NJ Banker Winter 2012
This issue of New Jersey Banker features the winners of the New Leader Awards and coverage of BankNext, the largest banking conference in the Mid-Atlantic region. It also includes a special focus on enterprise risk management in the new era of banking.
NEW JERSEY B A N K E R WIN T ER 2 0 1 2 ENTERPRISE RISK MANAGEMENT & THE NEW ERA IN BANKING OP ERA TIO NAL RIS K INT ERE ST RAT E RIS K CR EDI T RIS K LIQ UID ITY RIS K BankHorizons and New Leaders | NJBankers Joins Alliance | Garden State Community Bank ENDORSED BY THE NEW JERSEY BANKERS ASSOCIATION Consolidate your IT Services and improve your bottom line. One company... One contract... One set of service standards... Contact Maintech today to learn how we can optimize your IT Services needs, while lowering your operating costs. Maintech's wealth of service offerings can bolster your efficiency and deliver a true value to your company. � Data Center Services: Your Single Source, Vendor Neutral services program delivered with unified performance. Maintech's neutrality allows us to support a wide range of hardware. � Managed Services: Build the customized monitoring, administration and maintenance program for your enterprise that you've always wanted. Maintech can make it happen. � Desktop Services: All the desktops, laptops, PDAs, mobile devices, etc. can be overwhelming to maintain. Maintech offers solutions for managing them all. � Hardware Maintenance: In or out of warranty, your hardware maintenance is in great hands with our network of field representatives. Emergencies? No problem. Maintech. Servicing IT since IT first needed servicing. www.maintech.com � Maintech 2010 1.800.426.TECH NEW JERSEY B A N K E R Peter A. Dontas Market Executive Bank of America James P. Genoy, Jr. President/Chief Executive Officer Monroe Savings Bank, SLA David J. Hemple President/Chief Executive Officer Century Savings Bank Stanley J. Koreyva, Jr. Chief Operating Officer/ Executive Vice President Amboy Bank Anthony Labozzetta President/Chief Executive Officer SussexBank New Jersey Bankers Association www.njbankers.com 411 North Avenue East Cranford, NJ 07016-2436 Phone: 908-272-8500 Fax: 908-272-6626 NJBankers Board of Directors Robert C. Ahrens President/Chief Executive Officer GCF Bank Peter M. Brown President/Chief Executive Officer Manasquan Savings Bank Walter Celuch President/Chief Executive Officer Clifton Savings Bank Joseph Coccaro President/Chief Executive Officer Bogota Savings Bank Joseph F. Dempsey, Jr. President � NJ Middle Market Banking JPMorgan Chase Bank, N.A. Margaret Lanning Senior Vice President, Senior Regional Credit Officer-Northeast Region Wells Fargo Bank, NA Gerald H. Lipkin Chairman/President/Chief Executive Officer Valley National Bank Christopher Martin Chairman/President/Chief Executive Officer The Provident Bank Stewart E. McClure, Jr. President/Chief Executive Officer Somerset Hills Bank William D. Moss President/Chief Executive Officer Two River Community Bank Mortimer J. O'Shea President/Chief Executive Officer Hilltop Community Bank Gerald L. Reeves President/Chief Executive Officer Sturdy Savings Bank Michael Schutzer President/Chief Executive Officer Harmony Bank Robert E. Stillwell President/Chief Executive Officer Boiling Springs Savings Bank The Warren Group Staff Timothy M. Warren Chairman David B. Lovins President Jeffrey E. Lewis Controller & Director of Operations Sarah Warren Director of Events Richard Ofsthun Advertising Account Manager John Bottini Creative Director Christina P. O'Neill Custom Publications Editor Cassidy Norton Murphy Associate Editor Timothy M. Warren Jr. CEO & Publisher Vincent Michael Valvo Group Publisher & Editor in Chief George Chateauneuf Publishing Division Sales Manager Cara Inocencio Advertising Account Manager Emily Torres Advertising, Marketing & Events Coordinator Scott Ellison Senior Graphic Designer Ellie Aliabadi Graphic Designer NJBankers Officers Frank A. Kissel Chairman Chairman/Chief Executive Officer Peapack-Gladstone Bank Kevin Cummings First Vice Chairman President/Chief Executive Officer Investors Savings Bank Robert H. King Second Vice Chairman Senior Vice President Roma Bank John E. McWeeney, Jr. President and CEO New Jersey Bankers Association NJBankers Staff John E. McWeeney, Jr. President and Chief Executive Officer ext. 627 email@example.com James M. Meredith Executive Vice President and Chief Operating Officer ext. 614 firstname.lastname@example.org Michael P. Affuso, Esq. Senior Vice President and Director of Government Relations ext. 628 email@example.com Emily T. DeMasi Vice President and Director of Communications ext. 610 firstname.lastname@example.org Wendy C. Mandelbaum Controller ext. 603 email@example.com Cris Goncalves Manager of Education ext. 630 firstname.lastname@example.org Candida Johnson Assistant Vice President/ Assistant to the COO ext. 615 email@example.com Lauren Barraza Executive Assistant ext. 618 firstname.lastname@example.org Paula H. Cassidy Assistant to the Director of Communications ext. 604 email@example.com Cynthia M. Zaccaro Assistant to the Director of Education ext. 632 firstname.lastname@example.org Erin Suckiel Administrative Assistant/ Receptionist ext. 600 email@example.com Counsel Michael M. Horn, Esq., McCarter & English, LLP www.thewarrengroup.com 280 Summer Street � Boston, MA 02210 617-428-5100 Published continually as a quarterly publication by the New Jersey Bankers Association from 1929 to Winter 1986. Revived as a quarterly publication by NJBankers and The Warren Group in 1998 under the name New Jersey Bank & Thrift and continued as New Jersey Banker in 2002. Combined with The League Leader, published by the New Jersey League of Community Bankers, in December 2008 and continued as New Jersey Banker. Mary Kay Roberts, Esq., Riker, Danzig, Scherer, Hyland, Perretti LLP Jenn Zorn Vice President, Director of Education and Business Development ext. 611 firstname.lastname@example.org Claire Anello Office Manager, Database and Website Manager ext. 631 email@example.com Contributing Editor Emily T. DeMasi Winter 2012 New Jersey Banker 3 Table of Contents NEW 6 JERSEY B A N K E R Departments Chairman's Platform Neither an End Nor a Beginning � Going on in 2012 From the President's Office The Time has Come for Optimism (and Courage Too!) Politics & Policy Regulatory Visit a Success New Associate Members Upcoming Events Bank Notes Bank Shots CRE DIT RIS K OPE RAT ION AL RIS K 8 LI Q U ID IT Y R IS K INTER EST RATE RISK 10 15 39 40 44 24 Cover Story: ERM and the New Era in Banking Averting Crises Before They Happen Features 12 14 Directors' Corner The Real Risk for Banking's Future Behind the Teller Line Garden State Community Bank, a Division of New York Community Bank Feature Creating Value through Enterprise Risk Management 18 Feature Trends in the Defined Contribution Industry Feature NJBankers Joins Alliance to Assist Members with Regulatory Examinations Feature Risky Business 28 20 BankHorizons and New Leaders in Banking Nine of the Best of Banking's Next Generation Meet Our Endorsed Service Provider It was Never a Matter of If, It was Only a Matter of When 39 16 22 4 New Jersey Banker Winter 2012 Chairman's Platform Neither an End Nor a Beginning � Going on in 2012 By Frank A. Kissel W elcome to the winter issue of New Jersey Banker! Where did the year go? We've certainly experienced a year of changes and challenges and New Jersey's banks have adapted and are stronger. We do so because our members live, work and play in the communities they serve. Even during these Frank A. Kissel times of economic Chairman uncertainty, we NJBankers Chairman/CEO understand our Peapack-Gladstone Bank markets, our customer needs and the importance of maintaining safe and secure financial institutions. There's no change there! So in this issue, we feature one of the challenges that bankers face in the new year � enterprise risk management. Banks must create a framework for managing risk, but within that framework, there are opportunities for creating value for our customers. We highlight the NJBankers new ERM committee and its chair, Karen Casey. I think you will find the articles on ERM timely as you and your staff identify, analyze, quantify and monitor risk. As I write this letter, I would like to note that in light of economic conditions, NJBankers members have stepped up efforts to support their communities. As Hubert H. Humphrey said, "The impersonal hand of government can never replace the helping hand of a neighbor." As good neighbors, New Jersey's banks stimulate our local economy when we support small businesses with loans, home buyers with mortgages and provide helpful products and services. Contrary to some uninformed reports, we are not the problem. We are an important part of the solution. In the wake of Hurricane Irene, members helped clean up wet basements, dished out warm food for cold and wet neighbors, and provided school supplies to children who lost theirs in the flood � all with friendly smiles on their faces. As bankers, we know that we are a vital part of the communities we serve, so why not share the initiatives you have taken with members, the media, legislators, regulators and others in our industry? The NJBankers Community Service Award Program does just that and more. The association bestows special recognition to banks that are judged by outside public relations specialists to have made a particular impact in their communities. I am proud to say that my bank, Peapack-Gladstone Bank, was a recipient of an award for