May 25, 2022

IBANYS Weekly E-Newsletter

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Memorial Day - Monday, May 30 This is the day we reflect and honor all those who have served and who have made the ultimate sacrifice in service to our nation. We celebrate, honor and remember your sacrifice to ensure our freedoms.

2022 Convention Sponsors - to date Advanced Media New York Bankers Healthcare Group (BHG) CEIS Review COCC Federal Home Loan Bank of NY Hartman Executive Advisors ICBA NEACH Pillar+Aught Piper Sandler Plante Moran Pursuit Roosevelt & Cross SHAZAM Shield Compliance Sunwealth T. Gschwender & Associates TransWestern Capital Advisors The Baker Group Wolf & Co.

President's Message IBANYS 46th Annual Convention will be “MOBILIZED” in three short weeks at the Turning Stone Resort & Casino. This event is developed by bankers for bankers and is a “must attend” event. Why is this a “must attend” event….IBANYS President & CEO John Witkowski shares some thoughts on why you should attend.  CLICK HERE   ********** The New York State Legislative session is due to adjourns on June 2. All important updates can be found under the Albany Update.

IBANYS MEETINGS

Join IBANYS’ 2022 Annual Convention — June 13-15, 2022 — Turning Stone Resort & Casino, Verona, NY     AUCTION ITEMS NEEDED: Do you have a unique item you would like to donate to the auction? — please see page 11 of the attached brochure to learn more. This is a fun and exciting event MC’d by ‘THE MOST ANNOYING’ PERSON TO HOLD A MIC - John Witkowski.              Associate Members, Preferred Partners and service provides for community banks, we still have a few booths available - secure you locations today (see page 10). Please do not hesitate to contact us if you have any questions or need more information.   Click for Convention Brochure

Guidance for New Directors Thursday, June 16 — 11:00 - 12:30 p.m. This session will focus on fundamental board governance issues and is designed for Directors with less than five years’ experience. This session will be hosted on MS Teams Click here for registration information

CONVENTION SPONSORS

On behalf of IBANYS members, Board of Directors and staff we want to extend our thanks to all the sponsors of IBANYS 46th Annual Convention and for all they do for all New York Community Banks. Please click on each of the companies to learn more about the company and how they can help you. This week we are highlighting our Gold Sponsors.

Debbie Feeley Account Manger 220 S Warren Street Syracuse, NY 13202 Phone: (315) 282-8573 Email: dfeeley@advancemediany.com Luncheon - Wednesday About Advance Media New York About 100 marketers in the heart of Upstate New York manage local, statewide, national and global campaigns for hundreds of companies scattered across Upstate. Imagine more We help clients imagine the best they can be, write their stories and deliver those stories to the right audiences. We’re a successful media company with its roots in storytelling and building audiences. We bring that expertise to our clients. What’s your dream? We’ll help you get there. What’s your story? We’ll help you write it and make sure more people know it. Imagine what we can do together.

255 State Street Boston, MA 02109 (617) 439-9700 Dinner Wine - Monday Evening Since 1911, Wolf & Company has blazed a trail through Boston and beyond, growing into a national—and through our Allinial affiliation, an international—presence with clients across myriad industries. Explore our history and see how our bold beginnings have led to 111 years of progress, innovation, and growth.

Justin Hill 75 Broad Street, Suite 820 New York, NY 10001 Phone: (212) 967-7380 E-mail: justinjh@ceisreeview.com Dinner Wine - Tuesday Evening Professional Consulting Services to Bankers by Bankers The CEIS Review mission is to be the preeminent provider of independent outsourced loan review, loan portfolio stress testing, ALLL methodology validation or refinement, as well as being a provider of related commercial credit management techniques to financial institutions worldwide. Our commitment is to commercial banks, savings banks, credit unions, foreign branches and agencies, multinational organizations and other firms requiring a third party assessment of loan portfolio quality and process. Our commitment to excellence includes delivering clear & concise reporting, utilizing cutting edge credit and portfolio management techniques, maintaining an objective viewpoint, providing adequate flexibility to clients needs and consistently staying ahead of emerging industry and regulatory matters. Ultimately, we are dedicated to our client’s success and growth

ASSOCIATE & PREFERRED PARTNERS

Commercial Loan Portfolio Trends 4Q21  Having reviewed the results of a quarters engagements CEIS assembles & analyzes the findings to provide market insights on public and non-public portfolio quality indicating metrics as well as any identified Regulatory "focus areas" to take into consideration. CEIS Review - Est. 1989, domestic and international commercial loan portfolio engagements.

