Banking New York Issue Three 2019

THE EMPIRE STATE MAGAZINE FOR FINANCIAL EXECUTIVES & PROFESSIONALS • ISSUE THREE 2019

STOP CUSTOMER ANGST! BUSY FIRST HALF

MONEY LAUNDERING

B CORPORATIONS

IBANYS Tackles Long List of Activities

Use This New Tool To Combat It

Does The Designation Drive Deposits?

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CONTENTS

JUL ISSUE THREE AUG 2019

STAFF CEO, PUBLISHER & EDITOR Vincent M. Valvo ASSOCIATE PUBLISHER Barb Dimauro

OPERATIONS MANAGER Kurt Schenher ONLINE CONTENT DIRECTOR Navindra Persaud GRAPHIC DESIGN MANAGER Stacy Murray GRAPHIC DESIGNER Scott Ellison If you would like additional copies of Banking New York Call (860) 719-1991 or email kschenher@ambizmedia.com

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MANAGING EDITOR Keith Griffin

COVER STORY: Stop New Customer Angst

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President's Message

IBANYS pulls out all the stops for education and advocacy in first half of 2019

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Public Affairs Update

Success at holding back a host of new challenges on legislative front

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Bank Design

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Chase opens a new community branch in Harlem

Even local banks need to worry about money laundering law changes

Outreach

20

Lending

24

Merger

What brought T-Mobile and BankMobile together: it’s not revenue

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Anything But Banking

Steve Martin loves the great outdoors and cuisine

14

Marketing

The B Corporation designation might not drive business

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On the Move

See who’s career is on the move in New York

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© 2019 American Business Media LLC All rights reserved.

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What’s popping in bank branches in the near future

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Strategy

Bank of the Future Issue Three | 3

IBANYS PRESIDENT’S MESSAGE | By John Witkowski

IBANYS’ Busiest Spring Concludes With 2019 Annual Convention, End Of Legislative Session

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he first half of 2019 is now in the books, and what a first half it was at the Independent Bankers Association of New York State.

It included what might have been one of the most challenging state legislative sessions in recent memory. After all was said and done – and we had pulled out all the stops to stop tax-exempt credit unions from being allowed to enter the municipal deposits business – we emerged successful in the very closing hours of the session. It was a long process, and Steve Rice will provide the details in his Public Affairs update in this issue of Banking New York.

I want to say a special thank you to our Chairman Tom Amell (Pioneer Bank), the members of our Government Relations Committee, our board and leadership, our Legislative Counsel Bill Crowell, our industry consultants (and longtime community bankers) Larry Heilbronner and Kevin Klotzbach for all their hard work and expertise.

Thanks, as well, to our member bankers,

who contacted their local legislators to urge them to support our position.

However, the first six months of the year were about more than our legislative efforts. Our educational programming calendar was heavily front loaded, and included regional meetings and longer conferences designed for New York community banks’ directors, compliance officers, security officers, human resources officers, lending officers and CEOs. According to evaluations from those who attended, all were well received for their speakers and presenters, locations and the Continuing Professional Education (CPE) credits IBANYS is authorized to offer. Our

member banks themselves played a big part in designing the program agendas, recommending speakers and advising us on the hottest topics and biggest concerns they’re facing.

In some instances, we broke new ground in terms of our venues. For example, we held our first Compliance Conference in New York City, and held meetings in

4 | Banking New York | July 2019

Poughkeepsie as well as the Capital District, Central New York, Western New York and the Southern Tier.

The biggest conference of our IBANYS year was our 2019 Annual Convention in June at The Turning Stone Resort in Verona, New York. All in all, it was a major success both financially as well as content wise. It featured a number of presentations on a wide array of timely topics, addressing operational, strategic planning and bottom-line issues for community banks. It also included our business exhibition show with 30 booths -- hosted by firms that offer valuable products and services designed to help community banks. Convention attendees also included 33 New York community banks, 51 bank representatives and 29 associate member firms (not counting exhibitors).

We also held our traditional PAC Silent Auction, which raised a considerable amount of funds to support our political action efforts in New York State ... and enjoyed unique peer networking opportunities for community bankers Next year’s conference will be held at as well as those firms Turning Stone from June 15-17, 2020. that are allied with the industry.

(Make sure you save the date for next year’s conference. It will be held at Turning Stone from June 15-17, 2020.)

We have one more major meeting scheduled for the fall: Our Bank Executive Symposium, set for September 9 – 11 in Clayton, New York on the St. Lawrence Seaway. We hope to see many of you there.

Last, but not least, I want to recognize some important new additions. I am referring to our newest IBANYS preferred partners: UHY; Freed Maxick, and Compliance Anchor ... and, our newest associate members: Transgate Solutions; CES; LaMacchia Group; QwickRate; InfoAgora, and Performance Trust Capital Partners. We look forward to working closely with all of you and are pleased to welcome you to the IBANYS family.

Many of you know that in a previous life, I enjoyed playing competitive football at Columbia University, and later in the National Football League.

During my gridiron days, no team I ever played for went into the locker room and rested on our laurels for “winning the first half.”

That’s exactly how IBANYS will approach the second half of 2019.

We’re already busy preparing our next strategies for our 2020 legislative agenda ... planning ideas, speakers and locations for our 2020 educational calendar ... and working every day to provide the level of representation and service New York community banks have come to expect from their association.

JOHN WITKOWSKI Bring on the third quarter! ■ John Witkowski is president and CEO of the Independent Bankers Association of New York State. He may be reached at johnw@ibanys.net or (518) 436-4646.

IBANYS BOARD OF DIRECTORS Chairman Thomas Amell Pioneer Bank, Albany, NY Vice Chair Michael Wimer Cattaraugus County Bank, Little Valley, NY Secretary/Treasurer Thomas Carr Elmira Savings Bank, Elmira, NY Immediate Past Chairman R. Michael Briggs USNY Bank, Geneva, NY ______________________________ John Buhrmaster First National Bank of Scotia, Scotia, NY Randy Crapser Bank of Richmondville, Cobleskill, NY Anthony Delmonte Bank of Akron, Akron, NY Director Emeritus Ronald Denniston First National Bank of Dryden, Dryden, NY Christopher Dowd Ballston Spa National Bank, Ballston Spa, NY John Eagleton Steuben Trust, Hornell, NY Robert Fisher Tioga State Bank, Spencer, NY Gerald Klein Tompkins Mahopac Bank, Brewster, NY Douglas Manditch Empire National Bank, Islandia, NY Mario Martinez Catskill Hudson Bank, Kingston, NY Paul Mello Solvay Bank, Solvay, NY Theresa Phalon North Country Bank Anders Tomson Capital Bank/ a division of Chemung Canal Trust Company, Albany, NY Kathleen Whelehan Upstate National Bank, Rochester, NY Steven Woodard Alden State Bank IBANYS STAFF John J. Witkowski President and CEO Stephen W. Rice Vice President of Government Relations and Communications William Y. Crowell III Legislative Counsel Linda Gregware Director of Administration and Membership Services

Issue Three | 5

PUBLIC AFFAIRS UPDATE | By Stephen W. Rice

In Albany: State Legislative Session Ends: Credit Union/Municipal Deposits Legislation Held In Committees

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ince last November’s general election produced such dramatic changes by giving Democrats complete control – of the State Senate, as well as the State Assembly and Governor’s office – community banks IBANYS and the New York community banks we represent realized a new era was beginning in Albany. As we discussed in our Government Relations Committee and leadership meetings, and in our various publications and updates, we faced a number of new challenges on the legislative and regulatory fronts.

As the 2019 state legislative session unfolded, it became clear that the agenda was very different from the days when Republicans controlled the Senate. For community banks, the dominant issue was the issue of whether credit unions – essentially tax-exempt, and not subject to CRA mandates – should be allowed into the business of bidding on, securing and holding municipal or state deposits.

6 | Banking New York | July 2019

For IBANYS, the process included: • Testifying at a Joint Hearing Legislation by the Assembly’s Committees on Banks and Local Governments. IBANYS Chairman Tom Amell (President & CEO, Pioneer Bank) led our group of witnesses and delivered an extremely cogent and effective presentation.

• A series of meetings with Senate Banks Chairman Sanders (D-Queens) and Assembly Banks Chairman Zebrowski (D-Rockland County) and their senior staffs; • Preparing and circulating our

Memo in Opposition and a White Paper Analysis that explained the impact the change could have on community banks and those we serve, and refuting credit union positions and claims. Larry Heilbronner, our industry consultant and a longtime senior executive and current director with Canandaigua National Bank, was instrumental in developing the analysis. Kevin Klotzbach of Five Star Bank also contributed greatly to our efforts.

• Launching an all-out, memberdriven grassroots outreach to inform legislators of our position.

AS THE 2019 STATE LEGISLATIVE SESSION UNFOLDED, IT BECAME CLEAR THAT THE AGENDA WAS VERY DIFFERENT FROM THE DAYS WHEN REPUBLICANS CONTROLLED THE SENATE.

We worked hard to keep membership fully engaged and informed at each step along the way.

In addition to simply opposing the legislation, we also developed and offered James Sanders proactive, Chairman, Senate Bank alternative solutions to seek a more level playing field between banks and credit unions on issues related to state taxes and CRA requirements.

IBANYS was supportive of the provision that would have allowed thrifts to enter the municipal deposits business without the current requirement that they must form commercial bank subsidiaries to do so. We also believed the amended bill, which would have phased in credit union participation over six years, with limits beginning at $300,000 and ending at $5 million, represented an improvement over the initial version.

However, we believe that permitting tax exempt credit unions to compete with tax paying community banks for these public deposits would have made an already unequal playing field even more unfair and imbalanced.

Because of the unified efforts and innovative approaches of IBANYS’ leadership and membership -- reinforced by our consultants and G.R. staff -- our efforts were successful. When the 2019 state legislative session adjourned in the early morning hours of Friday, June 21, it did so without taking any action on the legislation (A.3262, Zebrowski/S.6079, Sanders).

Despite strong indications that it would be passed by both chambers, the legislation was instead held in the Assembly Ways & Means Committee and the Senate Banks Committee, and will not be enacted this year. However, it is clear that there is much work to do in the months leading up to the next legislative session that begins in January

(ICBA), our partners in Washington, to advance and protect the interests of New York community banks at the federal level.