the last two years in our deposit category! Kudos to all members who significantly impact local communities and share those accomplishments through the Community Service Award Program. I encourage all members to join in this effort to tell our story. The association welcomes your submission. Information for participation in the program is available on the NJBankers website. There were some important anniversaries this year. We at PeapackGladstone proudly celebrated our 90th anniversary. Congratulations go out to Franklin Bank, which celebrated its 125th anniversary, and Millington Savings Bank and Oritani Bank, which celebrated their 100th anniversaries in 2011. These anniversaries demonstrate the strength of the New Jersey banking industry and the long-term commitment to our employees, customers, shareholders and neighbors. As we enter a new year, I wish to emphasize that our industry is open for business, and our business is helping our customers grow. And that's how our great Garden State will grow. We are the "Main Street" banks. Together, we will have an impact on economic recovery. We anticipate an economic renaissance in 2012 which is also the theme for our annual conference in May. But more on that later! As Hal Borland said, "Year's end is neither an end nor a beginning, but a going on, with all the wisdom that experience can instill in us." I wish you all a happy holiday season and a very happy and prosperous New Year! n Frank Kissel is chairman of the New Jersey Bankers Association and chairman and CEO of Peapack-Gladstone Bank, located in Bedminster. He can be reached at kissel@ pgbank.com. 6 New Jersey Banker Winter 2012 Sometimes accidents get tired of waiting to happen. In the banking world of today, risk can come from anywhere, anytime. That's why it's important to have coverage that stays one step ahead. For more than 110 years, our local presence and industry-leading underwriters have combined to offer a comprehensive suite of coverages designed to fit each client's needs perfectly. Contact your independent agent today to learn more about our Travelers SelectOne � for Community Banks. It's the ideal way to make sure it stays "business as usual" even when it's not. �2010 The Travelers Indemnity Company. All rights reserved. The Travelers Indemnity Company and its property casualty affiliates. One Tower Square, Hartford, CT 06183 travelers.com From the President's Office The Time has Come for Optimism (and Courage Too!) By John E. McWeeney, Jr. I t's hard to believe it, but by the time you read this, 2011 will be in the books and 2012 will be upon us. We came into the year hoping for an economic recovery powered by an end to the housing crisis and an improved job market. Unfortunately, we end the year with modest economic growth amid fears of a double dip John E. McWeeney, Jr. President/CEO recession, a weak NJBankers housing market still plagued by record foreclosures and unemployment rates, both nationally and locally, of over 9 percent. Add to this the partisan politics in Washington, the economic uncertainty in Europe and the almost daily volatility in the markets and it's easy to look to the future with doom and gloom. I for one, though, choose to take a different view of our future, and I think there are many others who are beginning to feel the same. While our economic both Democrats and Republicans, had the common sense and the political fortitude to do the right thing and fix New Jersey's public worker pension and healthcare programs. It wasn't popular, and it isn't perfect, but the changes that were made give New Jersey a chance to thrive again. Similarly, the administration and the legislature are working together to restore New Jersey's business climate and competitiveness. Hats off to Gov. Chris Christie, Senate President Stephen Sweeney and Speaker Sheila Oliver for their leadership! If that's not a cause for optimism here in the Garden State, then I'll give you a few more reasons. How about Lt. Gov. Kim Guadagno? You can't hear her speak and not walk away feeling good about our state's future. The lieutenant governor, along with Caren Franzini of the NJ Economic Development Authority, Linda Kellner of the Business Action Center and Tracye McDaniel of Choose New Jersey, give the business community and our state a powerful team of advocates. They are making New Jersey a business-friendly state again. Maybe the time has come to take our destiny into our hands and show people the way. challenges persist, we know the answers to our problems and all we need is for reasonable people to work together and have the courage to do the right thing. For all of the partisanship politics that we've seen in New Jersey over the years we can take pride that our elected leaders, Finally, it's expected that a meaningful debate on education reform will soon begin. If our leaders in Trenton can make changes to our broken education system the state's potential will be unlimited. At the national level, it's true that the partisanship is at a fever pitch. As I write this column, the work of the Congressional Super Committee is still under way and most are wary that meaningful reforms will be achieved. Just the fact that the committee exists, though, and a national dialogue has begun, is a step in the right direction. Democracy is percolating and Americans are speaking out on both sides of many major issues. In November of 2012, Americans will cast their votes for the next president, all the seats in the House and many Senate seats as well. This next election will be a catalyst for major change in our country for years to come. I'm optimistic that Americans will have the courage to do the right thing and set our country on a new path to prosperity. The banking industry and New Jersey's banks have been caught right in the eye of this perfect economic and political storm. Despite these challenges, for the most part our banks are profitable, well-capitalized and flush with deposits. New Jersey banks have continued to lend throughout the financial crisis. In fact, since Dec. 2008, New Jersey headquartered banks have increased loan outstandings by $5.7 billion, or 5.9 percent. Nationally, in the 12 months ended June 30, 2011, banks extended $1.6 trillion in new loans. The banking industry is poised to lead a robust economic recovery. So if banks are willing and able to lend, and we keep hearing that corporate America is enjoying record profits and sitting on trillions of dollars in capital, what's missing? I think the answer is confidence. The lack of leadership in Washington and the constant flow of negative news from the talking heads in the media have caused American consumers and businesses to freeze and wait for the next shoe to drop. Well, maybe 8 New Jersey Banker Winter 2012 the time has come to take our destiny into our hands and show people the way. The banking industry has incredible power to drive the nation's economy. With each new loan made and each new person hired banks can be game changers for growth. By the way, did you know that since 2008, New Jersey headquartered banks have hired over 3,000 new employees? That's a sign of confidence and strength. Our troubles will persist for a while longer, but we're on the verge of a great new era of prosperity, and banks will lead the way. 2011 will mark the end of the banking careers for three great New Jersey bankers: Ray Hallock, Columbia Bank; Gary Jolliffe, Millington Savings Bank; and Bob Monteith, NVE Bank. Each of these gentlemen have made outstanding contributions to their institutions, the banking industry and their communities. We thank them for their service and their leadership and look forward to the contributions they'll now make as directors of their institutions. We also wish their capable successors, Tom Kemly (Columbia), Mike Shriner (Millington) and Rob Rey (NVE) much success in their new roles. Finally, on behalf of the officers, directors and staff of NJBankers, I wish our bank members, associate members and friends of NJBankers a very happy holiday season and joyous New Year. It's a wonderful privilege to serve you. We look forward to bringing about and enjoying prosperity together! n John E. McWeeney, Jr., is president and CEO of the New Jersey Bankers Association, and can be reached at firstname.lastname@example.org. Looking to Reduce your Operating Costs? WE caN savE YOu TIME aND MONEY. Our proactive approach to managing computer networks will free-up capital to spend on GROWING your business, not fixing it. Introducing SAFETiNETTM Your IT Department's New Best Friend: An Atlantic Technology Solution Once you have SAFETiNETTM you won't know how you worked without it! Try SAFETiNET Risk Free for 30 Days: � Network Management Solutions � Managed Network Security � Managed Network Infrastructure Enjoy Peace of Mind with this new suite of products and services customized to the needs of your business. www.safetinet.com Call to Learn More: 1-888-921-2934 Atlantic Technology Systems 386 State Route 94 South Newton, NJ 07860 Providing Professional IT Services for over 20 years. Winter 2012 New Jersey Banker 9 Politics & Policy Regulatory Visit a Success T By Michael P. Affuso, Esq. wo major events marked the return from the beach season � a trip to Washington, DC, and an election. NJBankers was pleased to re-commence our regulatory trip to Washington, DC. Held on Oct. 5 and 6, the trip included visits to the Consumer Financial Protection Bureau (CFPB), Council of State Bank Supervisors Michael P. Affuso Senior Vice President/ (CSBS), Federal