Hope everyone is doing well!

Today is May 3. . .and that means our IBANYS Annual Convention --Community Banks - The Heartbeat of our Communities --is getting closer! The convention will be held June 12-14 at The Turning Stone Resort and Casino, just outside of Syracuse. It promises to be a terrific event featuring great speakers on timely topics. Visit www.ibanys.net for details and registration forms.

AUCTION ITEMS NEEDED! - Please get involved by donating an item to our NYSIBPAC auction on June 13. See page 11 of the convention brochure for details.

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IBANYS Chairman Anders Tomson (Chemung Canal Trust) and Steve Cohen of Pursuit (formerly NYBDC) did a fantastic job during Tuesday’s state legislative roundtable on public banking coordinated by Senate Banks Committee Chairman Sanders (D-Queens). After working with IBANYS to develop their testimony, they discussed the importance of New York community banks, the impact that establishing public banking might have on community banks, and the fact that Pursuit already has a process in place that acts like a public bank in that it can accomplish the same objectives supporters of a public bank say are needed. Our presentation clearly demonstrated to Chairman Sanders, Assembly Banks Chair Hunter (D-Syracuse), their colleagues and staff that Pursuit’s long-term success with this established program/process can help the same targeted group that a public bank would be created to help. Creating a public bank would be expensive, high risk, duplicative and would not perform anywhere near the level of Pursuit. IBANYS thanks Anders and Steve for taking the time to speak at this roundtable. It's important for community banks to comment at these meetings, as activist groups are not slowing their strong and aggressive efforts in support of a public bank bill. In fact, the lobbyist for the “New Economy Project” indicated the coalition is looking right past a proposed bill to establish a study of whether public banking is needed in the state, and instead are “all in” on legislation to actually form a public bank. Here are some talking points, developed by ICBA, that were shared during the roundtable.

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ICBA’s CAPITAL SUMMIT – May 14-17, Washington DC

Our community banking industry faces a number of important issues in Washington, including: 1) The aftermath of the SVB, Signature Bank and First Republic bank failures; 2) The CFPB's 1071 Small Business Rule; 3) The SBA 7(a) Rule; 4) The SAFE Banking Act, and more. IBANYS will be at ICBA's Capital Summit (May 14 - 17) in Washington. We are planning meetings with key members of the New York congressional delegation on Tuesday, May 16. WE NEED YOUR VOICE IN DC!!! Please join us so our political leaders can hear from you, the importance of having community banks working in and for their communities. Please register for the Capital Summit-- https://www.icba.org/events/icba-capital-summit -- and email me (Johnw@ibanys.net) and Steve Rice (Stever@ibanys.net) with your preference as to which meetings you'd like to attend. Our fantastic partners, of Luse Gorman and The Bonadio Group will be hosting a dinner for our DC contingent on Monday evening, May 15 to go over our issues and schedule. Please join us!!!!

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We have attached the latest state legislative bill introductions for the period of April 17th-28th, as well as last week's legislative activity and relevant committee agendas for this week. Please review - there are interesting bills on the agenda(s) and we would like your feedback and comments – i.e., expanding the community banks deposit program to include Credit Unions, feasibility study on Public Bank, credit union municipal deposits, etc. (See Albany Update)

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I’m attaching a recent IR report where they have filtered by Industry total ERC dollars.

This may be a surprise but:

1. Agriculture has the largest average deal dollars
2. Manufacturing is second and  
3. Construction is third

This is valuable info to help you target clients and discuss potential ERC dollar size.

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Employee Retention Credit and Innovation Refunds (IR)

Internal Revenue Service (IRS) Commissioner Werfel has committed to doubling the rate of processing Employee Retention Credit (ERC) claims. This is good news for New York community banks and their clients. https://augustafreepress.com/news/irs-commits-to-double-rate-of-processing-tax-credits-and-reimburse-virginia-small-businesses/

• INNOVATION REFUNDS (IR): As you know, IBANYS has partnered with Innovation Refunds (IR) for banks to apply for ERC and to offer these services to your small business clients. A great way to connect with your clients and offer them an opportunity to receive funds from the IRS for properly handling their business during the pandemic. Contact John Witkowski from IBANYS or Lee Gillespie directly from IR at jgillispie@innovationrefunds.com.