Covered in this Release Loan Quality Indicators Provisions for Credit Losses CEIS' - Borrower Financial Trends and Risk Grade Outlooks Notable Concerns for Portfolio Managers in 2022  Click here to read report

ICBA INFORMATION

The Great Escape The bond market braces for the Fed’s wind-down of its balance sheet. By Jim Reber, ICBA Securities If bond investors (you) were running low on things to worry about for the rest of the year, I’ve got some terrific news: The $9 trillion portfolio owned by our central bank will begin to shrink. Soon. And at a feverish pace, I might add. We’re into new territory for a number of reasons. The most obvious is that the mountain is double its size the last time a wind-down started. Another reason is that inflation, in case it’s escaped your notice, is at a 40-year high. Still another is that consumers no longer believe that prices will get back into their 2%-per-year box they’ve been confined to for the better part of a decade. So, this high-wire act has some drama attached. Read Article Here

ALBANY UPDATE

With only 4 session days left before the June 2 adjournment date, two major proposals are still under consideration in Albany. 1) To establish a state/public bank, and 2) to allow credit unions to bid on municipal deposits.  IBANYS strongly opposes both proposals, and has held a number of discussions with Senate and Assembly Banks Committee Chairs (Sen. Sanders, D-Brooklyn) and Assembly Member Fahy, D-Albany), to explain our positions and concerns.  Chair Fahy has now pulled her Assembly credit unions/muni deposits bill (A.08289), acknowledging it needs work before being presented again. On the public banking push, Chair Sanders is considering our suggestions of alternative ways to meet the needs of the unbanked and underbanked using existing vehicles.  Pressure to pass the initiative continues from many legislators and a coalition of progressives and consumer advocates. Here's a recent article in The City:  https://www.thecity.nyc/2022/5/18/23125953/public-bank-bill-blocked-new-york-senate.  . . .Read IBANYS’ Memo in Opposition to the legislation… and, Read IBANYS Background & Talking Points Opposing this legislation.) Lastly, there is also a proposal to conduct an independent “feasibility study” of the concept of public banking, after which DFS would eventually make the final decision. Gov. Hochul is confident the Legislature will take action on several major initiatives before the end of the session, but doesn’t think they have the wherewithal to revamp the controversial 421-a affordable housing program set to expire next month. She is “open-minded” about a fossil-fuel-powered digital currency mining moratorium. The Governor  “is not afraid” to take the legislative session into overtime if everything can’t be accomplished by June 2. The swearing in today of Rep. Antonio Delgado (D-Hudson Valley) as the state’s new Lt. Gov. will likely prompt a special election to fill his congressional seat on Aug. 23, coinciding with the rescheduled state Senate and congressional primaries. The winner of the special election for Delgado’s seat will serve only the four months remaining in his term. In an odd twist, Ulster County Executive Pat Ryan (D) will appear on the ticket for both the special election in the 19th Congressional District ,and the primary for the 18th Congressional District currently represented by Rep. Sean Patrick Maloney, who is now running for the 17thDistrict. https://www.cityandstateny.com/politics/2022/05/antonio-delgados-swearing-sets-messy-election-schedule/367365/ New district maps have been finalized for New York State’s new congressional and state senate seats. They result in significant changes in both downstate and upstate districts, and who will be running in them. The new congressional districts "will alter upstate New York politics for the next decade" and "could maintain competitive congressional races for years to come."  Read More; https://nypost.com/2022/05/21/new-district-map-creates-8-congressional-battlegrounds-in-ny/  Have you been redistricted? Search your redrawn political districts in New York. . .link    .  .  .Gov. Hochul acknowledged  New York's  redistricting process was again a ‘messy’ one, and wants a review of how it should potentially change. ‘The process played out the way the law was written. . .Do we need to do this differently? Yes, we do. Every 10 years it's always a mess.”  https://nystateofpolitics.com/state-of-politics/new-york/ny-state-of-politics/2022/05/24/hochul-says-a-review-of-new-york-s-redistricting-process-is-needed State DFS Superintendent Adrienne Harris said last week: “A fast-moving industry like virtual currency requires strong regulation. Regulation plays an important role in protecting consumers against market volatility and scams; maintaining the integrity of the market by guarding against  sanctions evasion  and illicit activity; and ensuring corporate infrastructure and consumer data are both well-protected from cybercriminals. These are the critical risks that we at DFS are committed to mitigating as the preeminent regulator of virtual currency." https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202205202 The Superintendent also said she wants to be cautious in regulating fintech that expands access to the underbanked. “There’s a need for liquidity for underserved communities,” Harris told PYMNTS.com. “We want to be careful to use a scalpel and not a hatchet.” The Federal Reserve Bank of New York today announced that former President and Chief Executive Officer, E. Gerald (Jerry) Corrigan, died on Tuesday, May 17, 2022. He was 80. He served nearly 25 years in the Federal Reserve System, and became President and CEO of the New York Fed on January 1, 1985. During his tenure at the New York Fed, Mr. Corrigan led the Bank and System through multiple periods of financial market stress in the 1980s, including Silver Thursday in 1980 and Black Monday in 1987. He also played a critical role in steering the Federal Reserve through the fall of investment bank Drexel Burnham Lambert in 1989 and the demise of Salomon Brothers. https://www.newyorkfed.org/newsevents/news/aboutthefed/2022/20220519

