IBANYS Weekly E-Newsletter |
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Visit our website at www.ibanys.net to review our daily updates on COVID-19.
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The President's Message
By John Witkowski, President & CEO
IBANYS has had an extremely busy spring.
- We have held a number of virtual meetings and conferences for New York community bankers -- including our highly successful "All Banks On Deck" virtual mid-year conference.
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We have participated in a series of important virtual congressional meetings with the offices of many key (and also some new) members of our New York congressional delegation and our two U.S. Senators. A large number of New York community bankers told their stories of how our industry (and IBANYS members) stepped up in a significant was as "the economic first responders" during the pandemic -- providing essential support for small businesses, homeowners, consumers and their local communities in general. . .as we have done year-in and year-out. We discussed our key federal issues with New Yorkers serving on the House Financial Services, Small Business, Ways & Means and Agriculture Committee. Here is a link to ICBA's 2021 Lobby Card: https://www.icba.org/newsroom/blogs/events-blogs/2021/04/01/capital-summit-spring-2021-lobby-priorities with details on some of those priorities.
- We have met by conference call a number of times with the New York State Senate Banks Committee Chairman James Sanders (D-Queens) to discuss the industry, our needs and priorities and his proposed legislation to establish a state/public bank and to allow credit unions into the State Linked Deposits (municipal deposits) program.
- We have held a number of "executive management conference calls" to bring together New York community bankers with government officials, outside experts, industry analysts to discuss the timely issues of the day, including updates on the pandemic, PPP and much more.
- Tomorrow, with Chairman Mike Wimer (President & CEO, Cattaraugus County Bank) presiding, IBANYS' Board of Directors will hold our May meeting to review the year to date, our goals and objectives for the rest of the year. We'll discuss financial, programatic, legislative and regulatory and other areas of importance to New York community banks.
- And, we continue to keep our industry and association fully informed and up-to-date through our daily morning Updates and our weekly e-newsletters.
We have an important article as part of today's "Albany" section of the newsletter, and I urge you all to read it. It focuses on the Public/State Banking bill being discussed in the State Senate Banks Committee. IBANYS is opposed to this legislation and we have spoken with Senator Sanders about using alternative methods to achieve the bill's objectives, without creating an additional layer of unfair competition for community banks. We need your help in reaching out to your local state senators representatives and opposing this bill. There is another bill back in the limelight - Credit Unions being eligible to bid on municipal deposits. Again, we need your voices to contact your local representative to oppose / alter this legislation as well. We are in a difficult situation, as the Governor no longer has veto power (both the Senate and Assembly Democrats have "supermajorities" that can override his veto), so these bills can be passed without any opposition or help from the Governors' office.
So, we have accomplished a great deal in the first third of the year -- but, there is clearly still much work to be done. Congress and the State Legislature are still in session, and the Biden and Cuomo administrations continue to issue proposals that will impact our industry. 2021 is a critical year as our nation, state, localities and industry emerges from the pandemic and begins to move toward recovery and normalcy. We hope you all are staying safe and healthy, and that working together, IBANYS, our member banks and our associate and affiliate members can help lead that effort.
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IBANYS received the following information today from the NYS Department of Financial Services (DFS), and was asked to share it with New York community banks:
Join the New York State Department of Financial Services’ webinar series for banking institutions on the physical risks related to climate change in New York and the Northeast. The first webinar will cover several climate-related physical changes that are likely to occur in the region such as flooding, extreme precipitation, snowfall, extreme temperature, and drought. The second webinar will focus on coastal risks, such as sea level rise, hurricanes, and coastal storms. The webinars will be led by Mark Lowery, the Assistant Director of the New York State Department of Environmental Conservation’s Office of Climate Change.
Session 1: Overview of Physical Risks from Climate Change in New York and the Northeast – May 24, 2021, 1 - 2pm
Please register here with Password ClimChg052421
Session 2: Coastal Risks from Climate Change in New York and the Northeast – May 26, 2021, 1 - 1:45pm
Please register here with Password ClimChg052621
With any questions, please contact Yue (Nina) Chen, Ph.D.