Director of Government Relations NJBankers Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC). The visit began with a briefing at the ABA and ICBA; both briefings were viewed as very thoughtful and thorough. Next, our group attended a meeting at the CSBS. One of the major takeaways from that meeting was that the appointive nature of New Jersey's State Banking regulator is preferable to an elected official needing to placate the whims of public opinion. A dinner was held sponsored by Wells Fargo � a special thanks to our hosts. The next morning � the Community Bankers Association kindly provided a bus to move our bankers expeditiously � we began at the CFPB, an agency staffed with 700 of the most highly educated attorneys in DC, charged with protecting consumer interests. A very interesting discussion ensued. Our meeting with the OCC was focused on the transition from OTS to OCC and an attempt to allay any lingering concerns. Next, the bankers enjoyed a lunch meeting at the FDIC. The trip ended with a final meeting at the Federal Reserve with an economic update. Please mark your calendars for our next Regulatory Visit on June 26 and 27, 2012. On Tuesday, Nov. 8, New Jersey voters went to the polls for the legislative and local Participants in the Regulatory Visit to Washington, DC, take a break for a photo near the Office of the Comptroller of the Currency building. The trip included visits to the CFPB, CSBS, Federal Reserve, FDIC and OCC. elections. All 120 seats in the New Jersey Legislature were up for election. In the end, Democrats retained control of the Assembly, where they presently hold a 47-33 margin. Going into the new session in January, the split in the Assembly will be by 48-32, given the loss of one Republican seat (Domenick DiCicco). The other two competitive races in the State Senate saw the Democrats hold on to both seats. In District 2, incumbent Democrat Sen. Jim Whelan won the election by a 54 to 46 percent margin over Republican Assemblyman Vincent Polistina. This race set fundraising and spending records as a result of close to a $4 million tab. In what was touted as another potential Republican victory, in District 38, incumbent Democrat Bob Gordon retained his seat and defeated Bergen County Republican Freeholder Chairman John Driscoll by a 53 to 47 percent margin. As a result, the Democrats' current control (24-16) of the Senate will remain intact. There were only a handful of contested Assembly races in the 40 legislative districts, but a significant number of new legislators will nonetheless be sworn in on Jan. 10, 2012. As a result of the election, there have been changes to the current leadership team in the Assembly under Speaker Sheila Oliver (D-34) and Majority Leader Joe Cryan (D20). Oliver will remain Assembly Speaker with Budget Chair Louis Greenwald (D-6) ascending to the Majority Leader position. Assemblyman Vincent Prieto (D-32) will assume the Budget Chair. Other committee chairmanships will likely not be announced until January. Minority Leader Alex DeCroce (R-26) is expected to retain his post and continue to be backed up by Assemblyman Jon Bramnick (R-22) to lead the Republican caucus. Senate President Steve Sweeney (D-3) retained his post in the Senate, but Senate Majority Leader Barbara Buono (D-18) did not seek re-election to the leadership post. Senate Health Committee Chairwoman Loretta Weinberg (D-37) was elevated to the Majority Lead position with Senator Joseph Vitale (D-19) poised to re-assume the Chair of the Senate Health Committee. Senator Tom Kean (R-21) will keep his position as Senate Minority Leader. n Michael Affuso, Esq., is senior vice president and director of government relations for NJBankers. He can be reached via email at maffuso@ njbankers.com 10 New Jersey Banker Winter 2012 Sg NJB Fall2011 4_75x7_25.pdf 8/25/11 2:40:59 PM PARTICIPANTS IN THE REGULATORY VISIT TO WASHINGTON, DC Diane Scriveri, Bogota Savings Bank Eric Amig, Federal Home Loan Bank of NY John Edelen, Federal Home Loan Bank of NY Lewis Beatty, First Hope Bank Alfredo Munoz, First Hope Bank David Hage, Freehold Savings Bank Robert Ahrens, GCF Bank Timothy Hand, GCF Bank Michael Schutzer, Harmony Bank James Hyman, Hopewell Valley Community Bank Kevin Cummings, Investors Bank John Nietzel, Investors Bank Maksim Sheyn, Investors Bank Thomas Shara, Lakeland Bank John Fitzgerald, Magyar Bank Peter Brown, Manasquan Savings Bank Michael Horn, McCarter & English, LLP John Alexander, Northfield Bank Steven Klein, Northfield Bank Robert Rey, NVE Bank Frank Kissel, Peapack-Gladstone Bank Jane Allerman-Rey, Spencer Savings Bank, SLA Edward Rice, SunTrust Robinson Humphrey, Inc. William Moss, Two River Community Bank Christopher Rosello, Wells Fargo Bank, N.A. C M Y CM MY CY CMY K NJBANKERS STAFF John McWeeney Jr., President and CEO James Meredith, EVP and COO Michael Affuso, SVP/Director of Government Relations Winter 2012 New Jersey Banker 11 Directors' Corner The Real Risk for Banking's Future I By Alan J. Kaplan thrive for the long term. Some community banks, especially smaller institutions, may immediately respond by saying that they cannot afford such an initiative. My reaction would be "you cannot afford not to invest in the future leadership of your institution." Investing does not need to cost big money, but failing to develop the next generation of leaders, in a worst case situation, could put the institution itself at risk. Here is a quick list of actions that boards can encourage on the path to developing senior bankers and potential future leaders of the institution: � Start early! Succession and talent development are long term programs, not short term projects. Planning three, four, or even five years ahead for succession provides plenty of time for alternatives to develop. � Take an honest assessment of the talent throughout the institution, even if this means using an outside resource to provide an objective perspective. You need to start by knowing who has upside potential and is worth investing in. a future top job. You can't afford not to, even if it means moving someone out of an important role and allowing someone new the chance to step up in their place. Well-rounded banking skills are crucial for future leaders. � Consider outside coaching for your true future leaders � the handful of folks who could someday run the bank. At some level, succession becomes less about technical competency and banking knowledge and more about how people manage and lead others. � Send your top people to industry conferences, whether national, state, or private organizations. There is not only strong content at many gatherings, but the development of peer relationships with non-competing fellow bankers is vital. � Get involved! Not with every employee who attends a training seminar, but with the future leaders. Boards and rising stars need exposure to each other, and often the board can provide selective mentoring where appropriate as well. Terms like "talent development" and "succession management" may seem like they only apply to or can be afforded by mega-banks. The truth, however, is that many talent initiatives do not need to be big or fancy. And for boards and CEOs who accept the premise that "people are our most important asset," investing in the future leadership of the institution should come naturally. Failing to focus on talent as the differentiator in your bank's performance and long-term viability could put the institution at significant risk of survival. n Alan J. Kaplan is founder and CEO of Kaplan & Associates, Inc., a retained executive search and talent advisory firm focused on serving community banks. Based outside of Philadelphia, K&A is an associate member of NJBankers. He can be reached at 610-642-5644 or email@example.com. n my 27 years of association with the banking industry, I have never heard a CEO or bank director disagree with the old saying that "people are our most important asset." However, too many CEOs and board members pay lip service to this clich� and fail to deliver on this imperative for the bank's Alan J. Kaplan future. There are roughly half as many banking institutions in the U.S. today as there were when I joined the First Pennsylvania Bank (remember them?) Management Training Program in 1984. Yet few bankers or directors today would disagree that despite this significant industry consolidation, the need for strong banking leadership is more important than ever. A bank board's singularly most important responsibility is the selection and oversight of the bank's leadership. Making sure that the CEO sets the tone at the top, and selects a great team, are vital to long term Investing does not need to cost big money, but failing to develop the next generation of leaders, in a worst case situation, could put the institution itself at risk. success. Along these lines, it is the board's responsibility � not simply the incumbent CEO's � to focus on leadership succession in a proactive way. Simply allowing the "next in line" to be presumed as the best successor may be selling the institution short. The board's management of the complexities of leadership succession requires pro-activity, strong communication, and sometimes dealing with the elephants in the room. Community bank boards are accountable for ensuring that the bank's leadership builds a talent pipeline not only to successfully compete in the market, but to survive and � Explore mentoring. The personal involvement of their boss (often the CEO) is a great motivator and retention tool. Wherever