WASHINGTON UPDATE

June 3 is the deadline for community bankers to submit personalized comment letters to the FDIC on its draft statement of principles for climate-related financial risk management for large financial institutions.  The FDIC proposal would impose a climate-related financial risk management framework for institutions over $100 billion in assets. However, the FDIC has said that all financial institutions may have material exposures to climate-related financial risks—raising concerns that the principles will trickle down to community banks. To help community bankers submit unique comments by the deadline, ICBA offers a summary of the proposal and guide to submitting a comment letter to the FDIC. Using ICBA’s summary of the proposal and guide to submitting a comment letter, community bankers can also point out that they are not threatened by climate-related financial risks, already manage climate-related risks, and are experienced at helping local communities prepare for and recover from severe weather events. Two years ago, the U.S. Supreme Court ruled the CFPB’s rulemakings survived intact, but a pair of pending cases that challenge the agency's funding through the Federal Reserve are again seeking to invalidate every action the CFPB has taken since 2010.    Read story → In public remarks,  Acting Comptroller of the Currency Hsu said events of recent months have revealed deep vulnerabilities in the crypto system, including that crypto is highly fragmented and prone to hacks with underdeveloped custody and ownership rights. Hsu noted while the TerraUSD collapse provoked contagion in the rest of the crypto market, there has been no contagion from cryptocurrencies to traditional banking and finance—allowing the banking system to remain a source of strength. “The resilience of the traditional banking system to the recent events in crypto is not an accident. . .Rather, it is due, at least in part, to federal bank regulators’ continued and intentional emphasis on safety and soundness and consumer protection.” ICBA last week expressed opposition to the establishment of a U.S. central bank digital currency (CBDC). Tomorrow, a House Financial Services Committee hearing  will focus on CBDC benefits and risks. In a comment letter to the Federal Reserve and a national news release, ICBA last week said a U.S. CBDC would introduce significant privacy and cybersecurity risks into the nation’s monetary system and disrupt U.S. banking stability. ICBA said a U.S. CBDC would obstruct the ability of banks to take deposits and make loans, pose privacy and cybersecurity risks, provide a gateway to direct-to-consumer Fed accounts, and damage the Fed’s ability to conduct monetary policy, among other risks. The FDIC reported that U.S. bank profits fell 6.5% from the fourth quarter of 2021 to the first quarter of this year to $59.7 billion, with a 22.2% decline compared to the year-ago period. Acting FDIC Chairman Martin Gruenberg said  that "inflationary pressures, rising interest rates and geopolitical uncertainty could hamper bank profitability, weaken credit quality and reduce loan growth."  Reuters.  Community banks reported a 14% decline in net income during the first quarter of 2022 from the same period a year ago:  Quarterly Banking Profile.   The decrease—which was less than the broader banking industry’s year-over-year decline of 22.2%—was driven by lower net gains on loan sales and higher noninterest expenses. These factors offset growth in net interest income and lower provision expenses. For details from ICBA on on the FDIC's data on community banks: ICBA encouraged federal banking regulators to take several steps to increase services to unbanked and underbanked households. In a letter to the agencies following a Government Accountability Office report on improving access, ICBA called on the agencies to: Integrate their independent efforts into a unified, interagency campaign. Provide the banking industry with more consistent guidance. Fully utilize their innovation offices. ICBA’s comments came the same day as the Fed reported that self-reported financial well-being reached its highest level since the Fed began its household survey in 2013. According to the fourth quarter 2021 survey of 11,000 adults: 78% reported either doing okay or living comfortably financially. Financial well-being increased among all included racial and ethnic groups. Parents reported large gains in financial well-being. Those who say they would cover a $400 emergency expense using cash or its equivalent increased to 68%, the highest level since the survey began. Four recently confirmed members of the Federal Reserve Board of Governors were sworn in Monday. Jerome Powell, whose new term as chair ends May 15, 2026, and term as board member ends Jan. 31, 2028. Lael Brainard, whose term as vice chair ends May 15, 2026, and term as board member ends Jan. 31, 2026. Lisa Cook, whose term as board member expires Jan. 31, 2024. Philip Jefferson whose term as board member expires Jan. 31, 2036.