Director of Sustainability and Climate Initiatives
New York State Department of Financial Services
One State Street Plaza, New York, NY 10004+1511
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As always, thank you for all you do every day for your customers, your communities and our industry. . . and, of course, for our industry and IBANYS!
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ASSOCIATE MEMBERS & PREFERRED PARTNERS |
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COMMERCIAL LOAN PORTFOLIO TRENDS, 4Q20
Having the privilege to meet the Loan Review & Stress Testing needs of over 100+ Institutions, CEIS Review is uniquely positioned to gain insights on market activity covering several geographical areas, portfolio profile types, and regulatory agencies’ concerns.
After reviewing and analyzing the results of CEIS engagements over a quarterly period, we identify emerging trends among commercial loan portfolio behaviors, as well as any heightened concerns from regulatory agencies.
Covered in This Release:
- More notable Bank examiner concerns in 2021
- Modest to moderate increase in criticized & classified loan levels
- An emphasis on adhering to the documented credit policy
- Loan and lease analysis by state
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Below please find an article that has been created by Travelers. It features information on elevated ATM theft threats that community banks and financial institutions might face. It also includes steps they can take to help protect against such attacks.
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Founded in 2004 by Grigoris Karakoulas, InfoAgora delivers innovative prescriptive analytics, RegTech (IFRS9/CECL/IRRBB/Basel III) solutions and risk management consulting that have enabled our clients to proactively manage risk/reward in their portfolios and increase profitability.
Our team combines over 130 years of Risk Management and Machine Learning expertise.
As a thought leader and provider of leading-edge analytics solutions, our company empowers Financial Services companies with new capabilities to understand and predict customer behavior, measure and mitigate risk under different macro and micro scenarios, at both the customer and portfolio levels, in order to gain competitive advantage.
Each of our solutions leverages proprietary machine learning technology. Our breakthrough data preprocessing and modeling techniques deliver dynamic and robust models for predicting customer behavior, such as default, loss given default, prepayment, usage, attrition, and fraud.
Clients, ranging from systemically important banks to midsize and regional banks and credit unions, use our solutions and services for:
- scenario generation, integrated stress testing and loss allowance estimation
- regulatory and economic capital estimation
- adjudicating and proactively managing customers in retail, small business and commercial lending
- interest rate risk measurement due to prepayment/redemption
- product and price optimization
- internal model validation and benchmarking
Our solutions vary, from custom models to full-fledged applications, integrated into client’s systems or as a service. They have resulted in multi-million dollar benefits with high returns on investment (>1000%).
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Munis for the many
Taxable municipal bonds have appeal for nearly all community banks.
By Jim Reber
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I have some good news for community bank portfolio managers who have grown weary of some or all of the following conditions that have persisted since 2020:
- declining portfolio returns
- erratic cash flows
- call option exposure
- paltry yield spreads
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Greg Roll, CFA
Vining Sparks' Loan Trading Group
Greg Roll is a Senior Vice President in the Vining Sparks Loan Trading Group. Greg began working in the depository sector in 1994 managing the strategic planning function for a regional bank. Since 2000, Greg has been working in the capital markets helping financial institutions formulate balance sheet strategies that create optimal income and return for shareholders. Currently he is focused on loan trading strategies to enhance loan portfolio performance, while incorporating the institution’s asset/liability position, liquidity and capital constraints, funding profile, and current market expectations. Greg attended the University of Oklahoma and The University of Memphis, earning BBA and MBA degrees in finance. In addition, Greg has earned the CFA designation and is a member of the CFA institute.
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ICBA Securities and its exclusively-endorsed broker/dealer, Vining Sparks, will present a webinar for the state associations that endorse ICBA Securities, as well as other community banks. This is the fourth in the 2021 webinar series.
Active loan portfolio management continues to serve as a valuable tool to maximize profitability, manage interest rate risk, and to manage concentration and liquidity needs. While institutions historically used loan sales to manage desired liquidity levels on balance sheets, currently the driver of sales is managing capacity and concentration challenges within certain loan types. Some institutions address stagnant earnings and net interest margin pressures by investing in loans that may not be available through organic loan originations. The economic environment, coupled with shocks in loan demand and changing funding profiles created balance sheet challenges that active loan portfolio management can help to address. During this session we will discuss the options available to actively manage your institution's largest asset class and how it can help you achieve your institutional goals.