possible, consider a crossmentoring program where senior execs in one area mentor up-and-comers in another department. This is easy � and free! � Rotate key people into new areas of responsibility. Not every role change requires a step up � many productive career moves are lateral. Give your stars meaningful exposure to other areas of the bank if they are really contenders for 12 New Jersey Banker Winter 2012 Behind the Teller Line W Garden State Community Bank, a Division of New York Community Bank its FDIC-assisted acquisitions of AmTrust Bank and Desert Hills Bank, which provided it with branches in Ohio, Florida and Arizona in December 2009 and March 2010. Reflecting the acquisition-driven expansion of the franchise, the bank's 241 branches operate through seven local divisions, each with a history of strength and service in its community. In New York, the bank serves customers through: � Queens County Savings Bank, with 34 locations spanning the borough; � Roslyn Savings Bank, with 55 locations in Nassau and Suffolk counties combined; � Richmond County Savings Bank, with 22 locations on Staten Island; � Roosevelt Savings Bank, with eight branches in Brooklyn. ith assets of $42.0 billion at Sept. 30, 2011, New York Community Bancorp, Inc., is the multi-bank holding company for New York Community Bank � a savings bank with 241 branches serving customers throughout Metro New York, New Jersey, Ohio, Florida and Arizona � and New York Commercial Bank, with 34 branches in Manhattan, Queens, Brooklyn, Long Island and Westchester County. NEW YORK COMMUNITY BANK Founded in 1859 in Queens, a borough of New York City, New York Community Bank is one of the top 25 depositories in the United States. The breadth of its franchise is the result of earnings-accretive merger transactions with five local institutions and Pictured are the Woodbridge and Wilson Ave., Newark, locations of GSCB. It also operates two branches each in the Bronx and Westchester County directly under the name New York Community Bank. New Jersey customers are served through Garden State Community Bank, with 51 branches in Essex, Hudson, Mercer, Middlesex, Monmouth, Ocean and Union counties. The Ohio Savings Bank division meets the needs of customers in northeastern Ohio with 28 branches, and the AmTrust Bank division serves customers through 25 branches in south Florida and 14 branches in central Arizona. A CONSISTENT RECORD OF EFFICIENCY AND ASSET QUALITY New York Community Bank is also distinguished by its efficiency and the quality of its assets, with measures that continue to rank among the industry's best. n 14 New Jersey Banker Winter 2012 New Associate Members as of November 2011 Internet Crimes Group, Inc. 997 Lenox Drive, Suite 115 Lawrenceville, NJ 08648 Phone: 609-806-4960 Contact: Jeffrey Bedser Email: firstname.lastname@example.org MTS Software Solutions 225 Executive Drive, Suite 4 Moorestown, NJ 08057 Phone: 856-642-1188 Contact: Rob Fleishman Email: email@example.com Parker and Partners Marketing Resources, LLC 134 New Jersey Avenue Absecon, NJ 08201 Phone: 609-484-1859 Contact: Christine Parker Email: firstname.lastname@example.org Reorganization Management Group, LLC 1033 Route 46E, Suite 201A Clifton, NJ 07013 Phone: 908-364-4687 Contact: Greg Babli Email: email@example.com Sunera LLC 14 Penn Plaza, Suite 300 New York, NY 10122 Phone: 732-580-7940 Contact: Ray Paolantonio Email: firstname.lastname@example.org Trustwave Holdings, Inc. 70 W. Madison Street, Suite 1050 Chicago, IL 60602 Phone: 312-873-7244 Contact: Melissa Forsyth Email: email@example.com WithumSmith+Brown, PC 331 Newman Springs Road, Suite 125 Red Bank, NJ 07701 Phone: 732-842-3113 Contact: Andrew Vitale Email: firstname.lastname@example.org We identify hidden risks, so you maximize potential. All financial institutions take risks. At ICS Risk Advisors we help clients manage those risks. A collaborative approach with value-added solutions. That's what years of experience with one single focus will get you. ICSriskadvisors.com // 888.250.4400 Winter 2012 New Jersey Banker 15 Feature Creating Value through Enterprise Risk Management By Jack R. Salvetti and Nancy D. Schell W ith so much attention focused on the economy, yield curve and the Dodd-Frank Act, the subject of enterprise risk management (ERM) has not received much attention. ERM has been a Federal Reserve requirement for the nation's largest financial institutions for some time. Now it is finding its way Jack R. Salvetti into the community banking arena. So what is ERM and how might it enhance the management of your institution? ERM as a methodology to understand Nancy D. Schell and manage risk emerged in the early 2000s in the insurance industry. The financial crisis in 2008 paved the way for broader use of ERM in the banking industry. The Federal Reserve Bank of Cleveland developed a comprehensive framework to provide guidance for banks implementing an ERM process. The framework addresses a wide range of issues from the integration of strategy and risk appetite to organization, oversight, vary widely among regulators, bankers and industry professionals. If you have begun the ERM journey, you have no doubt run into the conflicting opinions defining ERM. To clarify: ERM is a very specific and comprehensive management process that links risk and reward in a dynamic way. It connects your strategy to your risk appetite. It is an assessment of your current risk situation and your decision to accept, reduce or eliminate the level of risk your company undertakes in pursuit of your business performance objectives. The current challenge is that the interpretation of this guidance can vary widely among regulators, bankers and industry professionals. measurement, response and validation of the process. The current challenge is that the interpretation of this guidance can For example, consider the level of financial performance or "reward" you are expecting to achieve. That can entail any number of performance metrics, such as net income, earnings per share or return on equity. From an ERM perspective, isolating yield on earning assets may be most useful since it highlights the revenue requirement. This leads to the question, "How much risk are you prepared to take in the pursuit of that level of revenue generation?" More simply, what is the level of interest income required to cover operating, funding and credit costs? Factor in the expected profit and achieve some level of relief from noninterest income and you have solved for the level of required interest income. That number is very important. If it is significantly higher than your historical performance, you will need to determine the quantity and type of risk you are willing to assume in your pursuit of the desired level of return. Alternatively, you could look at your current products or lines of business to determine whether you are being compensated adequately for the risks you are taking. For example, nonbank subsidiaries 16 New Jersey Banker Winter 2012 may generate lower levels of earnings with much greater risk exposure. In determining your risk appetite, you must relate the level of risk to the strategic goals and objectives, operating environment, incentive compensation structure and other related areas that have a bearing on risk-taking throughout the organization. Once you have determined your risk appetite, the next step is to perform an assessment of the current level of risk (the risk profile). One approach is to conduct this assessment across the seven broad risk categories: credit, market, liquidity, operations, legal and compliance, reputation, and strategic. The risk assessment process is essentially a self-assessment that considers both quantitative and qualitative factors in determining the current levels of inherent risk and the effectiveness of risk mitigation activities throughout the enterprise. The assessment is typically performed by multilevel staff directly operating in the areas that manage the risks, under the direction of a risk officer or outside consultant. The quantitative factors will consider the potential impact of loss as related to earnings, capital, dividend payments or some combination of these items. The probability of loss is also captured in the assessment through qualitative factors that are not represented by financial measures in the final analysis of each area. Once the overall level of risk is determined, the next step is to identify the internal and external metrics that will assist you in identifying how your risk position is changing over time. These metrics are called key risk indicators (KRIs). The compilation of the KRIs is far more than yet another dashboard. Rather, it is a key component to taking specific actions to impact the current risk position. The KRIs should measure the degree of potential loss, external economic and monetary conditions, and resulting effects on the risk profile. These indicators will evolve over time as the ERM process matures. Despite the apparent complexities, there is practical value in using ERM as a management decision-making model for organizations of all sizes. In its simplest form, a practical ERM process compares the intended amount of risk you wish to assume � the risk appetite � with the assessment of your current risk position � the risk profile. If these are not in sync, specific action steps are needed to better align the risk appetite and risk profile. In doing so, you will arrive at the most important aspect of the entire ERM process � taking action sooner rather than