IBANYS met in the offices of more than a Tom Amell, IBANYS Chairman Kenneth Zebrowski dozen members President & CEO, Pioneer Bank Chairman, Assembly Bank of the New York congressional delegation earlier 2020. The issue will most certainly be this year in Washington. Most were addressed again next year. IBANYS’ members of the House Financial Services Government Relations Committee will Committee, Agriculture Committee, be developing policy positions and Small Business Committee and/or were defining and shaping our strategy in the newly elected Members of Congress. We coming weeks and months. discussed our industry priorities, and A number of other bills that will provided background information and have a short-term and/or long-term analyses on how many of the pending impact on community banks did pass bills would impact New York community the Legislature this session. Indeed, a banks back home and the local and state considerably larger number than was economies. traditionally the case when the entire legislature was not controlled by under The state legislature is now adjourned one-party. until January 2020. Congress will be The state "wild card" law - which out on recess for much of the rest of allows the State Department of Financial the summer before returning to a full Services to maintain the viability and schedule in September after Labor Day. competitiveness of the state banking When state and federal legislators charter vis-à-vis the federal charter - was are not in session in Albany and extended another five years to 2024.

Washington, they are usually back There were a number of other home in their districts. It’s a great bills related to CRA, confession of time to schedule appointments with judgement, foreclosure, data breaches, them, even to invite them to visit consumer credit that also passed, and the bank to discuss community bank IBANYS will work with our Government issues, operational challenges and Relations Committee to determine many contributions made to local legislation on which we may seek a neighborhoods and customers. ■ gubernatorial veto.

On federal matters, Congress continues to operate under a Republican Senate and a Democratic House. Among the issues being considered and/ or debated are beneficial ownership, CECL, BSA/AML reform, GSE reform, flood insurance and a number of other issues safe harbor marijuana banking legislation. IBANYS continues to work closely with the Independent Community Bankers Association

STEPHEN W. RICE

Stephen W. Rice is Director of Government Relations & Communications for the Independent Bankers Association of New York State.

Issue Three | 7

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Should It Be So Hard To Become Your Customer?

By Mike Kirkpatrick, Special To Banking New York

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H H AH

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pening a new bank account can be a rite of passage for many young consumers who join the working world. Some already have accounts opened by their parents but with an independent spirit and newfound freedom, most decide to open an account on their own for direct deposit of their payroll check and access to the banking system for bill pay and other conveniences.

This access isn’t always cheap, some of you are charging 12 bucks or more a month for this access. That’s on par with HBO GO or Amazon Prime - subscriptions that deliver much joy for those bucks. And while there’s no way you’ll ever deliver the same joy as Hulu, Netflix or other fun stuff for that money - shouldn’t it be at least very easy to sign up?

I surveyed a handful of bank account sign-ups and found some really common pitfalls with simple fixes that would make capturing these consumers far easier and start relationships in a much better way. By the way, it’s estimated that 40 percent of consumers abandon this process once they start.

We can do better than that with simple UX and UI best practice.

For this exercise, I surveyed seven banks, four large Issue Three | 9

national brands, one digital only player, one credit union and one local regional player based in Massachusetts. I found some trends, patterns and have some tips all for experience improvements that can be made today without an overhaul to the IT tangle. A lot of them come down to best practices of humancentered design - that is building the product (the online application) around how the user thinks, feels and acts and their wants and needs — not how the financial products or the bank works.

Product-centric or feature-centric design is a common folly and one I saw in full display. This is where experiences cater to the way the organization works, or because of a legacy process or technology. Risk and compliance can also be rationale for bad user experience. You don’t need to drive risk to zero, it’s impossible to do that - right? Challenge that thinking and take the right balanced approach to achieve compliance without torturing new customers.

Here are some of the findings and food for thought in reviewing a handful of account-opening experiences.

1. WATCH THE LANGUAGE

In many cases the language used is “banky,” and not welcoming. Product names are often the worst offenders and not at all consumer-centric. Here’s a short roster of products I had to choose among: • Total Checking • One Deposit Checking • Platinum Checking • Platinum Plus Checking • Premier Plus Checking • Gold Star Checking • Star Checking • Free Checking (that one sounds good actually…)

10 | Banking New York | July 2019

Be wise about the questions you ask and challenge your banking colleagues in the name of customer experience.

With product names, banking is taking a page from health insurance, which has notoriously opaque names for healthcare plans. Health insurance isn’t often a source for experience-based inspiration and shouldn’t be here either. Here at Mad*Pow, our research has shown this opacity reinforces the distance between you and your customers which impacts loyalty. When you speak a different language, it does not foster trust (which starts with mutual understanding).

There was one exception with product language specifically, the digital-only player asked how I plan to use my account. Online Savings? Interest Checking? It’s not perfect but a much more, “me-centric” way of asking!

Thank you. I know products need names but why not focus on my needs and you figure out whatever product that translates to? Remember to be customer-centric, not product-centric.

2. JUST BECAUSE YOU WANT TO KNOW, DOESN’T MEAN YOU SHOULD ASK

Some of you ask me for employer information (skip tracing?) some didn’t. How do I plan to use the account? One bank asked me four questions about how I plan to use the account…

• What’s the average monthly value of your total deposit transactions?

• What’s the expected value of your total cash deposits?

• What’s the average monthly value of your total withdrawal transactions?

• What’s the average monthly value of your total cash withdrawals?

Come on. It is like I want to date your daughter and you’re asking me how many kids we’re going to have, where we plan to live and where we’ll send the kids to college.

It’s a turn off and makes me want to run away. If you’re using this information to tailor the experience or product options I’ll see later, that’s great. Honestly. Just don’t put this in front of the already arduous sign-up process. You don’t need to know everything now. Let me sign up and get this information later, maybe a little at a time if I end up calling or visiting a branch.

There was also this: You: “What is the purpose of the entire client relationship?”

Me: Puzzled. Thinking and unsure how to answer, “I need a checking account.” Open dropdown…

Choose “Basic Banking” You: “What products are you anticipating using?”

Me: Thinking, “??? I don’t know but can we just open the hypothetical account already?”

This felt a little like I was at the border being asked for my papers.

Please resist the urge to gather copious data that serves you but adds pain to an already painful exercise and risks feeling a little cold and unfriendly. I’ll be a great customer if you respect my experience. Let’s talk about this stuff later.

Be wise about the questions you ask and challenge your banking colleagues in the name of customer experience.

Every question you add decreases the chances of completion. Questions need to prove themselves in, not be proven out of the experience flow - Ask “why” not “why not”.

3. ANTICIPATE THE ISSUES AND DESIGN FOR THEM

I really tried to open these accounts which means I went all the way through the process including providing funding. In every case I was denied, which I thought was odd. I was looking forward to digging deeper by using each of the respective bank apps. Bummer.

Did I get my driver’s license number wrong? I screw that up sometimes.

Then I went to the pure digital bank and at the beginning of the process was asked, “Do you have a freeze on your credit?” “Ahh… yes. I do.”, I thought. I was able to first suspend the freeze, then work the application process to completion.

Anticipatory design has a lot of facets and at its finest can deliver real “delight moments” (as agency people say) through simple utility. As your “signer uppers” move from one section to another, try to anticipate what they may be asking themselves or an answer to a question based on something prior.

For example, on one bank’s application I chose to fund by credit card. I plugged in my number, no problem. Next question I was asked was “Card Network.” This broke like three rules at once. “What’s this want?” I thought. I opened the dropdown menu to see “Mastercard, Visa, Amex”. “Wait, can’t they derive this from the number I provided?” (yes) The trifecta here was the use of dropdown menus which hid the potential answers from me.

Other User Experience and User Interface madness you can learn from…

This is the experience economy, so much of that value can come in the form of a great customer experience ...

• Why don’t you all of you use the number pad for numerical data collection! Not helpful to have QWERTY for my date of birth or SSN is it? So easy.

• Dropdown menus or dropdowns are almost always a bad UI choice especially on mobile. Why? All the options are hidden. Many of you make them even worse by having the default option as “choose one” providing no sense for the family of answers contained within. Try to avoid dropdowns. If you must use them, try to make it clear what’s in them so I can mentally have the answer ready for scanning when I open up and see a long list of things to choose from.

• One bank listed Service Fees: “$25 or $0”- this is presumably the result of optional minimum balance requirements but it’s an odd way to display this to a consumer who’s wondering, “How much are fees?” Should be more intuitive.

• I was curious about my account’s interest rate. It was listed on one bank as “Earns Interest (see rates).” The “see rates” link sent me to a page

that included general rates for every product offered by the bank. Like a brochure on interest.

Why not just tell me what I earn!? I give up.

Be easier, please.

Readers here know that opening a new checking account isn’t the path to sudden profitability for the bank. On average, most banks lose money on a single checking account relationship.

However, the hope here is that this will begin a relationship that goes multi-product as consumers needs change and grow over time. This sets the stage for the relationship you hope to deepen.

Banks would love to deliver checking, savings, a loan for your new car, your mortgage. The challenge in the today’s digital age is that these products have largely become commoditized, with little differentiation. Therefore, these products need to be packaged with other items of value, and many banks are trying to figure that out.

This is the experience economy, so much of that value can come in the form of a great customer experience one that is highly personalized, meets me where I am and provides me with the advice I need not sales driven BS. If you’re committed to this ethos, start with the account opening and go from there.

Quick wins, folks. Experience matters.

Michael S. Kirkpatrick is senior vice president, client experience & strategy and leads the financial services practices at Mad*Pow, an experience design agency in Portsmouth, NH, and Boston, MA. ■

Issue Three | 11

BANK DESIGN | By R. Michael Goman, Special to Banking New England

Bank Of The Future

NEW BANKS FEATURE MORE, IN SMALLER PACKAGES (AND POP UPS TOO)

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oday’s technology means most customers can pay their monthly bills in about five minutes without ever picking up a pen to sign their name. No stamps or paper checks required, and no waiting for “regular banking hours.” With a smartphone, laptop or home computer, moving cash between accounts now takes only a few mouse clicks. Direct deposit has largely eliminated printed paychecks. Even store refunds using hard cash is rare.

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Most customers don’t visit a bank branch with any frequency. And when they do -- to cash a check or withdraw a few bucks -- ATMs take care of basic needs. Even complex credit and loan approvals are becoming almost instantaneous.

With all this transformative change, what will tomorrow’s bank look like, and what will we do there? Are traditional, ornate bank branches today’s granite and marble equivalents of the buggy whip -- once very useful, but now history?

Not exactly. Banks will indeed look and feel different, but they will still serve important functions, and offer

enhanced personal services. Rather than a place to conduct transactions, bank branches will be places we go for personal advice and financial education.

