May 11, 2022

IBANYS Weekly E-Newsletter

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

President's Message The legislative issues in Albany and Washington are moving front and center. In Albany, IBANYS is opposing two bills that would 1) establish a state/public bank, and 2) allow credit unions to bid on municipal deposits business. Yesterday, Assembly Banks Chair  Fahy pulled her muni deposit bill off the table, saying it needed additional work before she presents it again. In Washington, the House Financial Services Committee is preparing to markup legislation supported by ICBA and IBANYS (H.R. 5912) to close the Industrial Loan Company (ILC) loophole. IBANYS has been advocating in both Albany and Washington to explain our positions and concerns, and we have urged New York community bankers to reach out as well. See our Albany and Washington sections for details.    **********   This month’s  Independent Banker  magazine breaks down thrift and mutual banks, including their history, current operations, and outlook. Featuring thrifts and mutuals such as Big Horn Federal Savings Bank in Greybull, Wyo., and (IBANYS member) Abacus Federal Savings Bank in New York City,  the article takes a deep dive into these community bank models and how they promote customer relationships. Abacus is a privately owned, $321 million-asset savings bank in New York City, founded in 1984, back when the Federal Home Loan Bank Board regulated savings and loans. Abacus founder and chairman Thomas Sung formed the bank with other Chinese American business leaders in New York City to serve Chinese immigrants and other local residents. They received a warm welcome from the FHLBB, which encouraged the group and offered to help them charter a savings and loan, says Jill Sung, current CEO and president and Thomas Sung’s daughter. “Our community is more conservative and wants to feel safe,” Jill Sung says. “They want to feel like their money is carefully watched and that they can get a loan when they need a loan.” Jill is a member of IBANYS' Government Relations Committee and an effective, reliable participant in our advocacy efforts. Read more about Jill Sung » READ THE ARTICLE ********** IBANYS Annual Convention “Mobilized, Banking for the Future” is now just over six weeks away! Join us June 13 -15 at the Turning Stone Resort & Casino. Click here  for more information. . . .for full details on all 2022 IBANYS meetings, visit: https://ibanys.net/meetings-schedule/.   -- John

IBANYS MEETINGS

Please Join Us for IBANYS’ 2022 Annual Convention — June 13-15, 2022 — Turning Stone Resort & Casino, Verona, NY   It’s time to get back together again.   IBANYS' ANNUAL CONVENTION, "Mobilized, Banking for the Future" is being held at the Turning Stone Resort and Casino from June 13-15.   We have a few exciting days of networking, education and entertainment planned for our participants. The agenda is jam packed with great subject matter experts on a variety of topics that impact community banks today.   There are 30 exhibitor spaces available at the Tradeshow (over half have already been sold) and we anticipate that all the booths will be filled. Reserve your booth today, they are sold on a first-come-first serve basis.   Our event features opening and closing key-note speakers, Derek Williams, ICBA Chairman Elect will address the attendees on Monday evening and Jack Hubbard, Chief Experience Officer from St. Meyer and Hubbard close out the meeting on Wednesday.   Join us Tuesday evening after dinner as Michael Gutenplan, “Mentalist” entertains us with a fun, interactive, and high-energy show designed to entertain the most skeptical, demanding, and sophisticated audiences.   PAC Auction - Please consider donating an item for this event, (see page 11) of the brochure for suggested items. This is an important part of our convention and provides a perfect opportunity to showcase items from your region, while supporting an essential committee that focuses and advocates for community banks in NYS legislative affairs. The PAC auction takes place on Tuesday evening during our cocktail reception which is held on the Trade Show floor. Items are placed in exhibitor booths to be viewed and bid on.   It’s been more than two years since we have had an opportunity to get our bankers, preferred partners, associate members and sponsors together. We are excited to share with you, that the response to date, has been fantastic!   Attached is the convention brochure, containing everything you need to know about our signature event of the year including registrations forms, program agenda, hotel booking, and dress attire. PLEASE REGISTER FOR THE ANNUAL CONVENTION BY COMPLETING THE APPROPRIATE REGISTRATION form (Attendee or exhibitor) and email (lindag@ibanys.net) or mail to Linda Gregware, 194 Washington Ave., Albany, NY 12210. 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

MEET THE CONVENTION SPEAKERS

Adam Goldstein is Senior Vice President, Chief Business Officer at the Federal Home Loan Bank of New York.