later. n Jack R. Salvetti is president of S.R. Snodgrass, A.C., an expert accounting and consulting firm. He leads the firm's auditing, outsourcing, tax, technology services, and consulting business lines. Nancy D. Schell is senior vice president and director of the firm's Financial Services Consulting Group, specializing in the areas of strategic planning, enterprise risk management, organizational design, profit enhancement, and process improvement. For more information about S.R. Snodgrass, A.C., Certified Public Accountants and Consultants, call 800-580-7738 or visit www.srsnodgrass.com. The leader for leaders Our industry is undergoing rapid change. Excellence is being rede ned. Stonier's intense executive education program brings together the best and the brightest minds in banking to be challenged by expert faculty and fellow students. Join us and develop the management and leadership skills you need to effectively address the changes that are impacting our industry. To be the best, learn from the best. ABA Stonier Graduate School of Banking For more information visit: abastonier.com or call 1-800-BANKERS Stonier partners with the Wharton Business School Winter 2012 New Jersey Banker 17 Feature Trends in the Defined Contribution Industry MULTIPLE EMPLOYER PLANS O By Wade Connor retirement plan that covers employers that are not commonly owned. These employers each become adopting employers when they elect to join the MEP. These plans can be defined contribution (DC) or defined benefit (DB) plans. Section 413(c) of the Internal Revenue Code and the regulations thereunder establish guidelines for Multiple Employer Plans. A MEP is essentially a single qualified trust established by the plan sponsor that allows unrelated co-adopters to adopt the plan. Under a MEP, each adopting employer can maintain an individual plan design. Compliance testing is also performed on an individual basis for each adopter, but only a single Form 5500 is filed for all participating employers under a multiple employer plan arrangement. There are significant advantages gained by participating in a MEP, including: � Elimination of primary fiduciary responsibility � Investment fiduciary protection � relief of responsibility for selecting and monitoring plan investments � Economies of scale in the form of buying power of a single large plan vs. smaller plans and greater negotiating power when buying investment and other plan services � Costsavings � Eliminates need for annual plan audit and 5500 filing for individual employers; only a single plan document is maintained � Singlesourcesolutionforplanservices � Easeofuseforsmallbusinesses adopting employer's plan can be shifted to the plan sponsor. With a single plan document that participating employers adopt on an individual basis, a multiple employer plan approach also eliminates the need for individual plan audits and government filings, including individual Form 5500s. Typically, MEPs provide the adopting employer with a comprehensive package of plan services. These services often include plan design and document support, plan consulting, administration and recordkeeping, legal and technical support, regulatory compliance and government reporting, investment management, fiduciary protection, and sponsor and participant communications. Because administration is streamlined, participating employers can also realize significant economies of scale that may result in lower plan costs. ne of the most compelling trends in the defined contribution industry today is the increased use of multiple employer plans. Historically, the greatest number of workers without retirement plan coverage are those who work for small businesses. Retirement plan management for these companies is Wade Connor an administratively burdensome prospect. Lack of in-house benefits expertise, coupled with the fiduciary and legal issues surrounding a complex regulatory environment often make it difficult for small employers to sponsor a plan. Yet lack of benefits are often cited as a reason for high turnover among small businesses, with employees leaving these jobs for positions with organizations that offer more comprehensive benefits packages. Multiple employer plans (MEPs) offer an ideal solution to these challenges and address the complexities these businesses face in offering a retirement plan. MEPs are not a new concept � these plans have been in existence for many years. What has changed, and why is there renewed interest in these programs? Today, fewer employers sponsor defined benefit pension plans. With small businesses expected to generate the greatest percentage of job growth in the future, the need for retirement plan coverage for employees of these businesses takes on even greater urgency. THE MEP SPONSOR'S FIDUCIARY ROLE Today's regulatory environment and compliance challenges make fiduciary oversight more important than ever. One of the key benefits of a multiple employer plan is fiduciary relief � the MEP sponsor assumes principal fiduciary responsibilities associated with sponsoring a retirement plan. The MEP plan sponsor also ensures that the plan remains in full compliance with IRS and DOL regulations, providing plan amendments and regulatory updates as needed. The level of ERISA fiduciary protection a MEP offers relieves plan sponsors of the due diligence and ongoing monitoring of plan investments. ADMINISTRATIVE EASE MEPs deliver administrative ease for employers, as nearly all of the administrative tasks relating to the HOW DOES A MEP WORK? A multiple employer plan, or MEP, is a HOW PLAN INVESTMENTS ARE TYPICALLY HANDLED Under a MEP, the sponsor also 18 New Jersey Banker Winter 2012 serves as investment fiduciary. As the investment fiduciary, the MEP sponsor evaluates, identifies, selects and monitors plan investments, offering a fiduciary process that includes an investment policy statement, investment evaluation and selection, and ongoing monitoring and performance reporting. The ERISA section 3(38) investment fiduciary oversight and responsibility that the MEP sponsor assumes relieve adopters of the burden of due diligence and ongoing monitoring of investments. As an investment fiduciary, MEP sponsors offer the benefit of careful oversight of investment options for participants that are regularly scrutinized for appropriateness, provide rigorous style consistency and the opportunity for broad diversification and asset allocation � and the benefit of due diligence built around the fiduciary responsibility that the sponsor assumes to ensure that plan investments are appropriate for a qualified retirement program. A MEP provides a single investment policy statement that covers all adopting companies. Fund monitoring is done at the MEP trustee level on behalf of all adopters. Documentation of fiduciary decisions is critical due to increased scrutiny by adopters and regulators. Typically, a MEP's investment fund menu will generally be identical for all adopting companies. Investment menus should be broad enough to satisfy the investment needs of potential adopters and simple enough to be user-friendly to employee groups of widely varying investment sophistication. Pentegra Retirement Services consultative approach can help banks determine if a multiple employer plan is the right solution for an organization's needs. Today, as multiple employer plans grow in popularity, Pentegra is one of the few providers � if not the only one � that offers more than six decades of experience and expertise in administering these types of programs for banks nationwide. n To learn more, contact Wade Connor, regional director of Pentegra Retirement Services, at 800872-3473, ext. 578, or email@example.com. Do your statements look like this? ? Full-Color Redesigned Statements with Custom Formatting Interactive PDF Delivered Electronically Reduced Processing Costs Targeted Cross-Marketing Eliminate Inserts with Onserts Built-In Response Buttons Improved Customer Service ? ? ? ? ? ? Call 888-FSI-6200 today to schedule an online demo and see what eDoc can do for your statements. WHEN DOES A MEP MAKE SENSE? MEPs are an ideal retirement plan solution in many situations, particularly where fiduciary liability is an issue, when there is no current plan in place because of the complexities involved in offering one, for bona fide employer groups, where clients with multiple payrolls are looking for synergy, in decentralized organizations looking for leverage, and in organizations looking for value-added services for members or affiliates. Trust well placed. 21 Harristown Rd, Glen Rock, NJ 07452 � 201.652.6000 � 888.FSI.6200 � www.insideFSI.net Core Processing � Item Processing � Integrated Packages � Corporate & Branch Capture OFAC & Patriot Act Solutions � Web Hosting & Services Winter 2012 New Jersey Banker 19 Feature NJBankers Joins Alliance to Assist Members with Regulatory Examinations A By James M. Meredith recurring theme that NJBankers hears from the membership is a concern with the growing regulatory burden being placed on their institutions. These concerns can generally be placed into two categories; first, the actions of Congress in enacting new regulations; and second, the examination process itself. James M. Meredith For the first category, NJBankers regularly communicates with members of the New Jersey Congressional Delegation on the costly impact of harmful and often unnecessary regulations and supports the actions of the national trade groups in further communicating this message. On the examination process, NJBankers has regular and frank dialogs with all of the state and federal regulatory agencies. The regional officials regularly participate in our conferences and serve on the Committee on Examination and Supervision (COES). These venues provide members and the regulators the opportunity to raise issues and concerns that arise out of the examination process. While there is not always agreement, these meetings give all a better understanding of the other's perspective on these often complex matters. Earlier this year, NJBankers took additional action to better quantify some of the concerns raised by bankers. Regulatory Feedback Initiative Select Findings on National Responses (as of November 16, 2011) Do you agree with your current CAMELS rating? 