Taking stock: Tips for measuring your business’s financial wellness

As 2022 comes to an end it’s a perfect time to pause and take stock of various aspects of our personal and professional lives, including banking and finance.


“We encourage on an annual basis that businesses take a step back and contact their advisors for a financial wellness review,” said Thomas Dunning, vice president, relationship manager, at Evans Bank, a Buffalo-based full-service financial institution with locations in Fairport, Penfield, Perinton, and Irondequoit. “On an annual basis, the customer has the ability to bring forward all the issues facing them, whether it’s within their business or their operating environment.”

And, from indicators of an impending recession to record high inflation and continued supply chain and labor issues, 2023 is shaping up to include many issues businesses will want to get ahead of now. Proactively addressing these issues with a strong advisory team in place – including an insurance agent, attorney, accountant, and banker –  is key according to Dunning and other local community banking professionals.

Robert Cieslica Jr.

“There are a lot of potential headwinds and it will be important for business owners to have their eyes wide open going into next year,” said Bob Cieslica Jr., senior vice president and Rochester regional manager for business and professional banking for Buffalo-based M&T bank, a multi-state community-focused bank founded in 1856. “Make sure you have a banking relationship with someone who understands your goals and needs and has experience in your industry.”

Another tip Cieslica has for businesses going into 2023 is to have a solid understanding of their cash flow and liquidity and access to capital like a line of credit from their bank. He also encourages businesses to be mindful of cybercrime and to have proactive security systems and fraud prevention tools locked in, as well as have cyber insurance in place should a breach or attack happen.

PwC’s Global Economic Crime and Fraud Survey 2022 reports that 46% of surveyed organizations experienced fraud, corruption or other economic crimes in the last 24 months. Of those organizations experiencing fraud, 70% reported that it came from an external attack or collusion from external and internal sources. Among the emerging threats the report noted businesses should be aware of are ESG reporting fraud and supply chain fraud.

In their Thwarting the Cyberattack Resources and Insights article, M&T Bank presents other emerging cybersecurity trends businesses should be aware of, including spear phishing and whaling (typically conducted by email), ransomware (a form of malware that can or lock files on a computer or network), mobile malware (malware designed for Android and Apple devices) and social networking trickery, like promoting an article link to a website with malware.

Tips Dunning has for businesses in the year ahead include assessing capital needs, revisiting long-term objectives, examining depository services, ensuring emergency operating plans are thorough and up to date, and keeping the lines of communication with one’s advisory team open.

“Be proactive with your banker — reach out to them routinely and on a continuous basis and if you have any concerns bring them forward. Your banker can help you craft solutions,” said Dunning, who notes Evans Bank makes it a priority to meet with customers at their place of business so they can learn even more about their business and how they operate and customize better solutions for their individual needs.

Harry Powell

Harry Powell, CFO of One Stop Janitorial and Office Supply on Scottsville Road in Rochester, is a case-in-point of a business owner who understands the value of having a strong working relationship with his community banker and is passionate about encouraging other businesses to do the same. One Stop is a provider and distributor of items like office supplies and furniture, cleaning products, safety equipment, and promotional items, for other businesses.

“I see my banker once a month,” Powell said. “It’s important for any business — small or large — to have that relationship because none of us knows what’s around the corner. It’s as important as having an attorney or an accountant — a good banker is a must-have piece.”

Powell has been a business client with Canandaigua National Bank — a local full-service, community-owned financial institution founded in 1887 — since 2011. He found great comfort in the relationship he already had in place with the bank when the COVID-19 pandemic hit.

“When your business almost stops instantly and everything closes down there’s a fear there,” Powell said. “We relied on Canandaigua National Bank during that time and they were extremely helpful, especially with navigating the somewhat complicated PPP loans and the forgiveness aspect of them. It was a good time to have a bank we already had a trusted relationship with.”

Looking at the economic uncertainty of the year ahead, Powell notes continued concerns about labor costs and high interest rates but is overall positive and feeling prepared. Weathering the COVID-19 pandemic has given him added confidence in the resiliency of his business and other businesses that have the right support in place.

“Everything goes in cycles,” he said, about the economy. “Looking out six months to a year from now is important — reach out to your bank if you have concerns. Don’t wait until the last minute.”

Caurie Putnam is a Rochester-area freelance writer.

Local banks well stocked to survive, back up customers

Banks might want to tweak Arby’s catch phrase.

Instead of “We have the meats,” they could be spreading their message of calm in the face of  COVID-19-related economic downturn by saying “We have the money.” 

While other companies were announcing layoffs and furloughs because of a sudden drop in economic activity, Tompkins Bank of Castile announced it is giving essential branch employees a 25 percent wage hike and providing a loan program for other costs they might be incurring due to the pandemic, such as loss of a spouse’s job. Buffalo-based M&T Bank this week also announced a 15 percent wage hike for its front-line employees for the duration of the health crisis. 

With branches closed to walk-in business, you’d think banks would be laying people off, too, but they’re not, saying they’re an essential business and need their staff—while taking precautions—to continue to provide customers access to capital. Even though they’re not seeing as many people in person, they’re dealing with a crush of phone calls as people try to sort out payments and seek deferrals, say local bankers. And they continue to allow in-person visits, but only by appointment.

Virtually all local banks and credit unions have given the ax to customer fees, including those for late loan payments or bounced checks; promised quick $5,000 personal loans; agreed to defer loan and mortgage payments for those in need; and issued individual guidance for their wealth management clientele.  