Adam Goldstein is Senior Vice President, Chief Business Officer at the Federal Home Loan Bank of New York. In this role, he leads the sales, marketing, membership and research activities for all business lines. In addition, he established and has oversight for the FHLBNY’s Mortgage Asset Purchase® (MAP®) program and the Member Service Desk. He joined the FHLBNY in June 1997 and has held a number of key positions. Adam sits on the FHLBNY’s Management Committee, Asset-Liability Management Committee and Disclosure Committee. He created the Marketing Department, the Membership and Research Department, the Member Service Desk and established the Products, Services and Membership Committee where he is instrumental in improving the lending process and business innovation. In addition, he is the co-lead for the development and implementation of the corporate long-term Strategic Plan with an end-goal to add value to membership. He speaks at a variety of trade conventions as well as providing training for regulatory agencies and bond investors. He assists members in asset/liability management, liquidity and capital management, hedging interest rate risk, deposit pricing theory, and housing and economic development by providing them with liability structures to fund a variety of assets. He leads and participates in several FHLB System-wide efforts such as: Chairman of the Globally Systemic Important Banks (GSIB) Task Force, Chairman of the Regulatory Outreach Efforts Committee, Chairman and creator of the ESG Bond Issuance Task Force, Senior member of the Insurance Company Task Force and Data Governance Task Force, and past Chairman and creator of the Sales and Marketing Committee. Adam also serves on the Community Advisory Board of the American Fintech Council.   Adam holds an MBA in Financial Marketing from Binghamton University, and has completed post-graduate program certifications at Harvard University for Management Excellence, at Columbia University for Business Excellence, at New York University for Management Practices, at Cornell University for Management Development and at The New York Institute of Finance for Finance. He also served as the past Chairman of the Audit Committee and is presently the Chairman of the Finance Committee at the Kennedy Children’s Center in Harlem and the Bronx.

ASSOCIATE & PREFERRED PARTNERS

We invite you to join IBANYS and Effectiv on Tuesday, May 17 10:00 - 11:00 EST for a free webinar. Five Fraud Trends in 2022 that Community Banks should be on the lookout for Community Banks have faced no shortage of challenges over the last two years. Between the temporary closure of physical locations, finding ways to connect with members digitally, and pivoting services to meet their ever-changing needs, it has been a time of change and growth.   While it seems that we are turning a new page since the onset of COVID-19, there are still challenges ahead. Particularly, the digital transformation driven by the pandemic has brought with it unprecedented levels of fraud. This new digital-first environment has given fraudsters new ways to commit crimes, putting businesses and consumers at risk. It’s important to anticipate new types of fraud and leverage the right tools and technology to combat emerging trends. In this Webinar, you will learn about the Five Fraud Trends in 2022 that Community Banks should be on the lookout for to reduce the risk of falling prey to fraudsters. Also, we will discuss the fraud solutions that will help you become more efficient in detecting and monitoring fraud without breaking your technology budget. Click here to register Effectiv is a next-gen fraud and risk management platform with out-of-box solutions designed specifically for Community Banks. These solutions come pre-integrated with best-in-class data providers and can be customized to the needs of community banks. Effectiv’s focus is to significantly reduce the time it takes to deploy and adapt fraud detection strategies without adding any friction to good users.   The Effectiv platform comes with an easy-to-use no-code orchestration platform, a rule engine with pre-built integrations to all industry-standard data intelligence providers; an AI-assisted case management system built to increase investigator efficiency; and a powerful reporting and analytics dashboard. All of it comes with Effectiv's Solutions Experts-led implementation and onboarding.   About us: Our founding team has over 38 years of combined experience in building risk mitigation systems at companies like Google, PayPal, and Walmart. We were also part of the early team at Simility (acquired by PayPal), where we developed fraud detection solutions for banks like US Bank, Synchrony, Discover, Zions, Itau, and Santander.   Effectiv is bringing Big Bank Fraud detection to Community Banks that will not break your Technology budget.