What you will learn:
- Industry update and the impacts of the current economic environment
- The benefits of buying and/or selling loans
- Important criteria for loan sellers and buyers to consider
- How to manage concentrations and/or gain strategic liquidity from loan sales
- Performance of loan participations during the pandemic
- Recent loan trading activity by community banks
This webinar will last approximately one hour.
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IBANYS Webinars
Are you participating in IBANYS webinars? Now is the time! IBANYS webinars provide timely, important information on subjects of interest to New York community bankers including human resources, business development, investment, compliance and security and much more. They are valuable not only for their content, but for their convenience and low-cost. Take part from the comfort and privacy of your office, without leaving the bank.
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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.)
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Here is the article that we noted above in the President's Message.
Please see IBANYS' legislative update on this below.
Legislative Activity
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S.1762-A (Sanders) https://legislation.nysenate.gov/pdf/bills/2021/S1762A: This would amend the banking law, the state finance law and the general municipal law to establish the ‘New York public banking Act’." It is intended to lay down the regulatory framework for municipalities to create local public banks, to extend and expand access to communities of color in the post-COVID-19 economy. IBANYS discussed our opposition to this bill with Chairman Sanders and his staff. Read IBANYS' Memo in Opposition.
The Chairman wants to expand banking services to unbanked or underbanked communities—particularly regarding homeownership and small business funding. IBANYS cautioned would create another layer of unfair competition to independent banks throughout the state, and that there are also insurance and other concerns. There are other methods to improving the described services to the aforementioned areas -- i.e., using such existing “tools” as MDIs, CDFIs, the NYS Business Development District/BDD Program and others more effectively. Chairman Sanders pledged there would be “no rush to judgement” and he will work with IBANYS and others to gather and share additional information and consider alternative solutions.
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Chairman Sanders also has introduced legislation (S.670) that would allow credit unions, savings banks, savings and loans associations and federal savings associations to accept and secure deposits from municipal corporations. Read IBANYS' Memo in Opposition here.
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Another bill introduced by the Chairman, (S.191 (Sanders) -- would allow credit unions to participate in the Linked Deposit Program -- is on the Senate floor. Read the legislation here. IBANYS is opposing this legislation, as we have successfully done in previous years. Read our Memo in Opposition. Read IBANYS' Memo in Opposition here.
Most Recent Legislative Activity:
Please see committee agendas and bill activity here. . .here.
Other legislative activity:
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Here is the committee activity for the week of April 19.
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Here is bill activity for April 12 - 16
IBANYS is also reviewing the following bills:
- A1508 Dinowitz/S760 Biaggi - bill for reverse financing co-op apartment unit loans for persons over 62 years of age (similar concept to reverse mortgage). A similar to this was vetoed by governor in 2019.
- A7175 Dinowitz/S6362 Kavanagh – Extend to August 31, 2021the effectiveness of statutory limitations on eviction and foreclosures of residential and certain commercial tenants experiencing financial hardship. These were set to expire on May 1, 2021.
- A7127 Bronson/S5742 Kaplan – Bill expands protection to small businesses from 50 employees to 100 employees or up to 500 employees if the business was shut down for a 2 week period between May 15, 2020 and may 1, 2021. They can submit hardship declaration under covid 19 Emergency protect our small business act. This bill expands protections to more businesses that were impacted by Covid-19.
Earlier Activity:
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Bill introductions for March 8th through March 26th, as well as bill activity and committee agendas, are provided: See updates: and here and here
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A06617A prohibits bank set off and execution of judgments against emergency relief funds and is on the Assembly Codes agenda.
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S.2061/A.6281 would amend the State Banking Law (section 9-L) to prohibit a bank from imposing a fee on a non-customer of the bank when cashing a check drawn on an account of the bank. IBANYS is preparing a Memo in Opposition.
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Legislation permitting credit unions to participate in the Linked Deposit Program was reported by the NYS Assembly Economic Development Committee to the Assembly Ways & Means Committee with no negative votes.