200 189 158 150 144 100 62 50 97 0 (1) Strongly Disagree (2) (3) Neutral (4) (5) Strongly Agree 150 147 137 127 Flood Disaster Protection Act Real Estate Settlement Procedures Act (RESPA) 108 Regulation Z (Truth in Lending Act) HMDA/Regulation C (Home Mortgage Protection Act) 67 59 48 36 34 33 47 24 3 4 4 8 (D) Require Action by Your Bank 120 90 61 60 REGULATORY FEEDBACK INITIATIVE In June, NJBankers joined with other state banking associations to create the Regulatory Feedback Initiative (RFI) under the auspices of The Alliance of Bankers Associations. The initiative consists of a brief, online survey that member banks are asked to complete immediately following each safety 30 4 9 7 0 (A) No Problems Noted (B) Received Criticism (C) Require Evaluation by a Third Party (E) Not Applicable to My Bank 20 New Jersey Banker Winter 2012 & soundness and compliance examination. This data will allow the tracking of regulatory practices from state to state and from regulator to regulator. The goal is to better identify and quantify New Jersey banks' concerns and see if they are consistent among regulators and with national examination trends. Where appropriate, survey results will be shared with regulatory agencies with the goal of improving the effectiveness of the regulatory process for all. The survey is administered by an independent, third party with a track record in collecting feedback from bank customers and employees. The survey is completely anonymous and, because the data is only available in aggregate form, it cannot be tracked back to a specific institution. Additionally, report questions will require a minimum number of responses before it will provide data to further ensure the confidentiality of respondents. EXAM PREPARATION REPORT AVAILABLE TO PARTICIPANTS Participating members can request a custom exam preparation report, which can include a summary analysis of all the reports filed by similarly situated banks (i.e. asset size, primary regulator, state, etc.) or whatever criteria it wishes to review. Survey results will give participants a window into the issues that other institutions have experienced during their recent examinations and will be a valuable component of exam preparation. The initiative was announced over the summer and, to date, institutions have reported on over 900 examinations nationally, including 22 from New Jersey. We encourage more NJBankers members to participate since this will result in more valuable reports for all. Access to the survey and report data is only available to the CEO, or his/her designee, of the member financial institution. Additional information on the Regulatory Feedback Initiative, including a request to take the survey or for participants to request a customized report can be found at: http:// allbankers.org. n James M. Meredith is executive vice president and chief operating officer of the New Jersey Bankers Association and can be reached at jmeredith@ njbankers.com. FOR ALL THE RIGHT REASONS Independent & Cost-Effective Portfolio Risk Review LOAN REVIEW PROGRAMS LOAN LOSS RESERVE VALIDATION CREDIT DATABASE FORMATION PORTFOLIO STRESS TESTING PORTFOLIO ACQUISITION REVIEW LOAN POLICY MAINTENANCE PROBLEM LOAN MANAGEMENT LOAN & CREDIT SEMINARS CREDIT ANALYSIS REGULATORY RELATIONS CEIS REVIEW INC. Professional Services for Bankers by Bankers Toll Free 888.967.7380 www.CEISREVIEW.com Offices: Florida, Maine, New York Winter 2012 New Jersey Banker 21 Feature Risky Business T By Stephen R. King institutions to focus on putting in place the most effective risk management program possible and to support their risk officer in order to attain their business goals, successfully introduce new products, and remain compliant with a growing number of regulations. Risk assessment is a relatively new science that is growing, changing and becoming more important every day. But some institutions are still stuck in older, less efficient models of risk assessment. Some of the pitfalls that exist in poorly executed risk management programs are: � Lack of support for the program and risk officer from the C-suite � Anapproachthatistoocomplexandis inconsistent across the institution � A cumbersome program that identifies too many risks and threats � A silo approach to risk management that is not integrated throughout the institution. Your risk management program should serve your institution by keeping you in compliance while allowing you to stick to your business goals, and there are four factors that should be part of any plan: Consistency � This is vital to a welloiled risk management program. To counter confusion and inefficiency, an institution should define an assessment methodology with consistent measures that everyone performs. This methodology should start from the business line and then be applied across the institution for the best performance. he regulatory environment has never been as intense as it is today � especially for financial institutions. Community financial institutions are feeling as much pressure to comply as their larger counterparts with the Dodd-Frank bill heaping more than 10,000 pages of new regulations on them. This and the sheer number of major regulatory changes (more than Stephen R. King 10 each year) are increasing the need to have in place efficient and nimble risk management programs and a strong risk manager. Today, it is vital for community financial 22 New Jersey Banker Winter 2012 From the bottom � The most sensitive receptors for assessing risk at your institution exist at the business line where the products and services are. Building your risk management program from the bottom up � from the business line to the board level � will ensure that all potential threats and risks are considered and covered. It will also provide a consistent set of measures needed for your risk management program. Keep it simple � It's important that the entire institution operates in line with your risk management program, and clear communication is key to making this happen. Your risk management program should be explainable to the board down to the most junior associates within your organization so it is embraced and implemented at all levels. Currency � The regulatory and business climate is changing faster than ever before. To ensure that your risk management program is always providing security and maximizing profitability, it is essential that your institution and risk officer are always current on the latest regulations and that the risk assessment is constantly evaluated based on these changes. A good risk officer is one that is always proactive in implementation and maintenance of the program so that it never grows out of date, which increases risk and the potential for losses. Equally important to having a solid risk management plan in place, is giving your risk officer more power to effectively and efficiently manage your institution's program. In the last five years, the risk officer has emerged as a powerful asset in successful financial institutions. And there is good reason for that. The risk officer is there to understand the regulations and their impact on the bottom line and to find solutions that will allow the institution to pursue its business goals while remaining in compliance. A strong risk officer also serves an important role as a liaison between the board, the C-suite and the business lines. When the board has an idea that makes the business line nervous and vice versa, the risk officer is the one that finds the best solutions. Overall, if allowed to flourish, the risk officer can serve the institution in many ways as an analyst, leader, facilitator, communicator and visionary. Although the regulatory environment is the toughest it's ever been and risks have increased, community institutions should not shy away from setting high goals for providing the best products available for their customers or increasing profitability. With an effective and nimble risk management plan in place and a strong risk officer at the helm, your institution can survive the current regulatory environment and plan for success in the future. n Stephen R. King of Wolf & Company is a member of the firm and director of Wolf's Regulatory Compliance Service group. He can be contacted at 617-428-5448 and firstname.lastname@example.org. OUR eneRgy fUtURe IS COMIng tOgetheR. We all want the same thing: affordable, reliable, clean, and secure sources of energy. The good news is that we know how to get there, and we're already on the way. Energy markets are increasingly competitive. New Smart Grid technologies are making energy use more efficient. Investments in nuclear, solar, wind, and natural gas will more cleanly provide electricity for homes and businesses today, and for the cars and trucks of tomorrow. At Constellation