October 23, 2019

In This Issue: 

**IBANYS Member Banks - Dues notices will be mailed November 1 - watch your mail.
Message From The President

By John Witkowski, President & CEO

It's Past Time For Policymakers To Wake Up  
To Growing Threats Posed By Credit Unions 
It comes as no surprise to community banks that tax-exempt credit unions have an unfair advantage, and use it to take out their tax-paying community bank competition. Credit unions do not pay federal or state income tax, do not pay rent on military bases, are not subject to CRA and have little to no oversight. Credit unions are earning millions -- and paying less in taxes than a family of four.

Now, ICBA has launched the "Wake Up" campaign, with the goal of alerting Congress and consumers to the risky practices, costly tax subsidies, and irresponsibly lax oversight of the nation's credit unions. Through policy proposals, research, grassroots advocacy, and customizable resource, the campaign will encourage policymakers to "open their eyes" to the growing threats posed by these financial firms' abandonment of their founding mission facilitated by their "captive" federal regulator, the National Credit Union Administration. The campaign follows  formation of ICBA's Credit Union Task Force on the trend of large credit unions using their tax subsidy to buy smaller community banks. 

Visit ICBA's  "Wake Up" webpage  (www.icba.org) to access customizable resources and the grassroots advocacy campaign. Take a moment to read this press release and CEO Alert.   A video address from ICBA President & CEO Rebeca Romero Rainey can also be found at   www.icba.org/wakeup. Urge  your Members of Congress  to address the lack of oversight and the substantial, unfair competitive advantage taxpayer-subsidized credit unions enjoy. The webpage also provides  op-ed letters and other key tools for your bank's use.

As ICBA noted: "It is long past time for policymakers to wake up to the new realities of the credit union industry and subject it to the same level of scrutiny for the sake of our nation's consumers and economic well-being."

The Numbers Tell The Story -- And In New York State, They Are S tunning:
  • Did you know New York credit unions used their tax exemption to avoid paying $108,425,965 in federal income taxes in 2018?
  • In 2018 New York credit unions held a total of $83,906,235,219 in tax-free assets.
  • The lost tax revenue from New York credit unions would pay for 785 teachers, 490 police officers, or 573 social workers.
  •  Credit unions used $35,780,569 of their tax subsidy on non-member expenses.
On The National Level, The Numbers Are Also A larming:
  • Did you know USA credit unions used their tax exemption to avoid paying $2,761,821,857 in federal income taxes in 2018?
  • In 2018, USA credit unions held a total of $1,470,839,386,892 in tax-free assets.
  • The lost tax revenue from USA credit unions would pay for 22,781 teachers, 14,856 police officers, or 16,453 social workers. 
  • Credit unions used $911,401,213 of their tax subsidy on non-member expenses*

IBANYS looks forward to supporting and participating in this effort.  Tax-exempt credit unions have an unfair advantage and are using it to take out their tax-paying community bank competition. Let's work together to open some eyes in Washington and Albany!

As always, thanks for all you do for community banking in New York State.
-   -   -   -   -

(*Data based on 2018 estimates from BLS Office of Employment/Unemployment Statistics (BLS/OEUS)
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Mark Your Calendars For These Upcoming IBANYS Conferences: 

Meeting Agendas & Registration Information Coming Soon

    • IBANYS Human Resources Conference - January 14 & 15, 2020 - Rochester & Poughkeepsie
    • IBANYS Compliance Conference - January 28, NYC; March 3 & 4 - Rochester & Poughkeepsie
    • IBANYS Directors Conference - February 4, NYC; April 7 & 8 - Rochester & Poughkeepsie 
  • IBANYS 2020 Annual Convention - June 15-17, 2020 - Turning Stone Resort and Casino 
  • 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
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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.

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

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Government Relations


The New York State Legislature will return to Albany in January for the 2020 session. 