Solving CECL Compliance Timeline, Practical Steps, Open Q&A   Thursday, May 18 at 10–11 am ET Presented by Shawn O’Brien, President, QwickRate/QwickAnalytics   CECL compliance grows more pressing by the minute. Some banks are still designing their process for estimating reserves. Others have moved past methodology testing and are already rethinking their approach. No matter where you’re positioned on the readiness spectrum, you‘ll glean valuable takeaways from this webinar – like this reality: CECL doesn’t have to be so complicated or costly.   Join us for information and guidance, including: A timeline for meeting the implementation requirements  Popular methodologies in use at various community banks Real-life strategies that proved successful – or disappointing   How to run parallel paths of your current and CECL processes Estimating aids using Call Report and industry data (like the Fed’s spreadsheet-based SCALE tool) You’ll leave the session with practical steps you can take to make the transition as simple as possible, with less impact to your team.

Register here

Regulators took a first step toward modernizing CRA regulations with a joint Notice of Proposed Rulemaking. By: Brian H. Montgomery, Rodney R. Peck, Deborah S. Thoren-Peden, Craig J. Saperstein On May 5, the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board (FRB), and the Office of the Comptroller of the Currency (OCC) issued a joint Notice of Proposed Rulemaking (NPR) to “strengthen and modernize” the regulations that implement the Community Reinvestment Act (CRA), which have not been significantly revised since 1995. The joint NPR appears to be the first step toward ending years of uncertainty about the fate of the agencies’ CRA regulations. Read Article here

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

Two top issues IBANYS is focused on as the 2022 state legislative session enters its final 10 scheduled session days before its announced adjournment date of June 2 winds down are:   Opposing the establishment of a state/public bank, and proposing alternatives to better serve unbanked and underbanked New Yorkers through existing vehicles, and;  Opposing legislation to allow credit unions to bid on municipal deposits business. Both bills are sponsored by the Senate and Assembly Banks Committee chairs, Senator Sanders (D-Queens) and Assembly Member Fahy (D-Albany). Yesterday, Fahy pulled her Assembly version of the muni deposit bill off the table, saying it needed additional work before she presents it again. IBANYS and New York community bankers have been meeting with her – and with Sanders -- to explain why this legislation would have a negative impact not only on community banks, but also on the customers and communities we serve. Chair Fahy’s decision allows for more time, and during the closing days of a very busy legislative session, that’s a positive. . . Read IBANYS’s Memo in Opposition to the legislation… also: Read IBANYS Background & Talking Points Opposing this legislation.) 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. IBANYS is working to provide alternative solutions and has proposed possible approaches to help meet the needs of unbanked and underbanked communities using various existing vehicles.  Here is the bill activity for last week and the committee agendas for this week. There were no bill introductions last week. Meanwhile, Here are other recent bill introductions and committee agendas  bill activity legislative activity,  bill introductions  committee agendas  previous updates on bill activity and committee agendas.  The CEO of the Genesee Co-op Federal Credit Union of Rochester said a public bank would make a great partner to assist the credit union with community investments, claiming: “One of the reasons we are so invested in trying to get this legislation passed is that we are really seeking a partner to do financing on projects.  There (are not) enough financing vehicles. No community lenders, no big banks are doing the kind of projects that we envision are needed, especially in minority neighborhoods and low-income neighborhoods.” https://nystateofpolitics.com/state-of-politics/new-york/politics/2022/05/10/credit-union-argues-new-york-public-banking-bill-will-help-underserved-communities. . .Establishing public banks in New York is supported by dozens of local elected officials in 19 cities throughout the state; 82 officials have signed onto the letter to Gov. Hochul and legislative leaders urging its passage of the measure.  https://www.ny1.com/nyc/all-boroughs/ny-state-of-politics/2022/04/18/local-officials-in-new-york-call-for-public-banking-bill Governor Hochul signed bills that 1) “boosts consumer protections and 2) addresses inequities in the state's financial services system.” S.1684/A.8293 directs the NYS Department of Financial Services to conduct a study of underbanked communities and households in New York and make recommendations to improve access to financial services for them. Legislation S.4894/A.1693 protects consumers from potentially unsafe banking products by prohibiting the issuance of unsolicited mail-loan checks. https://www.governor.ny.gov/news/governor-hochul-signs-legislation-boosting-consumer-protections-and-addressing-inequities  According to a Federal Reserve Bank of New York report released Tuesday, roughly 24,000 people had new foreclosures listed on their credit reports in the first quarter of 2022, up from about 9,000 in the fourth quarter of 2021. Foreclosures are still about a third of what they were before the pandemic ⁠— and far below the levels after the mortgage meltdown of more than a decade ago. Still, the uptick reflects a return to more normal conditions after a federal moratorium effectively prohibited foreclosures on many homeowners for much of the pandemic.  The New York Fed’s Center for Microeconomic Data issued its Quarterly Report on Household Debt and Credit. The Report  shows a solid increase in total household debt in the first quarter of 2022, increasing by $266 billion (1.7%) to $15.84 trillion. Balances now stand $1.7 trillion higher than at the end of 2019, before the COVID-19 pandemic. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel.  The report  showed a sharp drop in mortgage refinancing activity. Originations of refi loans fell 15%, to $424 billion, in the first quarter. Refi loan originations are down 40% from the first quarter of 2021. New York Fed President Williams also said that lowering inflation is the U.S. central bank's main mission now and he doesn't think that making monetary policy more restrictive would necessarily cause a recession.  Williams is "confident we have the right tools to achieve our goals." https://www.newyorkfed.org/newsevents/speeches/2022/wil220510  A federal judge in Albany authorized New York to push back its congressional primary until August, a delay that will give more time for a neutral expert to draw new congressional maps for this year’s midterm contest,   The New York Times reports.