Undeniably, digital banking is taking over. Brick-and-mortar bank locations remain a critical sales channel, but smaller physical layouts and technology are transforming how customers will interact with bank employees. Traditional bank teller positions are disappearing, replaced by knowledgeable personnel who offer advice and can sell a full array of products and services. Meanwhile, the emergence of Big Data analytics

– which increasingly track and characterize individual and collective consumer buying patterns and preferences – will enable a more personalized customer experience.

Greater convenience will be evident. Hours of operation will move toward 24-7. Interactive Teller Machines (ITMs) with full-service videoconference access will flourish, while payment options will continue to expand.

Let’s look at how banks are already reinventing their local branches.

One of the more intriguing innovations are so-called “popup” bank branches which can cost 10 percent of a typical branch!

These self-contained spaces may be designed to fit within converted recreational vehicles or housed inside 20’ by 8’ steel containers (the kind typically seen on a truck bed or rail car). These portable offices feature on-site bank employees who use tablets to open new accounts, initiate personal loans, offer products and make service referrals.

With relative ease, a “pop up” branch can be located where it’s needed. For example, a branch equipped with its own electric generator could serve an area suffering from a natural disaster.

Such a branch can also test early foot traffic in a prospective location, allowing the bank to gain local customer insights and better “scale” a brick-and-mortar building. A temporary branch could also be a vendor at a country fair, sporting or other public events where the bank wants to enhance its presence and build brand awareness.

Also, the traditional row of teller windows is quickly vanishing, replaced by kiosks or island service centers, staffed by professionals with tech at their fingertips. These “universal bankers” are focused on financial services and can help with all manner of banking business.

Tellerless branches known as “virtual centers” or “smart branches” will employ no people on site. Instead, videoconference

The traditional row of teller windows is quickly vanishing, replaced by kiosks or island service centers, staffed by professionals with tech at their fingertips. capabilities and handsets will allow customers to obtain personal, confidential assistance with transactions or consult with mortgage loan officers or investment specialists in remote locations.

Banks are also exploring contemporary café branches, where customers can access free Wi-Fi or web access, enjoy coffee, recharge their cell phones, withdraw money from an ATM, or talk to a banker for more complex assistance.

Branches are being co-located with other retail outlets – such as pharmacies and big box retailers – to reduce costs and enhance customer access. Many banks have gone a step further, offering their space for after-hours community activities such as investment classes or social gatherings to help build their community brands.

As technology and consumer preferences continue to evolve, so will banks, from places of basic transactions to financial advice and service centers. These are exciting times for banks that choose to embrace change, innovate, and please tech-savvy customers who will seek banks centered around custom services and conveniences that fit their busy lifestyles. ■ R. Michael Goman is president of Accubranch LLC, based in East Hartford, Conn., which offers trusted advice to community banks and credit unions regarding branch locations.

Issue Three | 13

MARKETING | By Dan Calabrese, Special to Banking New York

B Corporation Might Be A Feel Good Designation BUT CUSTOMERS ARE PROBABLY STILL SHOPPING BANKS FOR RATES

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ust about everyone wants their bank to offer competitive interest rates, low fees and reasonable access to credit – not to mention good customer service.

But is it important to bank customers which sources of energy the bank uses? Or where the bank advertises, or whether it buys from local sources? Or how much the bank pays its employees?

A small but growing number of banks believe their customers do care about these things, which has prompted them to work with Berwyn, Pennsylvania-based B Lab to achieve certification as a B Corporation.

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A B Corporation certification, according to B Lab, is a company that’s agreed to adhere to the highest standards of social and environmental responsibility, as well as public transparency, legal accountability and a commitment to “balance profit and purpose.” That includes imperatives like maintaining generous wages, buying from local sources, environmental responsibility and many other things.

Companies who have been certified come from a wide variety of categories – everything from bakeries and brewing companies to manufacturers and cosmetics firms.

It’s a comprehensive process that looks at a company’s practices with respect to environment, local

sourcing, wages and many other things. Once an applicant company submits the information required, it will usually be subject to an audit on at least some issues before receiving certification.

While 2,788 companies across 150 industries have become B Corporations, only nine banks have done so. New York City-based Amalgamated Bank (with additional branches in San Francisco and Washington, D.C.) has completed the process and touts its certification proudly to a customer base it believes puts a premium on the priorities necessary for B Corp certification.

Amalgamated is a bank that trumpets on its website how its

customers are “Nonprofits, labor unions, advocacy groups, socially responsible businesses and others sharing a vision of positive change.”

Amalgamated was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions.

The bank, which bills itself as “America’s socially responsible bank,” also adds to its online story, “Your money should align with your values, which is why Amalgamated Bank takes more than financial criteria into account when lending and investing. We look for businesses with missions that are as strong as their books, and we refuse to invest our own dollars in funds that harm people or the planet.”

But while the certification certainly demonstrates a company’s commitment to certain issues, the question remains just how the certification advances a bank’s business objectives.

B Lab charges an annual certification fee based on the company’s annual sales. Yearly costs range from $500 for a company with sales under $150,00 to $50,000 for a company with sales over $1 billion.

Hannah Munger, a media spokesperson for B Lab, said the certification speaks to a clearly expressed priority of consumers.

“It signals to your customers, employees, communities, and suppliers that your business -- or your bank in this case -- has met rigorous verified standards of social and environmental performance as well as public transparency,” Munger said. “It also shows that you are a credible leader in the movement of business as a force for good. And with 80% of global consumers agreeing that business must play a role in addressing societal issues, B Corp Certification provides the framework for businesses to do just that.”

For Amalgamated Bank, B Corp certification is about assuring customers the bank’s business practices line up with their own values.

Amalgamated is the nation’s largest B Corp bank and a member of the Global Alliance for Banking on Values. As of March 31, 2019, total assets were $4.9 billion, total net loans were $3.3 billion,

and total deposits were However, Amalgamated $4.1 billion. Additionally, was still a privately-held as of March 31, 2019, the bank when it became a B trust business held $30.1 Corp in 2017, according billion in assets under to a spokesperson. It custody and $11.8 billion in became publicly traded assets under management. in August 2018. Fishberg “If you’re a bank like said, “While there aren’t us, and a very significant many publicly listed B percentage of your Corporations, for us, our client base cares about mission-driven approach these kinds of values – is part of our value Ivan Frishberg, First Vice sustainability, economic proposition to customers President and Director of Policy justice, good governance and shareholders alike.

Impact, Amalgamated Bank – this this is a brand and We were clear in our S-1 a seal of approval that lends some that we would work for the benefit of weight,” said Ivan Frishberg, first vice all our stakeholder groups, not just president and director of policy impact shareholders. As a socially responsible for Amalgamated Bank. “I think if bank, we play a unique role in our you’re in the market and you’re trying industry. We think being a Certified to pick between big banks that all B Corporation is valued both by our collectively have financed fossil fuel customers and by our investors as operations, and continue to do that well.”

“80% OF GLOBAL CONSUMERS AGREE THAT BUSINESS MUST PLAY A ROLE IN ADDRESSING SOCIETAL ISSUES, B CORP CERTIFICATION PROVIDES THE FRAMEWORK FOR BUSINESSES TO DO JUST THAT.” –Hannah Munger Media spokesperson for B Lab

every year, it all kind of seems like the same thing.”

While Amalgamated already had an interest in doing a lot of the things required for B Corp certification, Frishberg said the process helped the bank’s leaders focus.

“I remember looking at it the first time and kind of going, wow, we don’t do that but we should, and it would be a really easy thing to do,” Frishberg said.

Some of those priorities included bumping the bank’s minimum wage to $20 an hour as of July 1 and putting more emphasis on clean energy financing.

Amalgamated is publicly listed on Nasdaq, which is unusual for a B Corporation bank. Most are mutual institutions that have to deal with shareholders who might question any short-term hit on the bottom line.

“You won’t see a lot of this other than in the mutuals,” said Peter Ostrowski, managing director at New Jersey-based Ostrowski & Company. “One of the things (B Corp certification) requires is that you have other priorities that will take precedent over above the shareholders, and that’s not going to fly.”

Amalgamated is convinced it has customer bases with a particular profile who will value the kinds of things you have to do to become a B Corp. Is that true of banks in general, and will the business payoff be the same for them?

Ostrowski doesn’t think so.

“That’s not what’s going to drive customers to your bank, no,” Ostrowski said. “Low rates will, lending policies will, but I don’t see this driving people to one bank over another. It’s possible in some cases but it would be a limited audience in my view.” ■ Issue Three | 15

ON THE MOVE

TRY TO KEEP UP LOCAL PROFESSIONALS MAKING THEIR MARK IN NEW YORK BANKING

Teachers Federal Credit Union Names “I welcome the opportunity to work with TFCU’s board, staff and members as Calhoun New CEO/President Timothy M. Southerton, chairman of the Board of Teachers Federal Credit Union (TFCU), one of the largest credit unions in the United States with over $7 billion in assets and more than 325,000 members, announced that Brad Calhoun, former chief retail and marketing officer for First Tech Federal Credit Union, headquartered in Hillsboro, Oregon, has been named TFCU’s new CEO/president. Calhoun started in June following the retirement of longtime CEO/President Robert G. Allen.

Timothy M. Southerton, TFCU Chairman, said, “He is a respected credit union and banking sector leader who has a clear vision for fiscal growth, innovation and adapting to ever-changing markets.

He has a proven track record of success as Chief Retail and Marketing Officer for First Tech Federal Credit Union, where he oversaw average year-over-year growth in excess of 11% from 2013 to 2018. This represents an increase of over $3.7 billion in deposits over this five-year period and the doubling of the credit union’s size.”

Mr. Calhoun has over 24 years of leadership experience in banking and credit unions. At First Tech Federal Credit Union, he led the strategic direction of the organization and was responsible for nearly half of the more than 1,400 employees who work out of 42 branches across eight states. In addition, he directed a number of major marketing initiatives and spearheaded the redesign and strategy for all branches.

16 | Banking New York | July 2019

we enter this new chapter in the credit union’s history,” said Calhoun. “This is a tremendous opportunity for me to leverage my leadership and marketing knowledge to continue the expansion of the credit union across the dynamic Long Island and New York City markets and across the nation.”

Prior to his position with First Tech Federal Credit Union, Mr. Calhoun held several roles at Bank of America, most recently as area executive senior vice president for the bank’s Pacific Northwest Region.

