begin transacting, we have decided to extend this incentive program through March 31, 2019. 

Choose a date and time that works for you!


Government Relations
AlbanyAlbanyGR

 

NYS Labor Department Won't Pursue Call In Pay Proposal

The New York State Labor Department does not plan to pursue its "Call In Pay Proposal"  that  would have required employers to pay workers for   scheduling changes   with less than two weeks' notice. IBANYS had discussed the proposal in our Government Relations Committee, and expressed concerns over the plan. 



Budget Talks Breakdown Over Revenue Projections

Governor Cuomo (left) & Comptroller DiNapoli (right)

New York state budget negotiations broke down over the past weekend as Governor Cuomo and the Legislature's Democratic leaders continued their disagreement over revenue projections for the coming fiscal year.  State Comptroller DiNapoli then determined a binding revenue estimate as required by law (see article below.) Negotiations also proceed as the administration continues to predict a $2.3 billion shortfall in its proposed $175 billion budget. 
Andrea Stewart-Cousins
In a joint statement, Assembly Speaker Heastie (D-Bronx) and Senate Majority Leader Stewart-Cousins (D-Yonkers) noted: "It is unfortunate that we could not come to an agreement on a revenue consensus with the governor. It remains the intention of both the Assembly and the Senate to reach a fiscally responsible, on-time
Robert Mujica
budget that meets our priorities." The Governor's office also appears to have dug in, as State 
Budget Director Robert Mujica pointed to the "fiscal realities" facing Albany this year stemming from "revenue shortfalls and an unstable economy." Mujica said t he Governor "has said getting the budget done on time is important but it is more important to get the budget right. Because of our record of prudent budgeting, we have never had to do a midyear budget correction, and we are not about to start now." Mujica warned legislators that economic experts predict economic growth will slow, while federal tax changes eliminating deductions for state and local taxes may limit new revenue. "The revenue forecast is an essential starting point for the state budget, and the Senate, Assembly and executive do not agree on a revenue estimate, with the Senate insisting on much higher revenues than the Assembly or executive."



Budget Update: Governor, Legislature Can't Agree & 
State Comptroller Issues Revenue Forecast

State Comptroller DiNapoli
On Tuesday, Comptroller Tom DiNapoli submitted a revenue forecast for the next two years that is $190 million higher than estimated by Gov. Cuomo's initial budget projection, but below the number lawmakers had sought. ( The revenue forecast decision was given to the Comproller after lawmakers and Cuomo's budget advisors could not reach an agreement on the number for the first time in years.)  The Governor likely  expected DiNapoli's estimate to be lower than both what lawmakers had projected as well as his own budget after independent economists raised concerns of a potential recession as early as next year.   In a letter   to legislative budget officials as well as Cuomo's budget director Robert Mujica, DiNapoli writes that forecasting revenue is more challenging this year, given federal tax law changes.   DiNapoli wrote that the Governor's proposal to include $488 million in the state's rainy day fund is a "a good step" toward guarding against fiscal uncertainty, and that more should be done in a final budget agreement to guard against a softening of the economy.   In a statement, Cuomo's office said the $190 million would be earmarked for reserves, and not used as part of the "budget pie."

Recently,  State Comptroller DiNapoli's office released a report noting that the proposed $175.1 billion 2019-20 Executive Budget advances several measures to reduce the financial risks posed to New York by unpredictable tax revenues and federal funding.
However, it warned larger-than-expected declines in current fiscal year tax collections leave uncertainty that may not be fully clarified before the April 1 start of the new fiscal year. "As lawmakers craft next year's state budget, they are negotiating under the threat of slower economic growth, volatile financial markets and continuing revenue uncertainty. Decisions on the new budget demand an exceptionally high degree of caution, and I encourage the Governor and Legislature to bolster the state's rainy day funds to better prepare for future fiscal challenges." State tax collections for the month of January were $2.3 billion below the Division of Budget's (DOB) initial Executive Budget projections. DOB has reduced estimates of tax receipts for the current and next fiscal years by $5.7 billion since release of the November update of the Financial Plan.



State DFS Investigating Trump Organization's 
Insurance Policies & Claims

The New York State Department of Financial Services (DFS) issued an expansive subpoena to the Trump Organization's longtime insurance broker, Aon. It is reportedly the first step in an investigation of insurance policies and claims involving President Trump's family business. The subpoena was served late Monday to Aon, one of the largest insurance brokerage firms in the world, as part of an inquiry by DFS just days after Michael D. Cohen, Mr. Trump's former personal lawyer indicated in congressional testimony that the Trump Organization inflated the value of its assets to insurance companies. DFS does not conduct criminal investigations or have authority over Mr. Trump or the Trump Organization, but can refer any possible illegal activity to prosecutors. 