Energy, NJBankers Endorsed Electricity Supplier, we understand the challenges and we're delivering the innovative energy solutions that are helping our customers succeed and our communities prosper. newenergy.com/NJBA � 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted. Environmental information about Constellation Energy's competitive energy supply services along with other information about our business is available at: www.newenergy.com and our toll-free number: 866.237.POWER. Winter 2012 New Jersey Banker 23 OP ER AT IO NA L RI SK Cover Story LIQ UI DI TY RI SK CR IT RI SK ED IN TE RE ST RA TE RI SK AVERTING CRISES BEFORE THEY HAPPEN ERM and the New Era in Banking (credit, interest rate, market, operational and transactional; compliance and legal; technology, fiduciary and reputation) and the management of responsibilities as they relate to risk under the various models available in the industry � COSO, FDICIA, CAMELs, etc. The ERM Committee is to discuss appropriate oversight roles and responsibilities by a bank's board, committees and senior management and related ERM topics, such as risk taking capacity, risk appetite, linkage of risk to strategic plans, measurement of risk, performance monitoring and reporting and other related topics. "Many of our member banks are just starting ERM programs, so they are looking for guidance on the best way to start and implement a program from the resources they have internally," says Casey. The ERM Committee has had two quarterly meetings as of this writing. The agenda items included: � Whatisamemberbank'sERMstructure � What is the role of ERM in a member bank's organization � What challenges is each bank facing in the implementation � What is the difference between risk appetite and risk tolerance � AcasestudyforimplementingERM � Impact of social media on risk management bank if it's doing one $10 million deal or ten $1 million dollar deals." The difference in the level of potential instability in markets that used to be steady performers is a critical issue. Risk factors for previously-known investment categories, such as residential mortgages, have changed. Consider affluent Bergen County, where many upper-income residents work in Manhattan in financial services � and where many more moderate-income residents work for large companies that have announced job cuts. While credit scores are important, lenders must also question whether a prospective borrower will still have a job two years from now, Casey says. She cites national statistics showing that mortgage default rates, which used to be less than 1 percent of all loans, now exceed credit card defaults in some markets. Banks should evaluate where they are exposed to risk, where they are sufficiently diversified � and where the next surprise might come from. And such a surprise could come from inside the bank. H BY CHRISTINA P. O'NEILL ow could someone that smart be in so much trouble?" Karen Casey asked the day after investment banking firm MF Global, an investment firm headed by former New Jersey Gov. Jon Corzine, filed for Chapter 11 bankruptcy. The extent of previously undisclosed positions in European sovereign debt, a $600 million shortfall in customer money, and a practice of underreporting its average quarterly debt load by temporarily reducing its borrowing levels before issuing its quarterly reports preceded Corzine's resignation from MF Global on Nov. 4. Casey chairs the newly-formed NJBankers ERM Committee and is also senior vice president and chief credit and risk officer at Amboy Bank. Somewhat presciently, she predicted about MF Global on Nov. 1, "I wouldn't be surprised if what brought it down was a failure in operational risk � a failure of not checking trades, limits and confirmations." While MF Global apparently misjudged its risk exposure and its operational abilities on a far more glamorous level than most of the nation's commercial and savings banks, it's the banking community that is taking enterprise risk management (ERM) seriously, notes Casey. CHANGES IN MARKET REQUIRE DIFFERENT APPROACHES Fundamental changes in the market call for a corresponding change in the evaluation of risk and a bank's appetite for it. An Oct. 10 posting on Bank Safety & Soundness Advisor, published by UCG's Financial Risk Group, calls for increased and improved reporting systems that provide information to make proactive decisions before a situational change becomes a crisis event for the bank. Additionally, the bank's executives must move beyond their given areas of responsibility, to ask how an event might continued on page 26 A TIMELY ENTERPRISE It seemed timely that the New Jersey Bankers Association instituted an Enterprise Risk Management Committee. Established in June, it has 33 bank and associate members (see sidebar, page 27), and is a growing and active group. Its mission statement calls for the review and discussion of Enterprise Risk Management by defining risk functions WHAT'S YOUR APPETITE? "Risk appetite is becoming a bit of an issue for banks," Casey says. "The regulatory agencies can say [banks can hold] only so much of a particular product as a percentage of capital, but it's a very big difference in a Winter 2012 New Jersey Banker 25 Cover Story ERM and the New Era in Banking continued from page 25 affect each area of the bank � not just their own. For example, Orlando Hanselman, education program director for Fiserv Risk & Compliance, quoted in the Oct. 10 post, says banks should look beyond credit risk, to examine liquidity risk, interest rate risk, market risk and operational risk. Fraud risk has also changed. As electronic fraud has become more sophisticated, the cost of a fraudulent activity to a bank has exceeded the cost of fraud monitoring. Amboy Bank encountered a situation in the first quarter 2011 in which some of its debit card customers' cards were compromised, stemming from a bank customer who was sending credit card information wirelessly. The bank traced the breach to a single retailer, canceled all the debit cards used at that retailer and re-issued new cards to its customers in 24 hours. Amboy Bank does background and credit checks on prospective remote deposit capture customers, and incorporates safety measures to ensure that a single check can't be deposited multiple times. In banks' approach to risk management, one size doesn't fit all, noted Bank Safety & Soundness Advisor. ERM programs are constantly evolving and conceptual, which makes it difficult to establish how its different aspects should work in practice, making them "all journey and no true arrival." That's anathema to regulators, who want uniform standards and predictable outcomes and endpoints. "Regulators are now requiring banks to dig a little deeper, to know what they're investing in," Casey says. risk from a forward-looking standpoint, includes not only the traditional financial data but regulatory, operational and transactional data. Amboy Bank is moving toward adopting a board portal and is evaluating what the important things are to monitor monthly, and Casey says she has been conducting more board education in the specialized aspects of enterprise risk management. "We felt it was important for the board to understand where real estate values are going," she says, in order to establish an appropriate risk level. Membership on a bank board used to be a mark of prestige, she says, but now, prospective board members should ask questions about the financial condition of the institution, ask to review the directors' and officers' liability, the most recent audit report, and review the issues that have arisen. Some of those issues may not be covered by D&O, she cautions. She foresees the need for board members with more financial experience BOARD OF DIRECTORS Changing risk impacts board members, too. The increase in information that boards must review and absorb to properly address New Jersey Bankers Association members receive an additional 5% discount* on New Jersey car insurance through Plymouth Rock Assurance. NJBA members understand the value of savings and service excellence. Plymouth Rock works with you to customize an auto insurance policy specifically to fit your needs. Peace of mind and money in your pocket -- that's more than just insurance. Call 1-800-625-8903 or visit www.NJBAQuote.com today for your free quote and special 5% discount for NJBA members. A member of * Discount only applies to new and renewal policies originally written on or after 06/04/07 in High Point Property and Casualty Insurance Company. If the discount is not currently applied, it may be added upon request. May not be combined with any other group discounts. Other restrictions may apply. Offer available to New Jersey residents only. Insurance offered by Plymouth Rock Management Company of New Jersey under the brand name of Plymouth Rock Assurance. Policies underwritten by High Point Property and Casualty Insurance Company. PR/13/KG/2011 26 New Jersey Banker Winter 2012 than in the past. While the board should not be running the bank, financial experience will be necessary to board members who will have to be as knowledgeable as bank management about the data in the many reports they must evaluate. "Enterprise risk is still a very new animal," Casey says. "It gets back to the risk manager, to stop something from happening before it does." n Christina O'Neill is editor of custom publications for The Warren Group, publisher of New Jersey Banker. CHAIRMAN Karen Casey � Amboy Bank VICE CHAIRMAN MEMBERS Joseph Mulrooney � Northfield