Today, TFCU extends its credit union membership to all 50 states.

Stojanworski Named Region Executive For Long Island, NYC Jaime Stojanworski was recently named the new consumer banking region executive for Long Island and NYC for Bank of America. In this role, Stojanworski will help drive business integration across 114 financial centers, which includes 63 financial centers on Long Island.

She will be responsible for working closely with multiple lines of business to help serve customer’s needs: Merrill, Home Loans and Small Business.

Stojanworski has resided on Long Island for over 25 years and currently lives in Franklin Square, N.Y. with her husband Robert, and her three children, Mason, Sophia and Grace. She is based out of the Melville office. Stojanworski is a graduate of Long Island University with a Bachelor of Science in Business Management. Her community support includes volunteer efforts in Island Harvest and Long

Island Cares Food Banks and volunteer champion across the region.

Stojanworski has been with Bank of America for twenty years, starting in 1998 in a management development program. Prior experience includes consumer market manager roles across geographies of Long Island, Brooklyn and Queens. In this role, Stojanworski lead 44 financial centers in Hudson and Bergen counties in New Jersey, as well as 46 financial centers in the NYC Boroughs Market, playing a key role in the expansion of this growth market

Stojanworski also has held a variety of positions in the financial centers, market operations, and performance consulting and was a consumer leadership program participant. Stojanworski is a member of Bank of America’s LEAD (Leadership, Education, Advocacy and Development) for Women Employee Network.

Tegan Joins Tompkins Financial Corporation Board of Directors Tompkins Financial Corporation welcomed Jennifer R. Tegan to the Tompkins Financial Corporation Board of Directors. Tegan was officially elected at the annual meeting of shareholders held on May 7, 2019. She will continue as a director of Tompkins Financial’s affiliate, Tompkins Trust Company, where she has served since 2016.

Since starting with Cayuga Venture Fund in 2002, Tegan has been working with, supporting and financing entrepreneurs in technology-based companies in the

areas of communications equipment, social networking, semi-conductors, materials sciences, consumer products, and SAAS. As part of her role with Cayuga Venture Fund, she also serves on the corporate boards of GiveGab (Ithaca, NY), Venuebook (New York, NY), POM (Newark, NJ) and True Gault (New York, NY).

In 2018, Tegan joined the board of directors of the National Venture Capital Association, the preeminent trade association advocating for public policy that supports the American entrepreneurial ecosystem. Ms. Tegan is past President and current Executive Committee Member of the Upstate Capital Association of New York Board (formerly, UVANY) a membership trade organization whose mission is to increase access to capital for entrepreneurs and companies in Upstate NY. Tegan is also an active member of the Tompkins County community and serves on the Board of Tompkins County Area Development and the Board of the Elizabeth Ann Clune Montessori School of Ithaca. She also has served on the Board of the Tompkins Cortland Community College Foundation and on the Economic Development Committee for the Ithaca Urban Renewal Agency.

Tegan has her BA and MS in geology from Smith College and University of Cincinnati, respectively, and her MBA from Cornell University. She is a marathon runner and enjoys weightlifting, hiking, cross-country and downhill skiing. She lives in Ithaca with her husband and daughter.

Tompkins Financial Corporation is a financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania.

Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Trust Company, Tompkins Bank of Castile, Tompkins Mahopac Bank, Tompkins VIST Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors.

For more information on Tompkins Financial, visit www.tompkinsfinancial. com.

Kaufthal Named Chairman of IDB Bank’s Board of Directors Israel Discount Bank of New York’s Board of Directors has elected Ilan Kaufthal as Chairman, effective immediately.

Jake Berman retired as chairman of the board on March 12.

IDB Bank is amidst executing a fiveyear strategic plan that will result in company-wide transformation. Key areas of focus are; growth through expertise, infrastructure improvements, and culture change. The results are progressing ahead of plan, which is evident in the 2018 results with a record year for the bank with $96 million in net income and a return of equity of 10.4 percent.

“It was an honor for IDB, but especially for me, to have Jake as our chairman.

Under his leadership, IDB was able to conceptualize, draft and begin to execute a strategic plan for continued and sustainable growth. His guidance to me and to the board meant a lot,” said Uri Levin, president and CEO

of IDB Bank. “Ilan’s appointment as chair will only catalyze IDB’s transformation and continued growth.”

Kaufthal has more than 30 years of markets and banking experience.

Kaufthal currently serves as Chairman of East Wind Advisors, an independent, industry-focused investment banking firm. Before joining East Wind Advisors in 2011, he was senior advisor to Irving Place Capital, formerly known as Bear Sterns Merchant Banking, from 2008 to 2011. Kaufthal was vice chairman of Bear Stearns and Schroder & Co., as well.

Kaufthal currently serves on a number of professional and philanthropic boards. He is chairman of the board at Tronox, a chemical company, as well as a board member at Cambrex, a life sciences company and Macsteel, a metals company. He is chairman of the Friends of Bezalel Academy of Arts and Design, Israel’s national school of art. He is on the board at the Columbia University Medical Center and a trustee at The Russell Berrie Foundation and at The Ramaz School in Manhattan.

Sellwood Named 2019 NYCUA Outstanding Young Professional Reliant Community Credit Union announced that Richard Sellwood, the credit union’s Vice President of Member Services, has been selected by the New York Credit Union Association’s (NYCUA) Awards Committee to be this year’s Outstanding Young Professional.

The award “honors individuals 39 or younger whose commitment, hard work and achievements have enhanced their credit union or the entire New York credit union movement,” according to the NYCUA. Sellwood has served on the NYCUA Young Professionals Commission since 2015. He was appointed chairman in 2018, a role tasked with coming up with strategies for engaging with and empowering future credit union leaders. He also serves on CUNA’s YP Committee, and in that role he helped to plan CUNA’s first-ever Young Professionals Conference.

“We are incredibly proud of Richard and his efforts on behalf of Reliant, our members, and the entire credit union movement,” said Pamela Heald, president & CEO of Reliant. “Richard has always been a strong advocate for credit unions and for educating and developing other emerging leaders in the movement, and so this is such a fitting honor.”

Reliant Community Credit Union, which began locally in 1970, is a $433 million credit union serving more than 40,000 members.

Canandaigua National Bank Promotes Three

Canandaigua National Bank announces the promotion of Melissa DeSain, Amy Force and Amy Flaitz.

DeSain has been promoted to bank officer and manager of the ManchesterShortsville branch. She is responsible for managing the sales and operations of the office. She previously served as assistant manager of the Honeoye Falls branch and

Issue Three | 17

has been with CNB since 2016.

Force has been promoted to bank officer and community office manager of CNB’s Honeoye Falls branch. She previously served as assistant manager and has been with the company since 1993.

Flaitz, former community office manager of the Manchester-Shortsville office, has been promoted to assistant vice president of the Victor branch.

BankUnited Hires Kesner As Director of Commercial Card Services BankUnited announced the hiring of Joshua Kesner as senior vice president, director of commercial card services. With more than two decades of industry experience, Kesner will be responsible for launching the bank’s commercial card program and will be building out his team in Melville, New York.

“We are very excited to welcome Josh to the BankUnited family,” said Thomas M. Cornish, chief operating officer. “Josh is a key hire in rolling out a new card program which is a significant strategic initiative at the bank that will deliver value for our commercial clients.”

Most recently, Kesner served as head of market management for treasury products at Citigroup in New York.

Prior to that, he served as that bank’s director of commercial cards and partner services, a position he held for six years.

He also held positions at Deutsche Bank for four years, including head of banking product sales and client onboarding.

A resident of Syosset, Kesner holds a bachelor’s degree from Queens College in New York.

McCarthy Named SVP, Head Of Marketing at City National City National Bank announced that Patrick McCarthy has been appointed to the newly created role of senior vice president and head of marketing, creative and consumer insights for City National.

18 | Banking New York | July 2019

McCarthy will develop and execute plans for a wide array of key activities, including brand marketing, content development, digital marketing, direct response and social media. He also will create a team to monitor and assess trends in the market. He will work out of City National’s New York offices and report directly to Linda Duncombe, City National’s executive vice president and director of Marketing and Product Strategies.

McCarthy was most recently the global head of marketing for Citi FinTech in New York and charted the development of its consumer product marketing strategy. He was responsible for branding, partnerships, digital marketing and client engagement, consumer and competitive messaging insights, social media, marketing technology and more.

From 2009 to 2011, McCarthy worked as a lead analyst with the United States Treasury Department. Prior to that, he was an analyst with Merrill Lynch.

McCarthy received his undergraduate degree from Miami University and his MBA from Georgetown University.

Bigham Named CFO and Treasurer of Financial Institutions, Inc. Financial Institutions, Inc., parent company of Five Star Bank, among other bu announced today that Justin K. Bigham was named Executive Vice President, Chief Financial Officer and Treasurer.

Kevin B. Klotzbach, former CFO and treasurer for the Company, was named executive vice president, senior financial advisor. Klotzbach will remain with the Company through December 31, 2019, to ensure a successful transition.

President and CEO Martin K. Birmingham said, “Today’s announcement is the culmination of a successful succession plan for the key CFO role. In March of last year, we communicated Kevin’s intent to retire in 2019. Following a national search,

Justin joined us in October and was named EVP and Deputy CFO, reporting to Kevin.

“Justin has gained significant institutional experience leading our finance and treasury operations over the past five months and was integrally involved in our 2019 planning process.

He joined us with nearly 15 years of experience in Western New York banking. He has already proven that he is a terrific addition to our leadership team and I look forward to partnering with him in the continued execution of our long-term strategy.”

Verneuille Named Chief Risk Officer at First National Bank of Long Island The First of Long Island Corporation, the parent company of The First National Bank of Long Island, has hired Janet T. Verneuille as executive vice president and chief risk officer of the corporation and the bank.

Verneuille brings more than 30 years of banking experience on Long Island that includes, among other areas, finance, investments, accounting, internal audit, compliance, municipal banking, lending, branches and human resources. She most recently served as Executive Vice President and CFO of Empire National Bank. Verneuille previously served as Director, Executive Vice President and Chief Financial Officer of a national bank in organization after serving 15 years at Bridgehampton National Bank, ultimately as executive vice president and chief financial officer.