WASHINGTON UPDATE

The House Financial Services Committee is preparing to markup legislation supported by ICBA and IBANYS (H.R. 5912) to close the Industrial Loan Company (ILC) loophole. During the recent Capital Summit in Washington, IBANYS met with a number of key New York congressional offices on this issue as well as other priorities. to explain our positions and concerns, and we have urged New York community bankers to reach out as well. New York has six members on the Financial Services Committee: Democrats Meeks (Queens), Torres (Bronx), Maloney (Manhattan), Velazquez, Ocasio-Cortez and Republican Zeldin (L.I.). We are reaching out to again make our case. Read our position here.  IBANYS led a group of New York community bankers to meetings in Washington with the offices of Senators Schumer and Gillibrand and key members of the New York Congressional Delegation on the House Committees on Financial Services, Small Business, Agriculture, Ways & Mean, Budget, Energy & Commerce and Homeland Security. Here are the issues we discussed. IBANYS joins ICBA in urging community bankers to send in grassroots messages to their members of Congress on these legislative priorities.  ICBA’s Be Heard grassroots action center has the customizable message. Acting Comptroller of the Currency Michael Hsu has directed senior OCC staff to work with the Justice Department and other agencies to review federal frameworks for bank mergers.   Hsu said: Agencies should rethink how they apply the statutory factors guiding merger analysis: competitiveness, safety and soundness, community needs, and financial stability. . .Without enhancements, there is an increased risk of approving mergers that diminish competition, hurt communities, or present systemic risks. . .There is a resolvability gap for large regional banks that should be addressed to avoid creating a new set of too-big-to-fail firms. . .He supports proposals for a more granular analysis that differentiates by types of lending, considers broader industry dynamics, and considers local, regional, and national markets. ICBA  recently called on  the Justice Department to revise its policies on bank mergers to better address too-big-to-fail financial institutions and nonbank competitors, including credit unions.  The  House  Financial Services Committee and  Senate  Banking Committee have several hearings set for this week. Tuesday: The Financial Stability Oversight Council’s annual report to Congress. (Full Senate committee.). . .Wednesday: Examining the bond rating industry. (House Subcommittee on Investor Protection.). . .Thursday: Addressing climate change with energy-efficient and resilient housing. (Full Senate committee.). . .Thursday: FSOC report to Congress. (Full House committee.). . .Friday: Using artificial intelligence for effective regulatory technology. (House Task Force on Artificial Intelligence.) By a vote of 51-50, the U.S. Senate Tuesday confirmed Michigan State University economics professor Lisa Cook  as the first Black woman to serve as a Federal Reserve Governor. Fed Chairman Jerome Powell's renomination and former Fed economist Philip Jefferson’s nomination as a Fed Governor are expected to be confirmed with less Republican opposition. Politico.  President Biden has also announced he plans to nominate former Treasury official Michael Barr as Fed Vice Chair/Supervision after former Fed Governor Sarah Bloom Raskin withdrew. Sen. Ossoff (D-GA.) is working on legislation to authorize the National Credit Union Administration to examine credit union third-party service providers for cyber risk and to require credit unions to report cyber incidents to the NCUA. During a Senate Banking Committee hearing featuring testimony from Treasury Secretary Yellen, Ossoff expressed concerns the NCUA does not have the same authority as bank regulators to supervise for cyber risk.  