New State Business Tax Climate Index
Ranks  New York State  49th Of 50 States   
The Tax Foundation, a Washington, D.C., think tank, ranks New York 49th out of the 50 states in its newly released 2020 State Business Tax Climate Index. The study found New York ranks:
  • 49th overall in business climate
  • 48th for individual taxes
  • 43rd in sales taxes
  • 13th in corporate taxes
  • 46th for property taxes,
  • and 38th for unemployment insurance taxes.
The National Federation of Independent Business New York State Director noted:  "New York again ranking near the bottom nationally in terms of its business tax burden is the latest reminder that much work remains to make the Empire State more competitive and affordable for small businesses. M aking the property tax cap permanent last year was an essential step to control the long-term growth of local property taxes, but continued action is clearly needed. New York should prioritize tax relief for small businesses on Main Street, which are most likely to reinvest in their growth, workforce, and communities."  Unshackle Upstate, a Rochester-based business group, noted New York dropped a notch in the ranking.   "Until Albany improves our harsh business climate, employers will continue to struggle and residents will continue to flee to more welcoming states." New Jersey was ranked 50th overall, Vermont 44th and Connecticut 47th.


IBANYS' Plan of Action for 2020

IBANYS is preparing for the 2020 state legislative session that begins in January, developing positions and policies and encouraging member banks to meet with their local legislators to continue informing them about community banks, our priorities and the vital role we play in New York State. Please email us your ideas, thoughts and comments on issues you want to see on the 2020 IBANYS legislative agenda.

Washington, D.C.WashingtonGR

Tell Congress It's Time To "Wake Up" --
Open Their Eyes To Credit Union Reality
As part of ICBA's newly launched "Wake Up" campaign, community bankers can use ICBA's Be Heard grassroots action center to tell Congress to open their eyes to the risks and taxpayer costs posed by credit unions.  ICBA's grassroots alert urges Congress to take on the credit union industry's $2 billion annual tax subsidy and rein in the expand-at-all-costs National Credit Union Administration.  ICBA and community banks have long opposed the credit union industry's unwarranted federal tax subsidy and the NCUA's attempts to drastically increase the powers of tax-exempt credit unions beyond their statutory limits.
Visit www.icba.org and click on the advoicacy tab.

House Passes Rep. Maloney's Beneficial Ownership Bill 
Rep. Maloney
The House voted   249-173  to pass Rep. Carolyn Maloney's (D-Manhattan) "Corporate Transparency Act" (H.R. 2513) that would provide relief from "beneficial ownership" disclosure mandates. Rep. Maloney's bill  would relieve community banks of the burden of collecting this information from their customers. The  Senate recently introduced similar, bipartisan legislation (S. 2563). Her legislation would require certain small businesses to disclose their "beneficial owners" to the Financial Crimes Enforcement Network when they are formed or there is a change in ownership structure. IBANYS met in Rep. Maloney's office to advocate for this bill during our 2019 Washington congressional visits, and supported  ICBA's letter to lawmakers and  grassroots advocacy campaign. We thank all IBANYS members who reached out to their Members of Congress. weighed in with their members of Congress. Reforming government collection of beneficial ownership records is among ICBA's recommendations in its   white paper   on modernizing the BSA/AML regime.

Meanwhile, with the passing last week of Rep. Elijah Cummings (D-MD), Rep. Maloney is now the Acting Chair of the U.S. House Oversight Committee, one of the key congressional committees in the ongoing House impeachment process.

IBANYS Member Jill Sung Testifies Before 
House Financial Services Committee

(Photo courtsey of "ICBA Newswatch" 10/23/2019)

Jill Sung Testifies Before House Financial Services Committee
IBANYS member Jill Sung (President and CEO of Abacus Federal Savings Bank in New York City) -- Chair of ICBA's Minority Bank Council -- testified Tuesday on minority depository institutions before the House Financial Services Committee. Ms. Sung, a regular participant at IBANYS' annual advocacy visits with members of the New York congressional delegation, appeared before the panel's Subcommittee on Consumer Protection and Financial Institutions. She said policymakers should work to help minority depository institutions obtain capital, such as by reducing regulatory costs. She also discussed MDI challenges in raising capital and declining MDI numbers in recent years. Ms. Sung said MDIs would benefit from the same regulatory relief policies that would help all community banks, cited Home Mortgage Disclosure Act and Current Expected Credit Loss burdens and thanked the committee for its passage of bills on cannabis banking and "beneficial ownership" disclosures. Her testimony also focused on subcommittee Chairman Gregory Meeks' (D-Queens) draft "Ensuring Diversity in Community Banking Act of 2019." She advocated streamlining the application process for MDIs to become Community Development Financial Institutions and reducing capital requirements for de novo banks, among other recommendations.