The hiring of Verneuille follows the March 19, 2019 announcement by the corporation that the current chief risk officer, Christopher Becker, will succeed Michael N. Vittorio as president and CEO after Vittorio’s retirement on Dec. 31, 2019. Becker commented, “I had the pleasure of working with Janet at two prior institutions. I am confident she will be an excellent chief risk officer and look forward to her joining our team.” ■

Chase Opens First-Of-Its-Kind Branch Inspired By Harlem Community

C

ommunity input was the driving factor behind a new Chase branch in Harlem in the northern part of Manhattan. The company describe it as the bank’s largest in Harlem. What sets the branch apart from others, Chase said in a news release, are four factors: • Unique programming in money management and financial planning, plus how to search and apply for jobs • Pop-up space for local small businesses • A hub for Chase to showcase and test new retail banking technology before it rolls out nationwide • Local art Chase has served Harlem for decades

Chats on budget building, how to fund a small business, and other topics that can help bolster financial health.

The sessions will be led by Chase branch staff, local and national experts, and community leaders from local organizations such as the Harlem Chamber of Commerce, Harlem Commonwealth Council, Hot Bread Kitchen, Neighborhood Trust Financial Partners, New York Urban League, and Start Small Think Big. In addition, a collaboration with Year Up will increase the organization’s recruitment of new participants in the Harlem area and bring participants into the branch to learn about retail banking.

Year Up, according to its website, Through a oneyear, intensive program, Year Up uses a highexpectations, high-support model that combines marketable job skills, stipends, coursework eligible for college credit,

and corporate internships at more than 250 top companies.

Soon after opening, the pop-up space at 55 West and 125th Street will showcase local small businesses -- especially those without a storefront -to highlight their products and services.

Chase is also granting $550,000 to help local non-profits and local minority and women-owned businesses, with an emphasis on black-owned businesses as part of the firm’s $150 million Small Business Forward initiative. The grants include: • A $300,000 philanthropic commitment to Start Small Think Big to help entrepreneurs in need of resources develop market-ready products, access distribution channels and get the marketing assistance they need.

• A $250,000 grant to help blackowned businesses access capital through a consortium of Harlem Commonwealth Council, TruFund Financial Services and Greater Jamaica Development Corporation. ■

COMMUNITY INPUT WAS THE DRIVING FACTOR BEHIND A NEW CHASE BRANCH IN HARLEM IN THE NORTHERN PART OF MANHATTAN. THE COMPANY DESCRIBE IT AS THE BANK’S LARGEST IN HARLEM. and today employs 90 local bankers. To create the new branch model, Chase managers hosted listening sessions with local organizations, elected officials and business leaders about filling resource and service gaps.

Residents will be able to register for interactive sessions including interview and job search skills, Chase Issue Three | 19

IBANYS | By Bryan Doxford, Special to Banking New York

I

Let’s Talk SBA Lending

f you’re a small business lender, untap a new revenue stream at your chances are you’ve come across institution while yielding more satisfied entrepreneurs with potential customers, both by implementing an who simply don’t qualify for SBA loan program. loans with your bank or lending institution. Without an alternative SBA GUARANTEED LENDING: option available, these business owners THE BASICS may turn to a competitor or a highThe SBA loan programs are cost online lender for the financing specifically developed to help they need, closing the door on current borrowers that have difficulty securing and future relationships with your conventional loans. Lenders offering institution. the SBA loan programs are privy to a Offering the U.S. Small credit enhancement – in the Business Administration form of a loan guarantee – for (SBA) loan products up to 85% of the credit request. provides a worthwhile All loan programs through the alternative for small SBA are guaranteed, meaning business owners like these you’re able to manage your and a way for you, as a financial risk while offering lender, to keep the door your borrowers flexible terms. open. Learn how partnering The SBA guarantee also enables with a lender service lenders to lend when there’s a BRYAN DOXFORD provider (LSP) can help you collateral shortfall, when cash 20 | Banking New York | July 2019

flow demands a longer loan term, or a myriad of other reasons. SBA loan proceeds can be used for a variety of purposes, including business startups or acquisitions; working capital; expansion; equipment; real estate purchases and the refinancing of existing debt.

WHY OFFER SBA LOAN PROGRAMS?

Becoming an SBA lender provides the opportunity to experience the following benefits: Increase Customer Loyalty and Retention Saying “no” to a loan request may mean waving goodbye to your customer’s business entirely.

Unfortunately, we’ve all had customers who took their deposit relationships elsewhere after being declined for a loan

THE SBA LOAN PROGRAMS ARE SPECIFICALLY DEVELOPED TO HELP BORROWERS THAT HAVE DIFFICULTY SECURING CONVENTIONAL LOANS. (or who went to a competitor and got approved). By offering an alternative when conventional financing isn’t feasible, you can become or remain your customer’s go-to institution for business financial needs. It’s a win-win for you and your clients.

Receive SBA Credit Enhancement The SBA’s guarantee provides a credit enhancement, allowing you to capture and close loans that may fall outside your current credit box or are considered “too risky” for financing otherwise. Your customers benefit from favorable rates, lower down payments, and longer repayment terms.

You benefit from minimal risk and maximum returns on each loan you make. The SBA guarantee makes this, and much more, possible.

Grow Your Portfolio and Increase Your Profitability With an expanded toolbox you can increase loan volume, market share and profitability. And by selling loans on the secondary market you can also bolster your institution’s fee income and develop your portfolio more rapidly.

HOW TO GET UP-AND-RUNNING

Partnering with an LSP to offer the SBA loan programs makes it possible to get up-and-running quickly and without the cost and hassle of launching an inhouse SBA lending department.

The SBA defines lender service providers (LSPs) as agents. They are tasked in carrying out functions like originating, disbursing, servicing, or liquidating your SBA business loan or loan portfolio. At Prudent Lenders we take care of everything from loan underwriting through servicing.

Partnering with a lender service

provider empowers financial institutions to launch and manage SBA loan programs immediately, effectively, and without any fixed costs.

UNLOCK THE BENEFITS OF AN LSP PARTNERSHIP

Turning away fundable customers is expensive to your bottom line and may mean waving goodbye to your customer’s business entirely. Partnering with an LSP to offer SBA loan programs makes it possible to avoid closing the door on small business clients while providing your institution with an additional revenue source.

In addition, the SBA is regulated by complex rules and regulations.

Staying up to date on policy demands considerable time and resources; but a reputable LSP will stay current on the ins-and-outs of the program on your behalf to ensure that your loans stay compliant and your guarantees are maintained—without having to learn all the minutia of SBA procedures.

Language Matters The partnership that exists between a lender and an LSP is contractual— not only because we agree to work together but because, in doing so, we collaboratively service your borrowers’ loans. All LSP contracts include mandatory language required by the SBA. While the SBA doesn’t require LSPs to employ a standardized contract, they review and approve each provider’s template prior to use. Furthermore, the SBA reviews individual contracts once again, after each contract has been fully executed. It’s safe to say: all LSP agreements are dependent upon SBA approval. Having an LSP who “speaks” the SBA’s language, matters.

Money Matters It’s important to face the reality that it’s far cheaper to outsource the back office of SBA expertise than to hire one in-house. In due time, and with consistent volume, this may change with the lender opting to bring the program in-house. In the meantime, as you determine the “how” and “why” of offering SBA loans, you should measure the cost of outsourcing with cost savings.

To attract, hire, and retain a talented industry expert is neither easy nor inexpensive. Let’s say you make eight loans during your first calendar year of SBA lending, each at a hypothetical cost of $6,500. Your total expense is $52,000. Now, compare that to the salary of a skilled SBA expert. To find an individual who can underwrite, close and service, and capably follow SBA guidelines to ensure your guarantee stays intact will cost you considerably more than $52,000/year. It’s impossible to find anyone who can fill all those roles at the same time…trust us, we’ve had that job posted for years!

Now, let’s imagine you didn’t make eight loans during your first calendar year. In fact, you only made two. Even if you managed to hire an SBA expert for $52,000/year, both loans would cost you $26,000 each. This is where outsourcing begins to make the most economic sense. Rather than staffing up for uncertain demand, it’s far better to convert a fixed cost to a variable one.

Additional cost savings may be hard to quantify but are worth mentioning.

Here’s one example: What does it cost when your financial institution can’t make a loan so a client takes their business elsewhere? Saying “no” to clients to whom you could lend comes at an incalculable cost! Second: What is the cost of compromising a guarantee by not following the SBA’s rules? Unfortunately, good loans can go bad. This inevitability is why lenders offer clients an SBA loan rather than a conventional loan. Working with a skilled SBA partner ensures that when a loan goes bad, your SBA guarantee does not.

Issue Three | 21

CRITERIA FOR CHOOSING THE RIGHT LSP

To choose a competent and superior LSP, we’ve developed the following benchmarks. These criteria can help you feel confident you’re choosing an LSP wisely, with the goal of offering your small business borrower’s access to the full suite of SBA products:

CONSTANT COMPLIANCE

Your SBA guarantee is conditional.

A competent lender service provider will have all the necessary experience and proficiency to ensure your SBA portfolio is sound, meaning your guarantee won’t be compromised.

An excellent partner fills in the gaps, complementing your existing resources and staff. Your LSP—and partner—should stay on top of evolving standards of SBA procedures so your portfolio remains compliant.

HOW CAN YOU DETERMINE IF AN LSP IS DEDICATED TO SBA COMPLIANCE?

• Determine how long the LSP has been involved in SBA lending.

• Determine the size of the portfolio they service.

• Take staff size into account and their levels of expertise – what is the scope of their work?

PROCESS: PROVEN AND PREDICTABLE

Let’s face it; turnover and staff changes are par for the course. It’s likely that your organization has experienced them, and most LSPs will undergo changes in human capital too. In evaluating an LSP, it’s important to remember that people matter. The culture created by the staff matters. But what matters most when determining who to partner with for your SBA lending: The process.

Ensure your LSP employs a predictable and transparent method for eligibility screening, loan closing and servicing.

When process is proven and respected above all else, staff transitions won’t disrupt your ultimate objectives. Your guarantee will remain intact even

22 | Banking New York | July 2019

if your LSP representative goes on maternity leave. Or someone on your team takes a sick day. Both lender and LSP stay on the same page—guarantees intact—even when life inevitably happens.

practical know-how and general understanding of SBA policy?

• Do they have useful tools and resources available on their website?

Is their platform intended to educate and support clientele?

HOW CAN YOU DETERMINE IF AN LSP EMPLOYS A PROVEN AND PREDICTABLE PROCESS?

NETWORK

Is their process outlined clearly and available for your reference online?

(Are your team’s responsibilities and your LSP’s responsibilities detailed well?)