State Legislative Activity 
 
The State Senate Banks Committee met last Tuesday. The committee's agenda included a number of bills discussed at the most recent IBANYS Government Relations Committee:
  • The Committee reported S. 727, Montgomery would permit state and federal credit unions to participate in the State Business Development District Program. This legislation passed the Assembly in previous years, but never the Senate. Democrats now hold a significant majority in the Senate and a seven-to-four majority on the Senate Banks Committee. Also, the legislative agenda is different and level of support for credit unions' involvement in municipal deposits business and related areas appears to be higher. While there is no companion bill yet in the Assembly, this action does reflect potential movement on this issue. IBANYS will again submit our Memo in Opposition to S.727, based on the fact that credit unions pay no income taxes to NYS and should not receive the benefits funded by taxpayer dollars. 
  • S. 2106, Sanders would require banks to disclose negative consequences of establishing alternative payment schedule on a loan (e.g., due to renegotiation, default). For example, providing a disclosure that the transaction could have a negative consequence on their credit score. There is no companion bill in the Assembly. IBANYS will work with the legislature to seek modifications to the bill, such as restricting the application to consumer mortgages and consumer loans, not commercial loans, and perhaps inserting the disclosure as an add-on.
  • Another introduction, S.133 (Carlucci)/A.5635 (DenDekker), was proposed at the request of State Attorney General James. It would expand current data breach notification areas to include biometric data, credit and debit cards, and emails with passwords/security questions. It includes a limited exemption for banks who notify of breaches (under the federal Gramm-Leach-Bliley Act) to avoid duplicate obligations.

 

  • Legislation sponsored by Sen. James Gaughran (D-L/I.) to update the state's "zombie property" law has passed the State Senate. The bill would reduce from two years to one the time a city, town or village must wait before beginning the process to take ownership of an abandoned property.  The Assembly companion bill is sponsored by Assemblyman John McDonald D-Capital District).


 


 


 

Trump Administration Asks Federal Court To Reject 

 

New York's SALT Lawsuit

The Trump administration once again asked a federal judge to throw out New York State's effort to invalidate a $10,000 cap on state and local tax (SALT) deductions. The Trump administration   called it a 'classically political' argument not suited for a court. 

In court filings last month, the U.S. Department of Justice refuted claims from New York, New Jersey and two other Democrat-led states that filed a joint 2018 lawsuit arguing the cap infringed on their constitutional right to tax as they see fit. The U.S. Justice Department claims the states haven't suffered 'concrete' and 'imminent' harm from the cap, which means they would lack standing to sue." 



Have You Reached Out To Your New State
Legislators 
Members Of Congress?ReachOutCongressRep
 

There are 39 new members of the State Legislature and 5 new members of the new York Congressional Delegation. IBANYS has provided lists of all the new State Senators, Assembly Members and Congressional Representatives, as well as talking points to help them understand and appreciate the importance of community banks to New York's state and local economies and communities (see below) as part of our   outreach program to all member banks and encouraged you to meet with your new members of the State Senate, State Assembly and New York Congressional Delegation. The program materials include:
  •  Talking points for your use in your meetings, emails and phone calls to introduce yourselves and to help inform them about New York's community banks.
Please contact your new state and federal lawmakers, then let us know the results by emailing  John Witkowski and Steve Rice 


Washington, D.C.WashingtonGR


ICBA Unveils "Community Focus 2020: The Community Bank Agenda for Expanding Economic Opportunity" ICBACommFocus2020

ICBA unveiled its new legislative and regulatory policy platform: "Community Focus 2020: The Community Bank Agenda for Expanding Economic Opportunity". The multifaceted agenda advocates common-sense reforms that will promote greater access to financial services and economic opportunity throughout local communities nationwide.