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IBANYS' grassroots push during our virtual "congressional visits" with key and new members of our New York Congressional Delegation. See list was extremely successful. In the face of the pandemic, a large group of New York community banks once again discussed our positive economic impact, saving thousands of local small businesses and jobs throughout our state. We told telling our stories of how New York community banks stepped up and provided vital assistance to their local small businesses and consumers -- literally savings thousands of jobs, keeping businesses open, helping home owners keep their homes through mortgage forbearance and other means, and much more. IBANYS members met virtually with key senior New York Representatives on the Financial Services, Small Business, Ways & Means and Agriculture Committees, and with Senator Schumer's and Gillibrand's offices. We also informed new members of the delegation about the importance of community banks to the local, state and national economies, and explained our the top federal issues and priorities.
The Paycheck Protection Program’s general fund was reportedly exhausted Tuesday ahead of the program’s May 31 authorization, though some PPP funds remain for certain loans and lenders. Details:While the SBA hasn’t yet released public figures, remaining PPP funds reportedly break down as follows: Roughly $6 billion reserved for loans with hold codes. . .Roughly $8 billion set aside for certain community financial institutions. Background: Under the Economic Aid Act, community financial institutions include Community Development Financial Institutions, Minority Depository Institutions, Certified Development Corporations, and certain microloan intermediaries. More:More PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page. PPP AND EIP NEWS
Here is the announcement from the Small Business Administration:
SBA Breaking News Update: PPP General Funding Exhausted, CFI Funding Still Available
The below update from SBA is the most current information we have on PPP. We have no further information at this time. Please know as additional information is provided we will send it out as soon as possible. We fully appreciate your patience in the interim.
After more than a year of operation and serving more than eight million small businesses, funding for the bi-partisan Paycheck Protection Program has been exhausted. The SBA will continue funding outstanding approved PPP applications, but new qualifying applications will only be funded through Community Financial Institutions, financial lenders who serve underserved communities. The SBA is committed to delivering economic aid through the many COVID relief programs it is currently administering and beyond.
Per the Economic Aid Act, a Community Financial Institution (CFI) is one of the four types of lenders.
- Community Financial Development Institution (CDFI)
- Minority Depository Institution (MDI)
- Community Development Corporation (CDC)
- Microlender Intermediary
Contact: Valerie Shoudy, Lender Relations Specialist
Grace Conners, Lender Relations Specialist
U.S. Small Business Administration
224 Harrison St., Suite 506 | Syracuse, NY 13202
In Other News:
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Credit union hearing push intensifies. ICBA is encouraging community bankers to call on Congress to hold hearings on credit union acquisitions of taxpaying community banks. Taking Action: ICBA’s Be Heard grassroots action center makes it easy for community bankers to contact their members of Congress. New Acquisition: ICBA last week renewed its call for policymakers to investigate credit union acquisitions of community banks following the purchase of a $1.6 billion community bank in Jonesboro, Ga., by a Florida credit union with more than $10 billion in assets. ICBA Advocacy: ICBA continued its call for Congress to hold hearings on this trend and to request a GAO study on the evolution of the credit union industry and National Credit Union Administration supervision. Next: Community bankers can continue the campaign against the credit union tax exemption at this month’s ICBA Capital Summit, which is set to livestream April 27 with remarks from top policymakers and virtual meetings with congressional offices. CONTACT CONGRESS
Taxpayer group urges credit union reforms
Congress should examine how the tax code is contributing to acquisitions of taxpaying community banks by tax-exempt credit unions, the National Taxpayers Union wrote in a new op-ed.
NTU Op-ed: On Townhall, NTU Director of Federal Affairs Thomas Aiello said the recent VyStar Credit Union acquisition is the latest indicator that credit unions have strayed from the mission justifying their tax exemption.
ICBA Op-ed: The op-ed follows last week’s American Banker op-ed from ICBA President and CEO Rebeca Romero Rainey urging Congress to hold hearings and request a GAO study on the evolution of the credit union industry.
Grassroots: Community bankers can use ICBA’s Be Heard grassroots center to urge Congress to hold hearings on credit union acquisitions and National Credit Union Administration oversight.
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