KNOW-HOW

When you work with an LSP to execute a contract, you’re bound together as legal partners. But the longterm success of your partnership may be better determined by how well you collaborate. Practical and educational training is critical to your success when you learn a new skill or take on new assets. And as your provider, an LSP should arm your team with proper information and tools. The top LSPs are teachers. They’re collaborators.

And they will equip your team with specialized resources and indispensable advice so you can build a superior SBA program.

HOW CAN YOU DETERMINE IF AN LSP IS DEDICATED TO PROPER TRAINING? • Does the LSP have a culture of explaining the “what” and “why” behind every loan they service for you?

• Does the LSP regard every loan as an opportunity to grow their clients’

Whether you’re a well-integrated member of the SBA lending community or are only now contemplating whether to offer SBA products to your customers; the finest LSPs will welcome you into their network. One of the benefits of their partnership is providing access to the people who know the industry—from a myriad of third-party specialists to the authorities who run the U.S. Small Business Administration.

HOW CAN YOU DETERMINE IF AN LSP HAS A WELL-ESTABLISHED NETWORK? • Who does the LSP recommend for life insurance, real estate appraisal, or construction management?

Do they have a trusted network of attorneys? Can they vet your approved vendors for SBA adherence?

WHY PRUDENT LENDERS?

Let’s end where we started: who you partner with matters. Prudent Lenders focuses on collaborative and successful partnerships, while recognizing our task of bringing expert knowledge, resources, and skills regarding SBA lending to the table.

Prudent Lenders is owned by New York Business Development Corporation (NYBDC), one of the top

PRUDENT LENDERS FOCUSES ON COLLABORATIVE AND SUCCESSFUL PARTNERSHIPS, WHILE RECOGNIZING OUR TASK OF BRINGING EXPERT KNOWLEDGE, RESOURCES, AND SKILLS REGARDING SBA LENDING TO THE TABLE.

$3.0 BILLION AMOUNT OF NYBDC'S LOAN PORTFOLIO THAT HAS PROVIDED CAPITAL TO MORE THAN 7,000 SMALL BUSINESS OWNERS IN NEW YORK, NEW JERSEY, AND PENNSYLVANIA. SBA lenders in the Northeast, and was developed to help institutions like yours offer small business customers access to the SBA loan programs.

NYBDC is a publicly initiated, privately funded corporation that has provided over $860 million to small business owners in New York State since its origination. Together with its affiliates, NYBDC has a $3.0 billion loan portfolio and has provided capital to more than 7,000 small business owners in New York, New Jersey, and Pennsylvania. NYBDC prioritizes building and nurturing relationships with banks and other financial institutions in its communities. It has built extensive referral networks, long-standing partnerships, and formed

meaningful connections with leading industry organizations.

What does our experience mean for you? It means you’ll be equipped to meet your borrowers’ complex needs while providing your institution great asset soundness, growth potential and profitability. Prudent Lenders’ unique process makes it easy for lenders to offer the SBA loan programs to their small business customers. That’s because we take comprehensive care of loan processing, underwriting, closing, and servicing.

Case in point: Our Fast Track Assessment (FTA). It’s a tool we designed to determine borrowers’ SBA eligibility before taking them through a full application process. We’ll review

the loan package against SBA criteria for eligibility, creditworthiness and loan structure. With the FTA as your guide, you’ll have the information you need to respond to clients quickly and effectively. More importantly, you’ll be able to optimize your time and focus on small business loans with higher likelihoods of approval.

Interested in learning more?

We’re eager to show you how our process works. Get in touch today at 1-800-495-0887 or visit freetrial. prudentlenders.com to receive your complimentary loan eligibility screening using our Fast Track Assessment. It’s our version of a “free trial.” ■

Issue Three | 23

MERGER | By Dan Calebrese, Special To Banking New York

+

It’s About Dialing In Customers – Not The Short-Term Revenue T-MOBILE AND BANKMOBILE’S RELATIONSHIP’S SUCCESS WILL BE BASED ON RETENTION

W

hy would an online bank enter into a relationship with a mobile data carrier to start offering consumer checking accounts? Especially when the interest rate and fee structure suggest it might be difficult to make it a profitable line of business?

The answer appears to center on one priority: Customer acquisition for both sides.

T-Mobile’s recent rollout of its T-Mobile Money checking accounts, offered in partnership with BankMobile (a division of Customers Bank) prompted questions concerning the consumer-friendly structure of the accounts. T-Mobile Money pays 4 percent interest on account balances up to $3,000, which is more than 10 times the industry norm, and pays 1 percent on everything from $3,001 up.

The accounts are also virtually feefree, although customers do have the option of buying into an elevated level of overdraft protection. The standard no-fee overdraft protection is limited to overdrafts of $50 or less.

Since fees are usually a major source of bank income on consumer checking accounts, T-Mobile Money isn’t

24 | Banking New York | July 2019

designed to generate revenue in the traditional way. And if a heavy volume of accountholders maintains balances below $3,000, the interest payments have the potential to represent a much higher cost than traditional banks incur on their consumer checking accounts.

Customers only need to deposit a minimum of $200 for the 4 percent APY to kick in.

So how does T-Mobile Money make money for T-Mobile or for BankMobile?

While the principals involved in the partnership were reluctant to talk on the record about the deal or any of its details, the answer appears to lie in the proposition of low-cost customer acquisition.

Jim Perry, a senior strategist at Market Insights, said T-Mobile has the challenge of churn in its customer base (as does any bank). “They’re just looking to gain more of that real estate,” he said. Both T-Mobile and BankMobile, Perry added, want to deepen their relationships with their customers and this is one way to do that. At the same time, he said, neither side is cannibalizing their own customer bases.

Luvleen Sidhu, president and chief strategy officer at BankMobile, declined

to discuss specifics of the T-Mobile Money arrangement but talked in broader terms about why BankMobile is interested in such an offering.

“We were looking for a new way to grow,” Sidhu said. “You can grow exponentially in terms of customer acquisition at high-volume, low-cost,

Luvleen Sidhu

and we pivoted to a Business-toBusiness-to-Consumers model.”

In other words, the traditional method of acquiring customers via a local bank branch was costly and inefficient, and it often resulted in checking accounts whose balances stayed in the unattractive range between $300 and $1,000. Working with a business partner with access to a higher volume of consumers gives BankMobile

T-MOBILE SPRINT MERGER COULD SWEETEN THE DEAL T-Mobile and Sprint are in the midst of regulatory approvals for a merger valued at $26 billion. If approved, it would significantly expand the market for the T-Mobile Money checking accounts.

The merger would combine third-largest T-Mobile, which as of April had 81.3 million customers, with fourth-largest Sprint in competition with the two biggest providers, Verizon and AT&T. Sprint has 54/5 million customers, according to company statistics.

Toward the end of May, Ajit Pai, the Federal Communications Commission chairman, endorsed the merger. It includes concessions from both companies including no price hikes for three years, according to NPR.org. Sprint will also sell off its prepaid brand Boost Mobile.

However, the agreement still needs Justice Department approval. NPR says if approved, the deal would reduce the number of major U.S. wireless telecom carriers from four to three.

OVER

access to more potential customers at far less acquisition cost.

“It’s a matter of attracting customers,” said Peter Ostrowski, managing director of Cranford, New Jersey-based Ostrowski & Company.

“T-Mobile is looking for customers so this is a way for both of them to gain access to customers. The money looks expensive, but there are no branches involved so the overhead is minimal.”

And Ostrowski, a veteran banking analyst, emphasizes that the deposits can also be used to fund BankMobile’s expansion of its lending portfolio.

BankMobile’s first foray into the B-to-

B-to-C involved partnering with various colleges and universities.

“We’re acquiring about 5,000 accounts a week as opposed to one per branch for week, and we’re acquiring those customers at less than $10,” Sidhu said.

In the past, Perry said, some community banks made errors trying to enter the digital banking space. He said attempting to lure customers with highinterest rate offers on money market accounts attracts rate shoppers – and not long-term clients. “They won’t have a stickiness,” he said.

Others involved with the deal,

$34 billion

including top officials at BankMobile parent company Customers Bank, based in Phoenixville, Penn., deferred to T-Mobile, which declined to go on the record with any details about the strategy behind T-Mobile Money beyond what was in the press release announcing the deal.

But as a customer acquisition strategy, T-Mobile’s direction here is in line with some crucial trends concerning the way people bank. A 2017 survey by the American Bankers Association indicated that two-thirds of all bank customers do the bulk of their banking activity online and/or via mobile devices.

AMOUNT BANK CUSTOMERS PAID IN OVERDRAFT FEES IN 2018.

Issue Three | 25

According to a 2014 study by the Consumer Financial Protection Bureau, most overdraft fees result from purchases of less than $24, so in many cases the overdraft fee exceeds the amount of the overdraft.

And Forbes in 2018 cited a survey from the financial research firm Moebs Services reporting that bank customers paid more than $34 billion in overdraft fees, while many others paid the fees for overdraft protection programs in which their banks automatically enrolled them.

T-Mobile’s strategic opportunity is to acquire customers who want to flip that script – to stop paying fees to their banks while actually earning some serious interest on their balances. At the same time, because so many of them are doing their banking in the mobile space, TMobile gets an opportunity to engage with those banking customers on familiar turf.

Once a customer is in the fold, T-Mobile and BankMobile would have a built-in audience for upsell efforts, with push notifications and other efforts made easier and cheaper by the fact that customers are already engaged with both digitally.

Will other digital carriers follow T-Mobile into this

26 | Banking New York | July 2019

space? Not that they are saying, at least.

“This is not something we are considering doing at this time,” said Brittany Siwald, corporate spokeswoman for AT&T. David Tovar, senior vice president of corporate communications for Sprint, echoed the sentiment.

“We have no current plans for a product like this,” Tovar said.

Perry from Market Insights, though, wouldn’t be surprised to see more cellular providers enter this market.

“I can see other cellular providers or even healthcare providers doing this. It’s all about delivering the deeper relationship. This is a way for a retailer to tap into a consumer’s understanding of the banking relationship,” he said.

To be sure, a partnership to provide checking accounts with a mobile carrier is unconventional. But Ostrowski isn’t surprised to see it coming from the likes of BankMobile CEO Jay Sidhu.

“He’s tried a bunch of different things,” Ostrowski said.