Community Focus 2020 includes policy prescriptions on the following issues areas:
  • Regulatory Relief: ensuring common-sense reforms that tier regulations to community banks' scale and risk profile, including capital standards and the bank exam environment, to better promote the flow of credit and economic opportunity for all individuals and families. 
  • More Competitive Landscape: Promoting a fair playing field between current providers of financial services, such as community banks, and new entrants in the marketplace while scrutinizing the taxpayer-subsidized advantages enjoyed by tax-exempt credit unions and Farm Credit System lenders.
  • Community Bank Innovation: Promoting financial innovation and collaboration with fintech companies as well as regulations that foster a level playing field across the financial sector.
  • Bank Secrecy Act/Anti-Money Laundering: Addressing outdated BSA/AML rules to make them more efficient and effective by raising the currency transaction report and suspicious activity report thresholds and ensuring that beneficial ownership information is collected and verified by either the IRS or other appropriate federal or state entities at the time a legal entity is formed.
  • Data Security, Fraud and Privacy: Advancing proper security and confidentiality of customer information and supporting equally strong safeguards for the many other entities that use and store consumer financial data.
  • Preserving Mortgage Lending: Supporting access to an open and robust secondary mortgage market, including Fannie Mae and Freddie Mac, which are a source of capital for lenders of all sizes and are obligated to serve all markets at all times.
  • Tax Relief: Promoting tax and budget policies that foster economic growth and support the community banking sector by providing tax reforms and encouraging private savings and small business investment.
  • Industry Concentration and Systemic Risk: Advancing legislative and regulatory changes that would curb or end advantages enjoyed by too-big-to-fail banks while preserving the separation of banking and commerce to ensure unbiased credit decisions and avoid excessive market power.
  • Agriculture and Rural America: Advocating policies that will support rural America by strengthening community banks, which fund nearly 80 percent of all agricultural loans from the commercial bank sector.
  • Payments: Creating a legal and regulatory environment governing payments that does not discourage community banks from offering various payments services that best address consumer needs.
  • Cybersecurity: Supporting policies that broaden supervision of technology service providers while recognizing existing cybersecurity frameworks, tools, and assessments for community banks to avoid duplicative and counterproductive obligations.
Rebeca Romero Rainey
ICBA President & CEO Rebeca Romero Rainey commented:  "ICBA's Community Focus 2020 agenda supports needed financial and regulatory reforms that policymakers on both sides of the aisle can advance."  ICBA and community bankers developed "Community Focus 2020" to advance a more efficient system of regulation, unbiased laws governing the financial sector, a safer and more secure business environment, and more effective agriculture policies to extend the nation's economic growth to every corner of the country. She noted the multipronged agenda advocates common-sense reforms that will extend the nation's economic growth to every corner of the country.
"In short, Community Focus 2020 offers a comprehensive plan to help every American in every community-whether urban, suburban, or rural-join in the nation's economic prosperity,".  ICBA and community  bankers look forward to working with policymakers on advancing this agenda. View the policy platform .



House Financial Services Committee's Sets 
Upcoming Hearing Calendar


In its newly released hearings calendar, the U.S. House Financial Services Committee announced it plans to hold hearings next month on Consumer Financial Protection Bureau (CFPB) oversight, ""Holding Megabanks Accountable: An Examination of Wells Fargo's Pattern of Consumer Abuses," and National Flood Insurance Program reauthorization. The hearings calendar also includes hearings on deterring financial crime, disaster recovery, and Securities and Exchange Commission rules. 



Rep. Ocasio-Cortez Co-Sponsors "Wall Street Tax Act Of 2019"

Alexandria Ocasio-Cortez
Rep. Alexandria Ocasio-Cortez (D-Queens/Bronx), a member of the House Financial Services Committee, signed on as the lead co-sponsor of the "Wall Street Tax Act of 2019," which will be reintroduced by House Democrats led by Rep. Peter DeFazio (D-OR.) 

The legislation would impose a tax on securities transactions, targeting high-frequency traders. The Joint Committee on Taxation estimates that a financial transaction tax could gather $777 billion in a 10-year period. A Senate  companion bill was introduced by Sen. Brian Schatz, D-HI). Republicans have a 53-47 majority in the Senate.



CFPB's Kraninger To Testify

Kathy Kraninger
Consumer Financial Protection Bureau Director Kathy Kraninger   is scheduled  to make her first appearance before the House Financial Services Committee this week. Kraninger is slated to appear before the panel at 10 a.m. (Eastern time) this Thursday and before the Senate Banking Committee next Tuesday, March 12. 

Meanwhile,  House Democrats have introduced legislation to undo efforts to weaken the agency by Kraninger's predecessor, former acting Director Mick Mulvaney. Nearly 30 Democrats on the Financial Services Committee panel are co-sponsoring the Consumers First Act to -- among other things -- limit the number of political appointees the CFPB can hire, restore supervision and enforcement authority in the agency's fair-lending office and resume supervision for the Military Lending Act.



