By Steve Rice, IBANYS Director of Government Relations, Policy & Services Development 

Legislation to Expand Funding Caps Pending in Legislature; More Banks Urged to Participate

The Community Bank Deposit Program  was created in recognition of the economic benefits and  stimulus  which  result  from  the  placement  of deposits  in  local  banks, and authorizes  and  encourages  the  state  comptroller  and the commissioner  of  taxation and finance to deposit a portion of the funds under their control into community banking institutions. To be eligible to receive deposits, or to renew existing deposits under this program, a  bank,  trust  company,  savings bank  or  savings  and loan association must be satisfactorily chartered chartered under the statute's provisions, must have a  current  CRA  rating  of satisfactory  or  better. The deposits of state funds are made available in the form of six month certificates of deposit. Rates for such certificates are set on a bidding basis with a floor of the six month Treasury bill rate. This expanded funding source has enabled community banks to reinvest such funds into loans in their local communities to encourage economic development.

New York's program was modeled the State of California's. At the end of April, 2011, there were 186 time deposits totaling $3.9 billion in 59 financial institutions in the California time deposit program. In New York State, there is a cap of $250 million on the funds available for the program - and, a cap of $10 million on the amount of funds each individual bank may have on deposit through the program. The total amount of funds currently on deposit is approximately $90 million, meaning there is significant room for growth. Several banks are using this program aggressively and are at or near the $10 million cap. However, many others have not yet taken advantage of the program.  

There is legislation under consideration in the NYS Legislature to increase the overall funding cap to $350 million, and increase the individual bank cap to $20 million. The legislation has been passed by the State Senate (S.4927, Griffo), but the Assembly version (A.8147, Magee) remains in the Assembly Banks Committee. The expansion of the Program being proposed is clearly modest when compared to the California model. IBANYS supports the expansion of the program, and also urges member banks that have not yet utilized it to look into it more closely.

CDARS Bill Passes Assembly, In Senate Finance Committee

The CDARS legislation (S.5135 Martins/A.8971 Magnarelli), which would allow New York State, its municipalities, agencies and public authorities to arrange for redeposit of monies through a deposit placement program, passed the Assembly on Wednesday, June 6 and was delivered to the Senate. The legislation was then referred to the Senate Finance Committee, with possible action expected as soon as next week. The credit unions have been seeking to amend this legislation so that it includes them, subject to approval by the National Credit Union Administration. This is a tactic they have used in other states, essentially laying the groundwork for future inclusion if approved by the NCUA. IBANYS continues to support the legislation as drafted, without amendment. The Assembly bill that was passed was not amended to include the credit unions.

IBANYS and WGNA had tons of fun meeting people from small towns throughout the Capital Region over the last three weeks. Every Friday morning, IBANYS and a member bank would represent all community banks on the radio and in person! The fun experience is all just one of the many benefits of being an IBANYS member.  

In our first week, we visited northern Saratoga County, in the town of Victory Mills. Pioneer Bank President and CEO Eileen Bagnoli was on hand to share in the fun, and speak on-air about the importance of community banks. It was a special treat to be able to help out the Victory Mills Fire Department, who were our venue hosts for the morning and held a breakfast fundraiser during the show. To see scenes from our Victory Mills stop, click here.  

In week two, we headed to Schoharie, where the Bank of Richmondville has a branch. They joined us at the Apple Barrel for a beautiful morning full of breakfast and good people. Schoharie has been through a lot in the last year, and it was nice to see smiles again. Bank of Richmondville President and CEO Randy Crapser joined us live on the air, and took a gentle ribbing from the radio crew. He is a good sport however, and the message was clear despite our jokes: community banks like theirs were here to stay. To see more from the Schoharie stop, click here!  

In our final week of the spring tour, we went back to Saratoga County and into Schuylerville. We were joined by NBT Bank at Mack's Diner, and iconic local gathering place.  Jim Caruso, VP & Regional Manager of NBT Bank was a natural on the radio, and shared with the hosts and listeners some of the best reasons to join a community bank.  To see pictures and more from our trip to Schuylerville, click here.  

Part educational, part community outreach, and entirely a fantastic time sums up our adventure with WGNA on the Small Town Tour. With the help of our banks, we can continue to spread the good news about New York's hometown banks. IBANYS will join the WGNA Small Town Tour when it hits the road again, starting in September.