“He gets out there. They’re already talking about wanting to go two or three years before monetizing the investment, before they see if it makes sense or not.” ■

STRATEGY | By Jothy Narendran Special To Banking New York

Beneficial Ownership Rule

M

A NEW TOOL TO COMBAT MONEY LAUNDERING

oney laundering negatively impacts the international economy by an estimated $600 million annually. Besides threatening the stability of legitimate financial institutions, laundering presents societal ills by aiding and abetting criminal activity, including drug trafficking, and can represent a threat to national security.

In May 2018, the Beneficial Ownership Rule was incorporated into the anti-money-laundering regulations covering financial institutions, to aid law enforcement in the identification of bad actors and limit their access to the United States financial system.

The primary purpose of the Beneficial Ownership Rule is to require financial institutions to implement procedures to identify and verify information about beneficial owners of legal entity customers who open new accounts on or after May 11, 2018. Financial institutions responsible for collecting beneficial ownership information include: banks, federal credit unions, savings associations, trust companies, a broker or dealer in securities registered with the Securities and Exchange Commission, a futures trading commission under the Commodity Exchange Act, and mutual funds. Covered

accounts can include a deposit account, a transaction or asset account, a credit account, or other extension of credit, as well as safety deposit box or other safekeeping services, or cash management, custodian, and trust services.

Legal entity customers, for which beneficial owners must be identified, are defined as corporations, limited liability companies, and any entity created by the filing of a public document with a secretary of state, a general partnership, or similar foreign entity. In the realm of Commercial Real Estate Lending, this Rule pertains generally to single purpose entities created to hold and manage real estate.

Financial institutions subject to the Beneficial Ownership Rule maintain a two-fold obligation. First it must collect identifying information of a beneficial owner: any individual holding at least a 25 percent ownership interest in a borrowing-entity, and at least one individual with significant responsibility or management control in the borrowing-entity. This identity information is to include name, date of birth, address (business, if personal cannot be ascertained), and taxpayer identification number for any applicable members of a borrowing-entity.

In the event no individual holds a 25 percent or greater

Issue Three | 27

ownership interest in the borrowing-entity, no individual needs to be identified; however, as a practical matter, there will always be at least one individual with the responsibility of day-to-day management of the entity.

The second obligation is to establish and maintain written procedures to verify the identity of each beneficial owner of a borrowing-entity, within a reasonable time after a new account has been opened. The verification procedures must comport with requirements already established under 31 CRF 1020.220(a)(2) (Beneficial Ownership Requirements for Legal Entity Customers – Verification of Beneficial Owner Information).

Financial institutions may rely on the identity information provided by the borrowing-entity or its representative. However, it is prudent for lenders to verify this information as well by conducting a due diligence review of the borrowing-entity’s organizational documents.

When a financial institution is made aware of additional individuals who have become beneficial owners, lenders must collect the information from these individuals.

While the Beneficial Ownership Rule applies to all new accounts opened on or after May 11, 2018, a change in beneficial owners will require the financial institution to collect this information.

One question institutional commercial lenders encountered early on was whether the rule is triggered

when modifying a loan which originated prior to the enforcement date (where a bank may not have collected this information as it was not required). It has since been clarified that modifications not requiring underwriter approval are not bound to the beneficial ownership requirements. Conversely, in instances where underwriter approval is required, institutional commercial lenders must adhere to the beneficial ownership requirements.

The Beneficial Ownership Rule is just one tool in a financial institution’s arsenal to strengthen the U.S. Anti-Money Laundering Laws. While this rule sets out minimum requirements, nothing precludes an institutional lender from implementing more stringent beneficial ownership identity requirements, for instance lowering the percentage of ownership requiring disclosure, for greater transparency and security.

(The above has been presented for informational purposes only and does not constitute legal advice.)

JOTHY NARENDRAN

Jothy Narendran is a partner at Jaspan Schlesinger, LLP (Garden City, NY) in the firm’s Banking and Financial Services Practice Group, representing institutional lenders on commercial transactions.

PCSB BANK HONORED BY WESTCHESTER CHILDREN’S ASSOCIATION PCSB Bank, based in Yorktown Heights, was honored by Westchester Children’s Association with its Corporate Children’s Champion Award at the 2019 Spring Benefit on May 21 at The Surf Club on the Sound in New Rochelle. The event celebrated a year of successful child advocacy by WCA and its supporters.

As a member of Westchester Children’s Association Companies for Kids (WC4K), PCSB Bank sponsored tickets for low income and foster youth to attend memorable performances that they might otherwise not have experienced through the organization’s Take the Kids to a Show program. This initiative also contributes to WCA’s vision focusing on children’s health, safety, and preparation for life’s challenges.

“As a community-focused bank, we are humbled to accept this distinguished award and proud to support this outstanding organization that has a notable legacy of improving the lives of young people in Westchester,” said Joseph D. Roberto, chairman, president, and CEO of PCSB Bank. “Our employees, 28 | Banking New York | July 2019

Westchester Children’s Association honored PCSB Bank with its Corporate Children’s Champion Award at its 2019 Spring Benefit, which took place on May 21 in New Rochelle.

Pictured L to R: PCSB Bank employees James Bouey, Sue Fregien, Dominick Petramale, and Ruth Leser; WCA Executive Director Allison Lake; PCSB Bank Chairman, President, and CEO Joseph Roberto; and PCSB Bank employees Carol Bray, Roger Campos, Robin Hulmes, Steve Elser, and Andrew Fairchild.

along with our loyal customers, share WCA’s dedication to the principle that all young people deserve a strong start in life.”

PCSB Bank, a New York-chartered stock commercial bank, has served customers in the Lower Hudson Valley

of New York State since 1871. It operates from its executive offices/headquarters in Yorktown Heights and 15 branch offices located throughout Westchester, Dutchess, Putnam, and Rockland counties in New York.

DID YOU SEE?

Banking New York publishes a weekly digital newsletter that rounds up the latest news and information affecting banks and credit unions in the Empire State. Here are some of the top stories from recent editions. To subscribe, share your news, or advertise in the Banking New York newsletter, contact us at info@ambizmedia.com.

MUNICIPAL DEPOSITS LEGISLATION DOES NOT PASS NY STATE LEGISLATURE Legislation that would have allowed municipalities to deposit funds in credit unions failed to pass the New York State Legislature before it adjourned last week.

The issue gained prominence this year, when the state Assembly’s Banks Committee held a hearing on the issue, with credit union officials facing off with bankers, who vehemently opposed the legislation.

New York Credit Union Association President/CEO William Mellin said the legislation did not advance to the floor in either legislative chamber, although he said he believed the legislation would have passed if it had.

“The language of the legislation was negotiated in good faith with both houses, and we’re disappointed they chose to not advance the bills to the floor,” Mellin said.

He added that the association will continue to push for the issue.

Meanwhile, the New York Bankers Association applauded the decision by legislators.

“NYBA is pleased to report that, once again, we were able to hold back the credit unions in their strenuous attempts to gain unlimited authority to accept municipal deposits,” the association said, in a legislative update.

WHICH BANKS ARE FINANCING THE CLIMATE CRISIS? Most Western New Yorkers who have loans and mortgages from Buffalo’s biggest banks may be unaware of the fact that they are financing the climate crisis in our world today.

The biggest banks in Buffalo – including M&T Bank,

KeyBank, and Bank of America – are lending hundreds of millions of dollars to coal, oil, and gas companies, including National Fuel, a local corporation engaged in a legal battle to build a pipeline through Western New York to export fracked gas to Canada.

Banks financing National Fuel and other fossil fuel companies are also governing members of the Buffalo Niagara Partnership, a local corporate advocacy group lobbying against state legislation to combat climate change and for building out oil and gas infrastructure.

Northern Access, National Fuel’s proposed pipeline project, would cross 206 bodies of water and impact 389 wetlands in order to ship gas from National Fuel’s fracking wells in western Pennsylvania to what the company terms “premium markets” in Canada. The project has been stalled since it was rejected by the New York Department of Environmental Conservation in April 2017. Since then, as National Fuel, the DEC, and the Federal Energy Regulatory Commission have fought in courts over the regulatory process, the company has sought to use eminent domain to seize land from holdouts who refused to grant access to their property for the pipeline.

COMMUNITY BANKERS SEEK NCUA INVESTIGATION The Independent Community Bankers of America have called on Congress to investigate the National Credit Union Administration’s role in medallion loans for New York City taxi drivers, some whom have committed suicide in the face of looming debt.

“This was a replay of the subprime lending crisis in residential mortgages prior to 2008, and a remarkable Issue Three | 29

failure of lenders and regulators to learn the lessons of that recent crisis,” Independent Community Bankers of America President/CEO Rebeca Romero Rainey said, in letters to the congressional committees with oversight of the NCUA, according to Credit Union Times.

She said that the problem indicates that the NCUA has been “captured” by the credit unions it supervises.

The value of the taxi medallions used as collateral for many loans has plunged and the taxi industry has been devastated by the rise of such services as Uber and Lyft. The president of the association representing New York’s credit unions said recently that those services had an unfair advantage over taxi drivers because the services were not subject to stringent regulation by city officials.

FORMER MCU CEO KAM WONG SENTENCED TO MORE THAN 5 YEARS IN PRISON Kam Wong will spend five-and-a half years in prison for embezzling nearly $10 million from Metropolitan Credit Union, New York City’s largest and oldest financial cooperative.

U.S. District Court Judge John G. Koeltl in Manhattan also ordered Wong to pay $9,890,375 in restitution and serve three years of supervised release after his prison term ends.

Prosecutors asked the judge to give Wong a six to 10-year prison sentence because the former executive’s abuse was so rampant that the $3 billion MCU continues to work “to uncover and unwind the damage he wrought.”

Even though Wong agreed in a plea deal last year to forfeit his assets, which included several luxury cars and millions of dollars in multiple bank or securities accounts and no liabilities, recently filed court documents showed that Wong took no steps to arrange for payment toward his obligations.

“To the contrary, the defendant, who previously appeared to seek to conceal certain assets, neither offered nor made any payments, over multiple months, requiring the government to investigate further and document his assets and then seek and obtain multiple orders from this court,” federal prosecutors wrote in a May 29 letter to Judge Koeltl.

CITIGROUP PULLS OUT OF APPLE CARD DEAL Citigroup has pulled out of its deal with Apple for the upcoming Apple Card amid concerns about its profitability.

The sniping began shortly after Apple unveiled its new credit card with Goldman Sachs, CNBC reports.

In an elaborate presentation in March, Apple CEO Tim Cook revealed the biggest yet mash-up between the worlds of big tech and big finance, a card that supposedly reimagines consumers’ relationship with plastic. Rivals of the investment bank wasted no time taking shots at the deal.