This is a busy time of year for everyone and every day there are new surprises in our industry. Please take a few moments to read through all the information in this newsletter. We have some great partners that are hosting free webinars on topics that may be very important to you and your bank.

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• Integrated Stress Testing Webinar – hosted by INFOAGORA – on May 10 on– For more details, Please register form in the section below!

• Expanding and Strengthening Your Relationships with Small Business and Commercial Clients -hosted by Jack Hubbard – June 21 at The Turning Stone Resort and Casino – Details in the newsletter.

Have a great week and I look forward to seeing everyone at the ICBA Capital Summit and the IBANYS Annual Convention!

IBANYS MEETINGS

REGISTRATION IS OPEN!!!

IBANYS' ANNUAL CONVENTION, "The Heartbeat of All Communities" is being held at the Turning Stone Resort and Casino from June 12-14.

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 and we anticipate that all the booths will be filled. Reserve your booth today, they are sold on a first-come-first serve basis.

Jack Hopkins, ICBA Chairman Elect will address the attendees on Monday evening and Gary Hoy, President Appointment University will close out the meeting on Wednesday.

Join us Tuesday evening after dinner as Dueling Pianos, “presented by Dueling Pianos International entertains us with a fun, interactive battle of the “ivories”. 

PAC Auction - Please consider donating an item for this event, (see page 11) of the enclosed 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.

This is an outstanding 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., Suite 420, Albany, NY 12210.

Reserve your overnight accommodations today and register as early as possible – the room block is filling up fast!! See page 6 for room block information.

June 21^st – Jack Hubbard on Building and Strengthening Relationships - Turning Stone Resort and Casino: Hear from Jack on his years of experience (over 50) in banking and how his tactics survive in the world of social media and innovative technology. It will be a great day to hear from one of the leading subject matter experts in banking. Click here for registration information 

CONVENTION SPONSORS

Golf Sponsors

Q1 Results: Do The Numbers Tell The Whole Story?

Tuesday, May 16 at 2pm-2:45pm ET

Q1 performance results seem to be pretty good so far as banks navigated another quarter where we saw unrealized losses in securities portfolios, rising deposit costs, slowing loan demand and an unexpected set of bank failures. Isolated, none of these are a huge issue, but scrutiny and loss of depositor confidence, as we’ve seen, could escalate quickly. Looking at everything as a whole, some bankers may not feel good right now, and for good reason as numbers don’t always tell the whole story. In this webinar presented by QwickRate and IntelliCredit, we’ll take a look at how community banks performed in Q1 and focus in on the areas that are of concern including liquidity, interest rate risk and credit. Register now.

Presented by:

Shawn O’Brien, President, QwickRate

David Ruffin, Principal, IntelliCredit

ICBA’s 2023 Capital Summit in Washington, D.C. will feature remarks by OCC Comptroller Hsu, FDIC Director Gruenberg, CFPB Director Chopra, Treasury Assistant Secretary/Financial Institutions Steele, senior representatives from the Fed, and Senate Banking Committee member Rounds (R-SD). . . Register here.  NOTE: IBANYS will coordinate meetings "on the hill" with members of the New York congressional delegation. We have New Yorkers on a number of key House committees, as well as

9 new members of the delegation since we gathered last spring. Watch for more details.

Legislative Update

• Here are the latest state legislative bill introductions for the period of April 17 -28, as well as last week's legislative activity and committee agendas for this week. NOTE: These reportts are updated and posted weekly on IBANYS' website under the "Advocacy/Legislative Updates" tabs.

State Budget Approved

• Tuesday night, the state Legislature finally approved a $229 billion state budget, more than a month after the April 1 “deadline”. deadline. The budget was completed more than a month past its April 1 due date.  The New York Times reports.  Here’s what’s in and what’s out.  A detailed budget summary IS HERE . . . Read More

• Many of the controversial budget items are in the education, labor, housing, and family assistance (ELFA) bill. Here is “Part S” of the ELFA article vii budget bill, which provides for minimum wage increases. (Governor Hochul signed this minimum wage rate increase as part of budget.)  