CNB's Frank H. Hamlin III
CNB’s Frank H. Hamlin III

“If it’s a fee we’re waiving it. If it’s a deferment, we’re granting it,” said Frank H. Hamlin III, president and CEO of Canandaigua National Bank & Trust Co. “We’re deferring principal and interest on mortgage loans…to allow people to focus on what’s important.”

 With fewer payments, and less interest coming in, how does a bank survive? The quick answer is reserves. 

After the economic crisis of 2008 in which the federal government had to bail out banks (most local banks didn’t take the bailout), banking regulators started requiring even greater amounts of money held in reserve than ever before. 

The same goes for federal credit unions. 

“We have different charter, but we also maintain reserves,” said Faheem Masood, president of ESL Federal Credit Union. “We are extremely well capitalized, one of the best capitalized credit unions in the country.”

ESL's Faheem Masood
ESL’s Faheem Masood

Besides the floor on reserves that the federal government requires, raised since 2008, ESL has always been conservative about its reserves, he said. As a result, “We are well, well, well above the reserves required by the regulators.”

So the banks and credit unions have the ability to take a hit caused by people failing to pay back loans on time or defaulting altogether. 

“It makes sense that the entire community is going to have to grunt through this and we will too. That’s our role in this community,” Hamlin said. “Our income will go down and that’s OK.”

Financial institutions generally were in a better situation before this health crisis hit than before the lending crisis of 2008, said Martin K. Birmingham, president and CEO of Five Star Bank. 

Five Star's Martin K. Birmingham
Five Star’s Martin K. Birmingham

“Relative to 2008, the banks are all much stronger than they were,” Birmingham said. In fact, as they entered 2020, the outlook was really quite good, with reasonable growth. “We made plans for March that are no longer relevant.”

That was true for financial institutions generally, Hamlin said. “ For the most part, all banks are well positioned… to go ahead and blunt some of the effects of this.” Similar to Five Star, the bank has more reserves than required, owing to an adjustment they didn’t make when the corporate tax rate declined. “My team had our eyebrows raised on that. We didn’t restructure around the new tax requirement because we figured the new tax would be taken away.” 

Unlike 2008, when a crash followed a mortgage crisis of Wall Street’s own making, this crisis is one that squarely hits Main Street, Birmingham noted. Efforts to avoid spreading the COVID-19 virus are causing businesses to close, lay off employees and potentially go out of business. 

“It’s clear that our federal government is going to follow through with a program that is aimed to address the impacts,” Birmingham said. “We’re starting to receive guidance and communication from our regulators in terms of actions we can take to support and continue to support consumers and businesses.”

Indeed, the Federal Reserve has reduced interest rates on loans, and told banks they have the cash to back them if they need more liquidity.  

Hamlin said, “The Federal Reserve and federal agencies that oversee us have pretty much been backing these plays.” They’ve said banks should offer deferments and the Fed will “do whatever is necessary for us to calm people down. We can bring down the noise level on that.” As for the accounting and the regulations, Hamlin said, “We’ll figure out the regulations. We’ll figure out that in the background.”

Masood added,”The Federal Reserve has been very aggressive in putting together actions that have worked in 2008, adding liquidity into the market to make sure the markets freely operate.”  

To reassure customers, Hamlin made a video letting them know that the bank is there to help. It’s available on CNB’s website and has been airing on local television stations. 

Birmingham said he hopes federal regulators will also allow more reporting flexibility for banks so they won’t get dinged at the regulatory level for allowing more customers than usual to be delinquent on their payments. If those changes aren’t made, ”that would mean the bank would take the loan and would have to increase its risk profile and therefore allocate more capital to it and potentially change its earnings or ability to earn interest revenue off of that loan.”

All three local bankers stressed it’s important for consumers to contact them if they are in financial distress.  

“In the coming month as we cycle through payment dates, that will become more apparent,” said Masood. “We’re trying to encourage customers to let us know that and we’ll be taking action to defer payments.”  

 The bankers also noted the important role financial institutions play in local economies by keeping capital flowing even as the financial system stutters and slows. And while all sounded confident about this negative cycle being followed by a positive one just as has happened countless times before, they also said the depths of the financial crisis are still unknown. None wanted to make firm economic predictions, given the still-developing nature of the crisis.

“We’re as a society and as a country really in uncharted territory in terms of what can happen,” Birmingham said. “We are really in unprecedented territory. Not since World War II  have we had such a dramatic need for collaboration.” Nevertheless, he said he could envision a turnaround by the end of the year, assuming the health crisis doesn’t last too long. 

Masood offered, “Even in the worst of circumstances, I think through a number of cycles, we have shown our economy is pretty resilient to bounce back.”

Both Five Star and ESL have been around for generations, but Canandaigua National is the granddaddy of local banks. 

“We’ve been in existence 135 years,” Hamlin said. “We’ve been through wars, the S&L crisis, every stock bust you can imagine. The fact is, there will be commerce. There are people who are buying things and people selling things.” 

Even the plunging stock market, which has reduced the value of investment portfolios, now offers opportunities for those in a position to buy, his officers added. 

Banks may actually grow during this time because of the calm stance they’re taking, offered Vincent K. Yacuzzo, chief financial officer at CNB. 

“Long-term our organization will come out stronger,” Yacuzzo said. “We’re connected to the local community unlike some other larger institutions. By tripling down on communications, we’re strengthening relationships.”

Hamlin dismissed economic predictions in favor of focusing on the here and now of the crisis. 

“Why don’t we calm down and let’s focus one step at a time: Make sure everyone gets fed and cared for,” he said. “If we all agree to do that, everything else will fall into place.”

[email protected]/ (585) 363-7275.