Bowman Sworn In As Federal Reserve Governor

Michelle "Miki" Bowman being sworn in
ICBA President and CEO Rebeca Romero Rainey joined the swearing-in ceremony for Federal Reserve Governor Michelle "Miki" Bowman , the first person to fill the Fed's ICBA-advocated community banking seat. Other attendees included Federal Reserve Chairman Powell, Comptroller of the Currency Otting, Consumer Financial Protection Bureau Director Kraninger, Secretary of State Pompeo and several state banking commissioners. 

ICBA strongly supported Bowman's nomination and recently urged President Donald Trump to renominate her for a full Fed term, noting that she is serving a partial term that expires Jan. 31, 2020. Governor Bowman said she plans to travel widely and listen closely to community bankers to help guide her efforts to preserve and enhance the community bank model for future generations.



Federal Regulators Adopt Exam Consistency Policy

Federal banking regulators issued principles to promote consistency, clarity and ease of reference for the presentation of information in examination reports. The Federal Financial Institutions Examination Council policy statement, developed as part of its Examination Modernization Project, seeks to reduce unnecessary regulatory burden on community financial institutions. It replaces a 1993 inter-agency statement.

Meanwhile, the FDIC's Subcommittee on Supervision Modernization held its inaugural meeting to discuss how the agency can use technology and refine processes to make the examination program more efficient. The panel was established to support the FDIC's Advisory Committee on Community Banking and will meet in person at least three times this year.



FDIC, OCC & Fed Discussing Incentive Pay Rule

Top officials at the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve are once again discussing a post-crisis rule that has long been set aside and is designed to curb incentive pay that encourages risky, short-term bets that critics say helped lead to the recession, according to recent press reports.



Fannie, Freddie Update Pooling Requirements for Single Security

Freddie Mac and Fannie Mae published letters to lenders detailing changes in certain requirements for loans included in the new Uniform Mortgage-Backed Security, which both enterprises will begin issuing in June.  Fannie and Freddie announced adjustments to interest rate spreads and fees in response to the Federal Housing Finance Agency's recently issued final rule on its single-security initiative.  The rule directs the government-sponsored enterprises to align cash flows and prepayment activities for investors who purchase the uniform security.



Meet With the New York Congressional Delegation at the
ICBA Capital SummitICBACapSummit


The 2019 ICBA Capital Summit will be held April 28 - May 1 in Washington. Community bankers from around the nation will travel to Washington to meet with their Members of Congress in their offices "on the hill" and hear federal financial regulators to discuss key issues. We'll hear firsthand from financial and policy leaders, and work to influence the policy-making process. New York community bankers: Mark your calendars and save the dates. U.S. Senate Banking Committee Chairman Mike Crapo, a champion of the S.2155 regulatory relief bill that provided the most comprehensive relief for community banks since Dodd-Frank's enactment in 2010, will be a featured speaker at the Capital Summit. 

IBANYS will be scheduling meetings with members of the New York congressional delegation. With a Democratic House of Representatives, a new agenda in the House Financial Services Committee, five new Representatives from New York and six New Yorkers on the House Financial Services Committee, it is more important than ever to bring our New York community bankers' voices, priorities and stories to the forefront. Email John Witkowski or Steve Rice  to confirm your participation and indicate which Representatives with whom you would like us to arrange meetings with.  


Industry Trends & Updates

Cash Whiplash 
Changing Interest Rates Can Create Volatile Cash Flow ReberArticleCashWhiplash
By Jim Reber
President & CEO, ICBA Securities

Jim Reber
Before 2018 gets too much further into our rearview mirrors, it may be worthwhile to review what investment portfolio lessons we can derive for future reference. The popular notion among community bankers is that, for all the positives that the industry enjoyed last year (record earnings, continued loan growth, and solid credit metrics), the bond portfolio was a lagging performer. I believe most of that impression was the result of fixed-income investments being, for the most part, underwater.  It may therefore surprise you to learn that, in 2018:  
  • Tax-equivalent yields improved nicely to 2.78%, an increase of 32 basis points (0.32%); 
  • Average lives actually decreased from 4.4 years to 4.3 years; and 
  • Net unrealized losses did increase, but only by about 1 percent of face value.
That third bullet point may sound like fake news, alternative facts, or just old-fashioned spin, but the average net unrealized loss as of December 31 was still only about 1.5 percent. The average bank's bond portfolio was further underwater than that for most of the year and was down around 3.0 percent as late as November. Read the full article.