• Fiscal watchdog group Citizens Budget Commission asserts the final budget “weakens the state’s financial footing.” read the full statement here.

• Hardly anyone seemed entirely happy with the final result of the state budget that "mixed in far-reaching policies” that have little to do with the state’s finances. Senate Majority Leader Stewart-Cousins (D-Yonkers): “This was an extremely policy-laden budget, and many of the policies had been debated for a long time … which made it very difficult to just go quickly through those things.” https://www.politico.com/newsletters/new-york-playbook-pm/2023/05/01/passing-budget-bills-finally-00094729?nname=new-york-playbook-pm&nid=00000177-6f21-d412-abff-6ff79d730000&nrid=00000152-f737-dcf0-a7d7-f73fb7700001&nlid=2693080.  The final budget agreement produced a disappointed sense around the Capitol. 

• Gov. Hochul’s "marquee budget proposal" -- her New York Housing Compact that would have created 800,000 housing units over 10 years, which would have required each municipality in the state to meet certain growth metrics -- never got off the ground and was left out of the budget as legislators failed to support it. “It can’t just be done by edict,” Assembly Housing Committee Chair Linda Rosenthal said.  https://nystateofpolitics.com/state-of-politics/new-york/politics/2023/04/28/new-york-assembly-housing-committee-chair-on-hochul-s-proposal

Regulatory Developments

• ICBA urged the New York State Department of Financial Services to fully exempt the state’s community banks from its proposed guidance on managing climate-related financial risks. Responding to a request for comment on the proposal, ICBA said:  1) Community banks cannot immediately implement and comply with a sweeping new framework that is not required by their primary federal regulators; 2) The guidance introduces an onerous and novel framework that would effectively require New York-chartered community banks to perform scenario analysis, which the Federal Reserve has said will be required only of the nation’s largest banks; 3) Climate-related financial risk management frameworks proposed by federal regulators would exempt community banks under $100 billion in assets. . .ICBA strongly opposes climate risk regulation of community banks and has expressed concerns with Federal Reserve, FDIC, OCC, and SEC proposals, including in an American Banker op-ed earlier this year.

Industry Insight

• The Fed approved its 10th interest rate increase in just over a year, and dropped a tentative hint the current tightening cycle is at an end. The Fed’s FOMC unanimously raised its benchmark borrowing rate by 0.25 percentage point. The increase takes the fed funds rate to a target range of 5%-5.25%, the highest since August 2007. https://www.cnbc.com/2023/05/03/fed-rate-decision-may-2023-.html

• According to U.S. News & World Report’s annual best states ranking, which was released Tuesday, ranks each state using more than 70 metrics across eight categories.  New York ranked 20th out of all 50 states, with high rankings for natural environment, health care, education and crime, but the state’s overall ranking was dragged down by low marks for opportunity, economy and fiscal stability. 

SBA Syracuse District Office Lending Reports

Happy National Small Business Week!

Please find attached the April month end lending reports (10/1/22-4/30/23).

Thanks,

Grace

Grace Conners

Lender Relations Specialist

Syracuse District Office

U.S. Small Business Administration

O: 315-471-9941

C: 202-815-5010

grace.conners@sba.gov

• Regulators have seized control of First Republic Bank and sold it to JPMorgan Chase & Co. -- a dramatic move aimed at curbing a two-month banking crisis that has rattled the financial system, the Times reports. ICBA said it is important to learn from the failure of First Republic Bank following the closure of the San Francisco-based institution. The FDIC announced the closure of First Republic by the California Department of Financial Protection and Innovation and entered purchase-and-assumption and loss-sharing agreements with JPMorgan Chase Bank following a competitive bidding process. First Republic had approximately $229.1 billion in assets and $103.9 billion in deposits as of April 13. DIF Impact: The FDIC said it estimates the failure to cost the Deposit Insurance Fund roughly $13 billion. Because regulators did not resolve the bank using the systemic risk exception, and instead applied the FDIC’s least-cost-resolution practices, the agency is not required to levy a mandatory special assessment to address the costs of First Republic’s failure. 