Supreme Court To Hear Case On Constitutionality 
Of CFPB Governance
The U.S. Supreme Court has decided to hear a case on the constitutionality of the Consumer Financial Protection Bureau's single-director governance.  ICBA and IBANYS are long-time supporters of replacing single-director governance with a five-member commission to allow for diverse views and expertise and a built-in system of checks and balances. ICBA President and CEO Rebeca Romero Rainey noted:  "A commission would promote measured and non-partisan agency decision making which over time is more likely to result in balanced, high-quality rules and effective consumer protection."
"Explainers" on Cannabis-Banking Bill
The Governors of New York, New Jersey, Connecticut, and Pennsylvania met last week to explore the possibility of regional standards for  legalizing recreational marijuana. Meanwhile, ICBA has released a  one-page summary  providing answers to  frequently asked questions  on House-passed legislation to establish a cannabis-banking safe harbor in states where cannabis is legal. Last month's bipartisan House vote sent the SAFE Banking Act (H.R. 1595) to the Senate. This ICBA summary details what's in the legislation, and how it would benefit community banks and local communities.  To read these documents, click here  and  here . . .O r, visit www.icba.org and click on "ICBA Issues Explainers On Cannabis Banking Bill"

New York Community Bankers: Take Action! 

IBANYS joins ICBA in asking IBANYS members to urge their local Members of Congress to advance legislation that will help community continue to serve military bases and rural communities. ICBA's "Be Heard" grassroots action center ( www.icba.org) can provide important information to help you: 
  • Urge lawmakers to include language in a defense bill to extend the same "rent-free" benefits to on-base banks that are currently enjoyed by credit unions
  • Support legislation that would exempt from taxable income interest on loans secured by agricultural real estate, and
A Conference Committee is currently working to reconcile a defense appropriations bill to support the provision to require the Department of Defense to treat banks and credit unions operating on military bases equally.  New Yorkers on the conference committee  include Senator Gillibrand and Reps. Delgado, Katko, Engel, Meeks, Nadler, Rose, Stefanik, Tonko, and Velazquez. 

ICBA is also asking community bankers to use the " Be Heard" grassroots action center  to advocate increasing the minimum threshold for collecting and reporting Home Mortgage Disclosure Act data. U rge the Consumer Financial Protection Bureau to raise the threshold even higher than proposed. ICBA advocates raising the threshold for closed-end mortgages from 25 to at least 100 and making permanent the 500 open-end lines of credit threshold.

Industry Trends & Updates

Are You Getting the Best ROI For Your Existing 
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As part of its "Trust Through Transparency" campaign, the Federal Deposit Insurance Corporation ( FDIC) is holding listening sessions throughout the nation. The New York Region's event will be Wednesday, November 13 (8:30 am to 12:30 pm) at the FDIC Regional Office in the Empire State Building, 350 Fifth Avenue, New York, New York 10118.
Visit https://fdic.gov/news/news/financial/2019/fil19052.pdf to read about the session and for a link to register for the New York session.  Or, contact the FDIC Conference Planning Manager : (703) 516-5664,  vejames@fdic.gov.

Tax Foundation: Credit Union Tax Exemption "Cannot Be Justified" 
A recent study conducted by the Tax Foundation, a non-partisan non-profit organization that provides research and analysis on federal and state tax policies, concluded there is no justification for the nation's largest credit unions to be tax-exempt. The study noted  there is evidence indicating that the credit union industry "has strayed from its original, tax-exempt purpose and is in direct competition with its taxed competitors." A spoesperson added: " The tax exemption for credit unions is not justifiable under principles of sound tax policy, nor under the rubric that lawmakers have used in the past to evaluate the tax-exempt status of financial institutions. . . Credit unions were granted their tax exemption with the understanding they would provide financial services that were unavailable or difficult to obtain elsewhere to lower-income, unbanked individuals with a strong common bond. However, evidence indicates that credit unions have evolved since their exemption was granted and now closely resemble other financial institutions that are subject to the corporate income tax. The exemption for credit unions is not justifiable on the grounds of sound tax policy."

Facebook: No Libra Until U.S. Regulators Approval
Facebook Chairman and CEO Mark Zuckerberg is set to tell the House Financial Services Committee today that the company will not introduce its Libra digital currency until U.S. regulators approve the payments system. He testifies on the impact of Facebook on the financial and housing sectors. The hearing follows the recent exodus of major financial companies, such as Visa, Mastercard, eBay and PayPal, from the Libra Association.