_________________________________________


Fed's March 6 Beige Book Shows Latest Conditions 
In New York District 

The Federal Reserve's "Beige Book" - which periodically measures economic conditions in the Fed's 12 districts - reported Wednesday that the U.S. economy cooled in the first two months of 2019, with growth characterized as "slight-to-moderate" across most of the country. according to the Federal Reserve's Beige Book economic report. The report is based on anecdotal information collected by the 12 regional Fed banks through Feb. 25.  About half the Districts noted the government shutdown led to slower economic activity in some sectors, including retail, auto sales, tourism, real estate, restaurants, manufacturing, and staffing services. 

  • Small to medium-sized banks reported lower demand for consumer loans, residential mortgages, and commercial mortgages, but slightly higher demand for commercial and industrial (C&I) loans.
  • Housing markets across the District have been stable to somewhat softer since the last report. Homes sales in upstate New York have slowed further, though the inventory of homes on the market has remained low, and prices have continued to rise.  
  • Refinancing activity was reported to be little changed. 
  • Banks reported higher credit standards for commercial mortgages but unchanged standards across other categories.
  • Higher loan spreads were reported on residential mortgages, while spreads were steady for all other categories.
  • Banks reported increased delinquency rates on consumer and C&I loans but unchanged delinquency rates on residential and commercial mortgages.
  • New multi-family construction starts remained sluggish, though a substantial volume of residential development remains under construction-particularly in New York City. New office construction starts picked up in New York City but remained sluggish elsewhere.
_________________________________________


Personal Income Down

The U.S. Commerce Department reported that personal income decreased 0.1 percent in January  following a 1.0 percent increase in December, the first monthly decline since November 2015. Consumer spending declined 0.5 percent in December - the largest drop in nine years - and January spending numbers were delayed due to the government shutdown. 

Separately, the University of Michigan's consumer sentiment index rose 2.9 percent in February (remaining down 5.9 percent from the same time a year ago). It was also reported that the Institute for Supply Management's index manufacturing activity slowed by 2.4 percentage points in February.

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ICBA's Romero Rainey: Community Banks 
Boosting Local Economies 

In her recent blog, "Main Street Matters" ICBA President & CEO Rebeca Romero Rainey wrote "while megabanks have been withdrawing from local communities, a new Wall Street Journal article would have you believe these areas can't possibly get by without them. . . In reality, community bank acquisitions of megabank branches are more often an economic boon for local communities.  Romero Rainey noted community banks are out-lending their competitors and have been adding bank offices while non-community bank offices are declining, and are taking advantage of innovative technologies.

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New-Home Sales, Services Sector On Rise


New-home sales rose 3.7 percent in December, to a seven-month high. Sales were still down 2.4 percent from the same time one year earlier. Meanwhile, on a separate note, the Institute for Supply Management's non-manufacturing index for the services sector rose 3 percent, expanding at a faster pace in February.

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Credit Card Debt Also Increases

U.S. credit card debt reached $870 billion in December, its largest amount ever. The United States now has 480 million credit cards, which reflects a 100 million-plus increase since the number bottomed out during the recession 10 years ago. 

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Vining Sparks & ICBA Securities Balance Sheet AcademyBalanceSheetAcademy


Registration is now open for Vining Sparks and ICBA Securities' Balance Sheet Academy seminar in Memphis, Tennessee from Monday, April 29 to Tuesday, April 30 2019. This  advanced seminar is designed to expose seasoned community bank portfolio and balance sheet managers to advanced products and concepts.  The objective is to enable the attendees to consistently outperform their peers. The dynamics of a community bank balance sheet require an investment professional to be versed in a wide range of topics.  Balance Sheet Academy  provides discussion and practical classroom exercises to equip the attendees for these demands. Examples of these topics include: 
  • Advanced interest rate risk management strategies;
  • Low cost funding strategies; and
  • Strategies for serving bank customers while managing interest rate risk.  
Attendees will learn how the changing economic data impacts market interest rates from Vining Sparks' Chief Economist. The Balance Sheet Academy is structured for more experienced investment managers, particularly those who have attended Bond Academy.  
It incorporates balance sheet strategies into the day-to-day management of an institution's investment portfolio, wholesale funding and interest rate risk management. Bank personnel with an intermediate level of understanding of investments who are integral to the investment and balance sheet management process will benefit the most from this advanced course. New directors serving on the investment or asset-liability committee will also find this course beneficial. 