• Industry Differentiation: ICBA continued to differentiate community banks from larger financial institutions in the news media following the failure of First Republic Bank. In a recent blog post and video to community bankers, ICBA President and CEO Rebeca Romero Rainey said round-the-clock media outreach, the ICBA National Campaign, and focused advocacy efforts are helping to differentiate community banks from larger financial institutions among policymakers and the public. In a national news release, ICBA said First Republic’s risky business model looks nothing like community banks’ relationship-based model and reminded consumers they can bank with confidence at community banks, citing their safe, sound, and secure banking model focused on longevity and serving local communities. ICBA called on Washington to ensure any response to recent closures at larger institutions does not affect community banks, as advocated by the Biden White House, and also cited FDIC board member McKernan’s statement following the First Republic failure that policymakers should “avoid the temptation to pile on yet more prescriptive regulation or otherwise push responsible risk taking out of the banking system.”  ICBA also told the Marketplace  public radio show it’s been largely business as usual for community banks despite the latest failure. The report, “Small banks are doing just fine. Thanks for asking”, notes that community banks have successfully communicated to their customers about how they differ from institutions such as First Republic and Silicon Valley Bank. Separately, The Hill cited ICBA’s President calls for policymakers to distinguish community banks from larger institutions. ICBA also told  American Banker that community banks should not have to pay higher deposit insurance assessment premiums due to the recent failures. 

• In a pair of news releases, ICBA said federal reports on the failures of Silicon Valley Bank and Signature Bank of New York reflect the preferential treatment that large banks receive and the risks of the crypto industry contaminating the banking system. 1)  The Fed’s admission that its supervisors failed to take forceful enough action against the 16th largest bank in the country confirms that large banks continue to enjoy lax oversight, ICBA said of the report led by Fed Vice Chair of Supervision Barr. With the Fed’s report citing an overly cautious approach from examiners and calling for re-evaluating regulatory standards for banks with $100 billion or more in assets, ICBA called for future laws and regulations to address large bank risk and supervision.  2)  In a separate statement on the FDIC’s report on the Signature failure, ICBA said that bank’s focus on serving the crypto sector illustrates the stark differences between certain large banks and Main Street community banks. ICBA noted the report cited Signature’s vulnerability to contagion from crypto and the FDIC’s ineffective oversight, which contrasts sharply with community banks’ safe, sound, and heavily regulated banking model. 

• ICBA expressed strong support for House and Senate legislation to establish a safe harbor for financial institutions that serve cannabis-related businesses in states where cannabis is legal. Recently reintroduced by bipartisan groups of lawmakers led by Sens. Merkley (D-OR) and Daines (R-MT) and Reps. Joyce (R-OH) and Blumenauer (D-OR), the Secure and Fair Enforcement (SAFE) Banking Act would open the traditional banking system to cannabis-related businesses, and would apply to states that have legalized cannabis for medical or recreational use. In these states, federal banking regulators would not be permitted to threaten or limit a bank’s deposit insurance, downgrade a loan, prohibit or discourage the provision of banking services, or take any other prejudicial action on banks solely for serving a cannabis-related business. The conflict between state and federal law has created legal uncertainty for banks and forced cannabis-related businesses to operate mostly in cash, presenting a public safety risk. After passing the House seven times amid ongoing ICBA advocacy, the SAFE Banking Act fell short of full passage last year as lawmakers left it out of the end-of-year omnibus package.

• In a comprehensive report on the deposit insurance system following recent bank failures, the FDIC expressed support for expanding deposit insurance coverage limits for business payment accounts. The FDIC’s “Options for Deposit Insurance Reform” report outlines three potential options for deposit insurance reform: 1) Limited Coverage: Maintaining the current deposit insurance framework. 2) Unlimited Coverage: Extending unlimited deposit insurance coverage to all depositors. 3) Targeted Coverage: Offering different deposit insurance limits across account types, with business payment accounts receiving significantly higher coverage than other accounts. The FDIC believes targeted coverage—which would require congressional action—is the most promising option to improve financial stability relative to its effects on bank risk-taking, bank funding, and broader markets. In a statement on the report, FDIC Chairman Martin Gruenberg said business payment accounts pose greater financial stability concerns than other accounts while posing a lower risk of moral hazard. Background: Following the failures of Silicon Valley Bank and Signature Bank of New York, FDIC Chairman Martin Gruenberg directed the agency to conduct an analysis of the deposit insurance framework and identify reform options.