Chair Yellen said the NCUA’s lack of cybersecurity supervision authority “seems like an important gap that deserved to be filled.” ICBA testified before the House Financial Services Committee last year that it supported  allowing the NCUA to directly examine and regulate credit union service organizations, core providers, and other large third-party service providers. ICBA said this would correct a disparity in rulemaking between banking regulators and credit union regulators and strengthen the financial sector. Some policymakers continue pushing postal banking, but recent history shows why the policy should remain in the discard pile, writes ICBA President and CEO Rebeca Romero Rainey in a new LinkedIn op-ed.   She   writes   that while recently reintroduced Senate legislation would add a bank branch to each of the nation’s post offices, a faltering U.S. Postal Service pilot program demonstrates the plan’s flaws. “If Congress pushes the post office into the banking industry, it will expose taxpayers to additional subsidies and financial rescues down the road while harming the USPS’s already-stressed primary function of mail delivery,” Romero Rainey writes. “This is another case of Washington putting good money after bad.”  A three-part series of ICBA issue briefs delivered to policymakers last year explores the postal banking policy’s flaws and offers alternatives for reaching the unbanked.  READ MORE Rep. Tom Reed (R-Southern Tier) resigned from Congress yesterday, setting up two special elections in the state where congressional maps are still being redrawn. (The other is to fill the seat being vacated by Rep. Antonio Delgado, recently named Lt. Governor.) Reed had previously announced he would not seek re-election. He is joining a Washington, D.C. based  lobbying firm.  In a brief speech on the House floor, Reed warned of “extremism” in the country’s politics. “It is time for petty political posturing to end,” he said.  Politico Treasury Secretary Yellen and members of the Senate Banking Committee said Congress should pass bipartisan legislation regulating stablecoins. They expressed concerns with potential systemic risks posed by stablecoins and other digital assets. The Federal Reserve this week said in its latest Financial Stability Report that the stablecoin sector is highly concentrated and vulnerable to runs.  ICBA blog posts provide updates on stablecoin  market developments  and how Washington is responding. ICBA also offers a summary of the president’s executive order on digital assets.  ICBA has issued a “customizable op-ed”  that community bankers can use to raise awareness of credit union acquisitions of community banks.  The op-ed—which is available in Microsoft Word so community bankers can personalize and distribute it to local news media—cites the harmful impact of the acquisition trend on local customers and tax revenues.  The custom op-ed is available on ICBA’s Wake Up page. It follows last week’s American Banker op-ed on credit union acquisitions by ICBA Chairman Brad Bolton.  While credit union advocates support credit unions leveraging their tax exemption to acquire community banks, these subsidized transactions harm local communities.  ICBA has urged Congress to build on state actions to curb this trend by investigating at the federal level. Read more. ICBA is also running a digital campaign featuring a recently released ICBA video urging Americans to advocate congressional hearings on how credit unions are taxed and regulated. Community bankers can continue urging Congress to hold hearings on the credit union tax exemption using a customizable message to lawmakers on ICBA’s Wake Up page and its Wake Up Messaging Playbook.