Contact:  Kert Johnson,  SVP/Marketing at (901) 762-5340 or kjohnson@viningsparks.com.

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CEIS Quarterly Newsletter - Q1 CEISQ1Newsletter

New York, February 15, 2019 - CEIS Review Inc. is a Commercial Loan Portfolio Consulting firm serving the needs of Commercial Lending Institutions. In this issue of our newsletter, we discuss  potential areas of concerns as observed throughout our Loan Review findings 2019 and how hybrid asset-based loans involve a unique credit structure designed to solve certain credit needs of customers by combining cash flow and asset-based lending in one credit facility.

ON MY MIND ...
CEIS' President and CEO, Joseph Hill, shares his thoughts
 
Indicators available to CEIS show that credit quality is generally sound, in planning for 2019 we see issues from our perspective that are potential concerns. Specific areas of concern based on our reviews are - a modest but gradual rise in criticized and classified assets, general loosening in underwriting standards for many loan types as evidenced in the increased level of policy waivers, the level of interest only transactions on stabilized properties, increased covenant compliance violation rates, and an observed complacency in managing portfolio risk and its potential direction. These observations and others may show an accumulated risk in portfolios that contain a notable level of borrowers that are not yet tested in adverse scenarios beyond the statistical models. Read the full newsletter.

Stay up to date with all CEIS Review news by visiting  www.ceisreview.com or visiting the Associate Member News page on our website. 

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Hybrid Asset Based Lending: Controls Are Necessary CEISHybridAsset
Senior Consultant With CEIS Review, Inc. 

John has over 35 years' experience in the commercial banking industry and is an experienced manager and senior credit officer.

As an independent loan review provider to approximately 150 foreign and domestic lending institutions, CEIS Review has the benefit of being able to gain insights towards the emerging and prevalent developments within the banking arena regarding commercial lending activities. One such is the entrance or expanded interest of some banks to engage in hybrid asset-based lending operations with varying levels of success and effectiveness. While portfolio and income fee diversification is important, the increased activity should be fully vetted before the additional risk is added to the portfolio.  

Hybrid asset-based loans involve a unique credit structure designed to solve certain specific credit needs of customers by combining cash flow and asset-based lending in one credit facility. While the portion of the loan approved on a cash flow coverage basis is often managed with financial covenants, the asset-based loan portion is supported by collateral coverage that is monitored with a monthly borrowing base. Read the full article.


Banking News

Congratulations to Community Bank, N.A.!CongratsCommBank


In a study  by Forbes, Community Bank System, Inc. was ranked third in the nation for financial performance - making it one of America's Best Banks! The Forbes study analyzed growth, asset quality, capital adequacy and profitability - a ll metrics related to being a good bank. IBANYS send our congratulations to President & CEO Mark Tryniski and his entire team! Read more about the accomplishment.

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Further Your Education at Barret Graduate School of Banking BarretGradSchool


Barret and IBANYS are aligned with a common interest: to represent the interests of the industry through effective advocacy and high quality educational offerings.

Located in Memphis, TN, Barret Graduate School of Banking offers a comprehensive graduate learning program for professionals in the financial services field. IBANYS has established partnerships with key industry educators including the Barret Graduate School of Banking. The school provides community bankers with an opportunity for a graduate degree in banking. 

We are currently endorsed by ICBA, ICBA Securities, Arkansas Community Bankers, CBAofGA, Indiana Bankers Association, CBAofKS, MIBA, CBAofOH, CBAofWV - with a couple more on the way. 

To learn more about Barret Graduate School of Banking, please visit   www.barret.ws.


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Keep The Door Open For Your Small Business Customers

Excelsior Growth Fund (EGF) is NYBDC's nonprofit Community Development Financial Institution and IBANYS' exclusive online lending partner. Join the growing number of banks that work with EGF to offer their customers an affordable and responsible option when they do not qualify for traditional financing. EGF offers loans up to $500,000 with a convenient, digital process. Loans under $100,000 are disbursed within 5 business days.

 EGF's experienced team can work hand-in-hand with yours to develop a customized process to make referring seamless. To learn more about offering your customers a second look through EGF contact Bryan Doxford, SVP, at bryan.doxford@excelsiorgrowthfund.org at at (212) 430-4512. 


Spotlight Bank of the WeekSpotlightBank

Fairport Savings Bank - 1962
The year 1888 was historic both in America and in Rochester.


It had been only 23 years since the end of the Civil War. Thomas Edison filed a patent for the Optical Phonograph- the first movie. George Eastman patented the first roll-film camera and registered the "Kodak" name. And in May, Fairport Savings Bank was born.