• ICBA continues calling on community bankers to urge their members of Congress to support a House resolution to nullify the Consumer Financial Protection Bureau’s Section 1071 rule. Community bankers can use ICBA’s Be Heard grassroots action center to urge lawmakers to pass H.J.Res.50, which would provide for congressional disapproval of the 1071 rule and dictate that it has no force or effect. ICBA recently published a summary of the rule  that details its scope of coverage, key definitions, compliance dates, collection and reporting procedures, and more.

• President Biden is reportedly close to elevating Federal Reserve Governor Philip Jefferson serve as Fed Vice Chair and nominating Adriana Kugler, the U.S. executive director of the World Bank, to fill the Fed's open Governor spot. Kugler would be the board's first Latina member and would fill the vacancy left by Lael Brainard, who is now Director of the White House National Economic Council. The New York Times

• Internal Revenue Service (IRS) Commissioner Werfel has committed to doubling the rate of processing Employee Retention Tax Credit (ERTC) claims. This is good news for New York community banks and their clients. https://augustafreepress.com/news/irs-commits-to-double-rate-of-processing-tax-credits-and-reimburse-virginia-small-businesses/

• ICBA called on Congress to pass a long-term reauthorization of the National Flood Insurance Program to bring stability and confidence to the market. In a written statement for a Senate Banking Committee hearing on the NFIP, ICBA urged Congress to: 1) Strike a delicate balance between setting the program on sound financial footing and ensuring affordable rates; 2) Increase private market participation as long as community banks are not responsible for certifying that private policies satisfy mandatory purchase requirements and consumers are allowed to return to the NFIP without losing their grandfathered status; 3) Preserve mandatory purchase requirement for commercial properties; 4) Maintain the community bank escrow exemption. . .Congress last year passed an ICBA-supported NFIP extension as part of its end-of-year omnibus spending bill. In a letter to congressional leaders during last year’s debate, ICBA advocated an immediate extension as well as a long-term NFIP authorization.

• Our community banking industry faces a number of important issues in Washington, including: 1) The aftermath of the SVB and Signature Bank failures; 2) The CFPB's 1071 Small Business Rule; 3) The SBA 7(a) Rule; 4) The SAFE Banking Act, and more. IBANYS will be at ICBA's Capital Summit (May 14 - 17) in Washington. We are planning meetings with key members of the New York congressional delegation on Tuesday, May 16. In order to finalize those, we need to know which New York community bankers will be able to participate.  Please register for the Capital Summit -- https://www.icba.org/events/icba-capital-summit  -- and email me (Johnw@ibanys.net) and Steve Rice (Stever@ibanys.net) with your preference as to which meetings you'd like to attend. We'll be holding our IBANYS dinner Monday evening, May 15 to go over our issues and schedule. Please join us in Washington for this once-a-year opportunity to make your voice heard.

• Senator Schumer said “steep budget cuts included in House Republicans’ plan for raising the debt ceiling would be a major blow to New York.”   https://www.nydailynews.com/news/politics/us-elections-government/ny-chuck-schumer-debt-ceiling-dagger-new-york-20230430-5fuml4qwejhi7f3n62bpnlotq4-story.html 

• Rep. Alexandria Ocasio-Cortez (D-Bronx/Queens), seen as one of Sen. Gillibrand’s strongest potential primary challengers in her 2024 re-election campaign, all but closed the door on a possible run.  Ocasio-Cortez’s spokesperson stated: “She is not planning to run for Senate in 2024. She is not planning to primary Gillibrand.”    AOC is ‘not planning’ to run for Senate in 2024.  Other possible challengers have already opted out of the race.   Politico reports.