Court Rejects OCC Special Purpose Charter
Some observers believe Fintech firms continue to face a murky path into the banking system after the U.S. District Court for the Southern District of New York rejected the Office of the OCC's special-purpose charter.  No firm had yet applied for the charter with the OCC was facing legal challenges. But the  court's  decision  may lead fintech companies to seek alternatives to a national licensing solution.

FDIC Call Reports Due October 30
FDIC call reports for the Sept. 30 report date are due by Wednesday, Oct. 30. Community banks with less than $5 billion in assets may qualify to file the FFIEC 051 Call Report during the first and third quarters. That rule, which implements a provision of the S. 2155 regulatory relief law, took effect July 22. 


The Economy: By The Numbers

  • Existing-home sales decreased 2.2% in September following two consecutive months of increases, the National Association of Realtors reported. Each of the country's four major regions experienced sales declines, with the biggest declines occuring in the Midwest. Sales were up 3.9% overall from one year ago.
  • The U.S. Commerce Department reported U.S. homebuilding declined from a more than a 12-year high in September. Housing starts fell 9.4% nationally to a seasonally adjusted annual rate of 1.256 million units last month. Single-family home construction,  the largest share of the housing market, rose 0.3% to a rate of 918,000 units in September -- marking the fourth straight monthly increase and the highest level since January. ( Single-family housing starts fell in the Northeast, West, and Midwest, and rose in the South.)   Construction in the multi-family segment dropped. 
  • The Mortgage Bankers Association's seasonally adjusted index found that total mortgage application volume was essentially flat last week, rising just 0.5%. 
    Applications to refinance a home loan rose 4% from the previous week and were 199% higher than the same week one year ago.  Mortgage applications to purchase a home fell 4% for the week but were still 12% higher than the same week one year ago. 

Banking NewsBankingNews

Please Join Saratoga National Bank's David DeMarco 
In This Important Effort
As President & CEO of Saratoga National Bank & Trust, David  DeMarco  embraces both his employees and the community he serves. David is excited to be part of the "Real Men Wear Pink" campaign again this year. M any of us have been touched by breast cancer through family, friends and colleagues. During the month of October, David will once again wear pink every day to raise awareness and funds to combat this dreaded disease. He is joined in making this stand against breast cancer by Capital District business leaders in the "Real Men Wear Pink" campaign. David notes: "The more people that support this cause, the bigger impact we can have in saving lives."  This year, MLB Construction Services, LLC has sponsored his campaign, and is helping in the fight. David is  asking you or your company to consider making a donation to support his efforts. If you wish to contribute, you can mail a check payable to the "American Cancer Society" to this address:

David S. DeMarco, President & CEO
Saratoga National Bank & Trust Company 
171 South Broadway
Saratoga Springs, N.Y. 12866


Excelsior Growth Fund Can Help 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.

IBANYS Spotlight Is On...

Freed Maxick CPAs, P.C. - - an IBANYS preferred provider firm -- is one of the largest accounting and consulting firms in Western New York, and a Top 100 largest CPA firm in the United States. Serving closely held businesses, SEC companies, governmental and not-for-profit clients across New York as well as nationally and internationally. Freed Maxick mobilizes high-performance professionals to guide client growth, compliance, security and innovation.

Freed Maxick specializes in helping clients discover and achieve their bottom-line potential. They provide sound business advice based upon their depth of services vast experience in a broad array of industries.  Though the firm maintains relationships with external resources nationwide, it continues to maintain independence and the ability to make decisions locally. Freed Maxick has the bench strength to provide a wide array of services with highly skilled professionals, but is not burdened by cost structure or bureaucracy. Those factors translate into world-class service at rates that are commensurate with the market you do business in.

Contact Mark Stebbins, Director: (716) 847-2651, mark.stebbins@freedmaxick.com. 

IBANYS Preferred PartnersPreferred
For more information on IBANYS Preferred Partners - click here: https://ibanys.net/preferred-partners/
Did You Know?

. . .That according to Section 122 of the Federal Credit Union Act (12 U.S.C. ยง 1768) states that credit unions are exempt from all taxes except for local real property and personal property taxes? They pay no federal or state income taxes.

Did you also know that a 2018 series in "The American Banker" noted that assets at U.S. credit unions rose by 43% between 2012 and 2017,  compared with 34% growth at banks, and that the nation's largest credit union, Navy Federal, built its assets by 93% during that period? 

. . .Now you know. 

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