In its 130 years, Fairport Savings Bank (FSB) has seen marked growth in its products, services, and locations, but remains, at its core, an effective and strategic community bank. "As we continue to grow, our purpose, philosophy, and commitment to meeting our customers' needs has remained," says Kevin Maroney, President and CEO as of January 1. "And we're proud that our size and flexibility truly allows us to be a 21st-century 'we say yes' bank."

Fairport Savings Bank - 2017
Last May, all FSB branches celebrated with family events, anniversary cakes and special giveaway items throughout the month.

Customer Julie Scott Stryker is representative of a multi-generational family with an FSB relationship beginning with her great-grandparents, through our great-aunt, her parents, her and her husband, and now their 10-month old son. "I use the online banking service daily," she said. "It's relevant and completely up-to-date."

Julie has chosen to continue with FSB and is a big fan. "We know we can completely trust our banking relationship with Fairport Savings Bank," she added. "If ever there was an issue, we could call and speak directly with someone who would be there to help." Julie's confidence also stems from knowing FSB from the inside. For several years she worked at the bank in various departments, noting "it was a wonderful place to work."

Interior - Fairport Savings Bank
With assets of more than $300 million, FSB now has five full-service branch locations, five dedicated mortgage offices, an expansive ATM network, broad offerings of online and mobile banking e-services, and two subsidiaries- Fairport Wealth Management and FSB Insurance Agency for investments and insurance. Maroney notes that FSB is still about "cultivating extraordinary relationships" with its new and longtime customers and its nearly 100 employees, and providing its personal Fairport Savings Bank experience.

Maroney began with FSB in 2004 as executive vice president and chief financial officer during the company's strategic growth period. Upon the retirement in December 2017 of longtime President and CEO Dana C. Gavenda- now the current chair of the board of directors- it seemed fitting that Maroney be appointed to that position.

We have a long and proud history and legacy, and Kevin Maroney is perfectly positioned to carry that legacy forward," said Gavenda. "He knows to look at today's world from both a personal and business perspective not only to stay relevant, but to expand and extend our reach. He knows that we succeed if our people succeed."

Another important addition to the FSB "family" is Michael Giancursio, named in October as executive vice president and chief lending officer. This Fairport native has more than 20 years experience in commercial credit, lending, and deposits. Thanks to FSB's many products, Giancursio looks forward to growing both commercial and residential lending. He also has a unique perspective on commercial banking, having been a bank examiner for the Office of the Comptroller of the Currency in Syracuse.

FSB Through The Years

FSB prides itself on core values which include, among other points, community 
involvement and support. Its culture encourages volunteerism and community event sponsorship; Maroney himself has been the treasurer of the Boys and Girls Clubs of Rochester for five years.

"Fairport Savings Bank may have a long history," notes Maroney, "but we are not your typical, purely transactional bank. As a community bank, we all roll up our sleeves and do what needs to be done. We really do want to earn our tagline, 'love your bank.'"

To learn more, please visit www.fairportsavingsbank.com.
 
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About Spotlight Bank of the Week

Spotlight Bank of the Week is a new feature that we have added to our website and e-newsletter. It is an opportunity to promote anything about your organization, such as fun facts, organization news, special events, etc. The Spotlight Bank of the Week will be featured on our homepage slider, e-newsletter, and our social media platforms for one week. So don't miss out on this exceptional opportunity to showcase your bank to thousands of people!

View banks that have been featured as our Spotlight in the past!

To apply, just fill out our registration form and email it to Natalie Rowan at natalier@ibanys.net.

IBANYS Spotlight Is On...




LEE & MASON FINANCIAL SERVICES, INC.

Lee & Mason Financial Services, Inc. was founded in 1954 by John Ryan and is owned and operated by his son, C. Gregg Ryan, President. It is recognized as one of the pioneers in the Vendors Single Interest (VSI) line of insurance, and and was the first to offer Gap Insurance coverage to auto lenders.  Today, the key lines of business are: 
  • Blanket LSI (Lender's Single Interest) or Vendors Single Interest (VSI)
  • Gap Coverage for Auto and Leasing 
  • Insurance Tracking and Collateral Protection Insurance (CPI) 
For mortgage lending, they offer Lender-Placed Mortgage Hazard Coverage with or without Insurance Tracking, Flood Coverage, as well as Blanket Mortgage Hazard Coverage and Mortgage Impairment protection.  In the Professional Liability marketplace, Lee & Mason is a leading provider of Insurance Agents Errors & Omissions coverage. With over 75 years of combined underwriting experience, they have the expertise to offer coverage customized to the individual needs of each insured.  Lee & Mason has always operated as a full-service program administrator. They handle underwriting, quoting and binding, policy issuance, premium collection and most importantly complete claims processing and reporting. Systems technology and data security are key factors in the risk management services provided to clients. They  represent over a half-dozen commercial insurance companies, writing on an admitted basis and excess lines. All carrier partners are 'A' rated by A.M. Best and known for their commitment to the lines of insurance that they write.