“Dude, if that portfolio ever makes money, I’m buying you a beer,” an employee at the card department of a competitor texted a Goldman staffer.

Within the industry, the deal is widely perceived as one that’s risky for a bank to take on. Citigroup was in advanced negotiations with Apple for the card but pulled out amid doubts that it could earn an acceptable profit on the partnership, according to people with knowledge of the talks. Other banks, including J.P. Morgan Chase, Barclays and 30 | Banking New York | July 2019

Synchrony, also bid on the business. Apple and the banks declined to comment on this story.

NY STATE TAKES CONTROL OF CREDIT UNION The New York Department of Financial Services has seized control of the $3 billion Municipal Credit Union. It comes in the wake of its CEO being convicted for embezzling $10 million.

The Credit Union Times reported the state agency named the National Credit Union Administration as conservator. In 2017, the New York DFS said it had uncovered deficiencies in board oversight that had facilitated the multi-million-dollar embezzlement.

A review of the MCU’s financial performance reports filed with the NCUA, however, does not show that the credit union is in any financial distress, although its net worth has declined from 8.76% in 2014 to 7.59% at the end of the first quarter of this year.

What’s more, the credit union has shown no substantial declines in its total loans or loan income though its net income decline from $17.5 million in 2017 to $11.4 million at the end of last year. At the end of the first quarter of this year, MCU recorded a net income of $2.8 million, down from the net income of $4.6 million in March 2018.

TOTAL HOUSEHOLD DEBT CLIMBS FOR 19TH STRAIGHT QUARTER The total household debt has increased by $124 billion according to the latest Quarterly Report on Household Debt from the Federal Reserve Bank of New York.

It was the 19th consecutive quarter with an increase, and the total is now $993 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and householdlevel debt and credit records drawn from anonymized Equifax credit data.

The New York Fed also issued an accompanying blog post that examines the prevalence of loan types over time, with the popularity of mortgages, auto loans, student loans, and credit cards following different paths during and after the Great Recession.

“The rate at which credit card balances become delinquent has been rising, and that has coincided with an increase in younger borrowers entering the credit card market,” said Andrew Haughwout, senior vice president at the New York Fed. “However, these delinquency rates are increasing from historically low levels and remain below pre-financial-crisis levels.”• New York State firms were less likely to be approved for any amount of financing than firms nationally (66% vs.

78%, respectively). They were also less likely to receive the full amount sought (34% vs. 47% nationally).

CHASE SUPPORTS VETS IN POLITICS PROGRAM AT SYRACUSE JP Morgan Chase & Co. in New York is supporting a Syracuse University program focused on getting military veterans more involved in the political system. The “Veterans in Politics” initiative is designed to act on the opportunity

associated with the affinity for civic engagement and public service demonstrated by those who have served.

Despite gains in the 2018 election cycle from a recent historic low, veteran representation in Congress has declined from more than 75% in the 1960s, to 19.1% today. The program will enroll its inaugural class in late 2019. It will feature both online coursework and a one-week intensive residency. The curriculum will cover election law, party politics and public policy, creating, managing and leading campaign teams, campaign finance, understanding voters, message development, mobilizing volunteer teams, responding to citizen issues and conflict management, among others topics.

Chase’s dedication to the military community is widely recognized and practiced in the firm’s operations. Since 2011, more than 14,000 veterans have joined the employee ranks of JPMorgan Chase, and the firm has developed several supportive programs including the Veteran Jobs Mission – previously the 100,000 Jobs Mission – a coalition founded in 2011 with the goal of hiring 100,000 veterans. Now over 200 members strong, the coalition has collectively hired more than 500,000 veterans with a commitment to hiring one million.

The program aligns with Syracuse University’s commitment to be the “best place for veterans” and the military-connected community. Consistently ranked among the top 10 best universities for veterans, Syracuse was most recently ranked the #1 private school for veterans by Military Times and the #4 school overall in 2018.

KEY BANK MARKET PRESIDENT ‘BULLISH’ ON LENDING KeyBank’s new Hudson Valley/Metro NY market president David W. Lewing says his bank is bullish on lending in the current economic environment. Lewing said his bank’s staff “are ‘understanding and supportive’ of business credit and lending requests.”

In an interview with the Westchester County Business Journal, Lewing said he believes the environment is favorable for economic growth. “There are many companies and individually owned businesses that are investing in their own businesses rather than managing for cash flow, meaning they are cautiously optimistic about a continued favorable environment for growth. I would call it basically a stable environment and favorable for businesses.”

Lewing said that part of the bank’s growth strategy is based on acquiring technology, not only to use in the bank’s operations, but also as investment vehicles. He pointed to an alliance with AvidXchange, a financial technology company which automates accounts-payable operations, and the acquisition of HelloWallet, which invites people to “say hello to an easier way to manage your money – and reach your goals.”

KEYBANK ACQUIRES LAUREL ROAD BANK’S DIGITAL LENDING BUSINESS KeyBank has acquired Laurel Road Bank’s digital lending business. The New York City bank built and launched in 2013 a student loan refinancing platform that has rapidly grown to total more than $4 billion in loan originations.

The Dayton Business Journal reports the acquisition will allow KeyBank to continue its strategy of building targeted scale against defined client segments such as healthcare professionals, lawyers, and graduate students. KeyBank will

focus in three areas to drive growth: • Expand national, digital-only lending capabilities.

• Boost KeyBank’s client experience through compelling digital tools.

• Deliver a holistic banking experience to a targeted segment of consumers.

The Laurel Road brand will remain in place, and its branches in southeast Connecticut were not part of the transaction. No financial details were disclosed.

MAYOR PROTESTS BANK’S TOWING POLICIES The mayor of Nyack, New York, has pulled his personal funds from the Key Bank in his village due to frustration with bank officials giving him the runaround. The issue is the bank’s policy of towing vehicles from its parking lot after hours.

Mayor Don Hammond told his local newspaper that he was prepared to pull Nyack’s $2.6 million in deposits. That got bank officials to respond.

Hammond had been upset about the $300 towing and booting of cars, which began a couple of months ago. The mayor says signs in the parking lot aren’t clear about the bank’s towing policies.

Karen Crane, Key Bank’s Connecticut-based senior communications manager, said the bank got the message. “We understand the issue that the village has with regard to lack of municipal parking and we are willing to work with him on ways we can help him address it,” Crane said. “We are willing to explore ways we can help reduce some of the public parking pains.”

Crane said the “stronger enforcement of our no after-hour parking policy” was prompted by “issues in the past with overnight and abandoned vehicles, littering, and vandalism.”

BOWER BULLISH ON MOVE TO BUFFALO CNB is happy it shuffled off to Buffalo. Joseph Bower Jr., president and CEO of CNB Financial Corp., says waiting out the economy was the right thing to do.

He told the Buffalo News the Pennsylvania-based bank put the idea on hold until late 2016. Now its Bank on Buffalo division has four branches and just finished renovating the seventh floor of the Electric Tower for its regional headquarters.

Bank on Buffalo is a strong contributor to CNB Financial, whose headquarters is about a three-hour drive from Buffalo, in Clearfield, Pa. CNB reported record-high profits of $33.7 million in 2018. Its Buffalo division accounted for nearly half of CNB’s loan growth last year, and 64 percent of CNB’s total deposit growth, driven in part by savings accounts that pay 2 percent interest, far more than most conventional savings accounts. It also offers checking accounts that pay 1.5 percent interest if certain conditions are met.

In a Q&A with the newspaper, Bowers said, “When we came in, we had expectations that we thought were fairly high. …

It’s been about 27 months. Our expectation for 27 months was to eclipse about the $200 million range in assets, and to have maybe three facilities up and running and operating. We’re well over ($300 million) in assets, and we have four locations up and running.” ■ Issue Three | 31

ANYTHING BUT BANKING | By Keith Griffin

“Kindness is really inherently important for every human being.

If we can all be a little more kind, things have a habit of turning out well.”

Steve Martin,

Senior Vice President and Director, Corporate Communications, Canandaigua National Bank & Trust

Banking New York caught up with Steve Martin while he was on the road visiting one of Canandaigua National Bank’s 23 branches in and around Central New York. He discussed his love of golf, music, sports and history.

You just won’t see him in front of the boob tube.

FAVORITE SPORT: I was a college athlete. I played second and third base at SUNY Fredonia (where he studied business and anthropology). I play golf and try to get in about 50 rounds a year. In general I’m an avid exerciser. I enjoy collegiate sports more than the pros but I do root for the Buffalo Sabres (in hockey) and the Baltimore Orioles. The Rochester Red Wings was the farm team of the Orioles for many decades. It’s Orioles land in the Finger Lakes.

MUSIC: I listen to lots of genres of music, including jazz and classical, but I’m a Rock and Roller at heart. There is a wonderful jazz festival in Rochester that my wife and I enjoy that can attract about a quarter-million people. It’s on the top 8 in the country.

BOOKS: I just started reading a book about Frederick Douglass and I’m about two-thirds of the way through a book on Alexander Hamilton. I try to stick to fiction and non-fiction books versus business books.

TV: I’m not a big television watcher.

I watch sports but TV is not big in our lives. The last show I watched regularly was “The West Wing.”

Steve Martin with some of his staff.

32 | Banking New York | July 2019

theater and the plethora of museums around us. We really do enjoy the local culture.

FAVORITE PLACE TO VISIT: We love the Finger Lakes. We do a lot of staycations.

We also like the Eastern part of Canada to Ontario and Quebec. Another favorite place is Hilton Head. It’s at the top of our list. We love how everything is tucked in and the natural beauty of the waterways and how the ocean dominates the area.

It’s a very relaxing place.

WHAT TOPS YOUR BUCKET LIST? I would say to travel to the Far East to Japan and China and even Taiwan. We love to travel. As well as see Eric Clapton in person on his home turf in England.

CUISINE: We cook quite a bit.

Pasta is at the center of a lot of things we do. We experiment. We don’t follow a lot of cookbooks. We have no signature dish.

We kind of map it out and put it all together.

HOBBIES: I like to exercise and walk as well. My wife and I enjoy the arts and like attending talks. In this area there a lot of interesting lectures and talks. We are also quite interested in the philharmonic, local

ADVICE: The best advice I ever received is something my parents and grandfather would say, “Treat others the way you wanted to be treated.” It’s good advice in every facet of life. ■

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34 | Banking New York | July 2019