Currently they insure hundreds of Financial Institutions and Insurance Agencies throughout the United States. Lee & Mason is licensed in all 50 states. They  have an experienced and talented management team backed by many dedicated and capable staff members, all standing ready to deliver the highest level of risk management services. "

For more information contact:

Charles Pritchard, Senior Vice President: 


IBANYS Endorsed Services
IBANYS identifies offers products and services that provide value to your banks, companies, employees communities. These brief summaries provide links for information. Please contact IBANYS President John Witkowski with questions.

Health & Wellness

My Wellness Resource & TELADOC

The health and wellness landscape continues to evolve. "My Wellness Resource" can be a nice addition to your existing benefit package. 

Teladoc can save your banks time and money, and provide real value to your employees as this testimonial from a New York community bank CEO proves:
HERE'S WHAT YOUR FELLOW NEW YORK
COMMUNITY BANKER SAYS. . .
"I wanted to let you know that some of our employees and I have been using "Teladoc" and it is one of the best things we have done for the bank. We all love it: We are saving time, avoiding waiting in an urgent care center or a doctor's waiting room for non-emergency related illnesses . . .and it is easy to use and convenient. Once you use it, you are hooked! This was a great find! Would recommend it to all banks."

Mario Martinez 
Chairman & CEO
Catskill Hudson Bank

Contact Alan Justin: (716) 907-5500. 




"Cure the Blue" Helps Banking Industry Battle Prostate Cancer!

The "Cure the Blue" program sponsored by the Buffalo Bills Alumni Foundation allows New Yorkers to participate in one of the most comprehensive efforts to help promote prostate cancer awareness and research in the United States.  Lake Shore Savings Bank has provided prostate cancer literature and Cure the Blue information at all eleven of its branches and their headquarters in Dunkirk. The bank also offered Cure the Blue ceramic lapel ribbon pins for a $5.00 donations to Cure the Blue to all their customers. "We fully understand the severity of this disease and the devastating effect it can have on families" said Lake Shore Savings Bank President and CEO Dan Reininga. "Our support of the Buffalo Bills Alumni Foundation's "Cure the Blue" initiative is something that we are taking very seriously and are proud to support." Buffalo Bills Wall of Famer and Alumni Foundation President Booker Edgerson, a two time prostate cancer survivor, said the bank has been a tremendous longtime supporter, noting: "They have really stepped up to the plate with their unwavering support of our Cure the Blue initiative." 

IBANYS urges all of our member banks, associate members and allies to join the effort. Cure the Blue" raises funds and awareness regarding prostate cancer in New York State. Visit  curetheblue.com  to get involved! Of all new cancer cases in the nation, prostate cancer represents 9.6%. In 2017, there were an estimated 161,000 new cases, and more than 26,000 fatalities due to the disease. Support IBANYS' "Cure the Blue" campaign to help New Yorkers participate to promote prostate cancer awareness and research.


Secure, Enhanced Internet Presence

The .bank program by fTLD operates trusted, verified, more secure, easily-identifiable internet locations for financial companies and  customers. www.icba.org 

Did You Know?



. . .That Albany has not always been the capital city of New York State?  The city of Kingston  in Ulster County was the state's first capital, where John Jay and other leaders wrote the state constitution in the local courthouse. New York's first Governor George Clinton's offices were there, and the State Assembly convened in a local tavern. In ensuing years, the State Legislature frequently moved the capital between Albany, Kingston, Hurley, Poughkeepsie, and New York City before permanently relocating the capital to Albany in 1797. 
 
New York community banks play a key role in our state and local economies. Help spread the good news among our customers, business, elected leaders and the media!



John J. Witkowski
President & Chief Executive Officer

Stephen W. Rice
Director of Government Relations & Communications

Linda Gregware
Director of Administration & Membership Services

William Y. Crowell III
Legislative Counsel

Natalie Rowan
Marketing & Social Media Assistant