Bank Enterprise Risk Management Committee (COMMITTEE FORMED JUNE 22, 2011) Donna Baer � GCF Bank Lewis Beatty � First Hope Bank Richard Bzdek � Clifton Savings Bank Finn Caspersen, Jr. � Peapack�Gladstone Bank James Christy � The Provident Bank Kenneth Emerson � Boiling Springs Savings Bank Lewis Foulke � First Commerce Bank Sal Gianvecchio � Investors Bank Amit Govil � P&G Associates Stephen Gozdan � Cenlar FSB Edward Gurak � Columbia Bank Julie Holland � Atlantic Stewardship Bank Maria Leibowitz-Curry � Hopewell Valley Community Bank Kevin Lenihan � Crown Bank Timothy Losch � Fulton Bank of New Jersey Karen Martino � Karen I. Martino Group Andriette Mathews � Roselle Savings Bank Maria Mayshura � Ocean City Home Bank Chris McFadden � NVE Bank Linda Mourao � Gibraltar Bank, FSB Linda Niro � Grand Bank Fred Nitting � Accume Partners John Noonan � Valley National Bank Daniel O'Donnell � First Bank Keith Pericoloso � Roma Bank Joseph Romanello, Wolf & Company Patrick Ryan � First Bank Robert Stepien � Hilltop Community Bank Alan Stuart � Manasquan Savings Bank Nicholas Tedesco � GSL Savings Bank Thomas Townsend � Sun National Bank Ferdinand Viaud � Glen Rock Savings Bank Jack Warnock � McIsaac Risk Solutions LLC STAFF LIAISON John E. McWeeney, Jr. � NJBankers That's confidence through clarity. They had the right mix of solid experience and knowledge of banking operations that kept my institution ahead of the industry. We make it a priority to monitor legislative and regulatory changes as well as economic trends that influence your day to day business. Our 200 financial institution clients include de novo banks to multi-billion dollar asset bank holding companies. See what we can do for you. Audit | Accounting | Tax | Business Advisory ParenteBeard.com � ParenteBeard LLC Winter 2012 New Jersey Banker 27 TROPICANA RESORT & CASINO | ATLANTIC CITY, NEW JERSEY | NOV. 10, 2011 BankHorizons Pays off in Atlantic City NEW LEADERS HONORED AT NJBANKERS EVENT In November, hundreds of New Jersey's bankers and finance professionals gathered in the Tropicana Resort and Casino for an action-packed, informative day of sessions, seminars, networking and fun. The Mid-Atlantic region's largest banking show was a huge success, according to attendees, and next year's is not to be missed! Nine up-and-coming bankers, the finest in their fields, were honored at the New Leaders reception and dinner. Following are their accomplishments, in their own words. NEW LEADERS: IN THEIR OWN WORDS Career highlights: I started my career in banking in 2005 as a customer service representative and have advanced to branch manager and officer. In 2009 I was given the opportunity to open a new branch for Fulton Financial Corporation. I built the branch customer base from ground zero and as we approach our third year of operation, we have established ourselves in our marketplace as a community bank that cares about our customers' needs and delivers on our customer promise while growing our business in an environment that is economically challenging and competitive. Community involvement: I am involved in several local organizations that support the community in which I both work and live. They include: Hammonton Board of Education, Winslow Rotary, Winslow Chamber of Commerce, Winslow Business Association, and Hammonton Lions Club. Biggest success: One of my biggest successes has been joining the Hammonton Board of Education, which positioned me to gain the experience of running a multimillion dollar operation. It has also given me the ability to be an active part of the community in which I live, and to make an impact on decisions that will affect my community, my children, and myself. This is important to me and was supported by bank management. Dream job: To travel the world and generate loans for developing communities in need of assistance. If you weren't doing the job you're doing now, what would you do? I would be teaching. I have a great respect for those who teach. I receive tremendous satisfaction when I have the opportunity to speak to our youth or to teach them as I occasionally do at our local technical school. Left, Manny Bermudez; right, Priscilla Luppke. Manuel Bermudez Age: 29 Title: Branch Manager Bank: Fulton Bank of New Jersey Bank location: Winslow Twp. Town of residence: Hammonton Winter 2012 New Jersey Banker 29 Left to right: James Covington, Adam Brenner, and Joseph Roberto. Community involvement: I am a member of Capital One's extended Market President Network for New Jersey. This group is responsible for all bank-sponsored charitable giving and community involvement in the state. I'm also a member of the United Jewish Communities Young Real Estate Executives Network for Metrowest New Jersey and a proud supporter of the U.S. Holocaust Museum, among other charities. Biggest success: The role I've played in developing young talent within our organization. I take great satisfaction in how some of our more junior associates have evolved and become more effective leaders. Dream job: Head golf pro at a prestigious country club � albeit, one with a doubledigit handicap. If you weren't doing the job you're doing now, what would you do? Sports agent � I can't think of a better way to blend my love of business and deal-making with my passion for sports. Adam Brenner Age: 33 Title: Senior Vice President of Commercial Real Estate Bank: Capital One Bank Bank location: Fairfield Town of residence: Ridgewood Career highlights: I have been with Capital One and its predecessor banks for 11 years. Originally hired into the bank's management training program, I have spent time in both our commercial lending and private banking groups. A few months ago, I was asked to join the commercial real estate division, where I lead a newly-formed deposit servicing group responsible for the New Jersey, Pennsylvania and Boston markets. KNOWLEDGE IS THE BASIS OF SOUND ADVICE. TWENTY YEARS OF EXPERIENCE TELLS US SO. As an advisor to financial companies nationwide for more than two decades, Sandler O'Neill's knowledge and insight have served clients well in bull and bear markets alike. The depth of experience gives our firm a unique perspective on how financial companies can best position themselves in the current environment. Sound, straight-from-the-shoulder advice � it's what we do best. To learn more, please contact Fred D. Price, Managing Principal, at 800.635.6855, or visit www.sandleroneill.com. Sandler O'Neill + Partners, L.P. 30 New Jersey Banker Winter 2012 Career highlights: Since I joined First Hope Bank in 2001 as deposit operations manager from a larger financial institution, I have been exposed to so many different aspects of banking. I've grown personally and professionally within First Hope Bank to my current position as operations and project manager, where I manage the core systems team and the management of deposit operations. Biggest success: I've had many successes throughout my career; two debit card conversions, implementation of document imaging, and assisting in leadership of a full core systems conversion. However, being recognized as a New Leader in Banking is an honor and personally confirmed, for me, the choices I have made throughout my career. Dream job: Looking forward to continuing to be a part of the leadership of First Hope Bank. If you weren't doing the job you're doing now, what would you do? I could not imagine doing anything different from what I am doing today, but if I had to do something else, I would choose to stay home to focus all my attention on my family. Left to right: Norman Beatty, Jennifer Finer, and Kevin Finer. Jennifer Finer Age: 39 Title: Vice President Operations Bank: First Hope Bank Bank location: Blairstown Town of residence: Hackettstown Do you manage a portfolio of non-escrowed loans? Need to know if taxes are paid and free of potential liens? ? Home of Charles Jones� and Data Trace� NJ/PA products and services Introducing Lenders On-Demand Tax Service (LOTS) LOTS provides detailed tax status information on residential and commercial properties in New Jersey -- in seconds! Tax Searches Call 800-792-8888 and ask for ext. 7035 or 7050 Charles Jones and Signature Information Solutions are registered trademarks of Signature Information Solutions LLC. Data Trace is a registered trademark of Data Trace Information Services LLC. �2011 Signature Information Solutions LLC. All rights reserved. Winter 2012 New Jersey Banker 31 Career highlights: I joined Sun National Bank in November 2005 initially with an entry level position supervising the quality control department. I realized very early in my career the opportunities available to advance and grow within the company. I currently manage four departments as vice president of settlement and EFT operations. In July 2011, I was selected by our executive management team to participate in Sun's Mentoring Program. Community involvement: I have served on Sun National Bank's United Way Planning Committee and helped raise funds for United Way. I have also volunteered at the Boys and Girls Club of Vineland. Biggest success: Graduating from Rowan University with a bachelor's degree in accounting. Working and attending college both on a full time basis was very challenging. I'm extremely proud of this accomplishment. Left to right: Tom Townsend, Dot Antrim, Jennifer Gonzalez, and Angelo Valletta. Jennifer M. Gonzalez Age: 29 Title: Vice President of EFT Operations and Settlement Manager Bank: Sun National Bank Bank location: Vineland Town of residence: Vineland Dream job: My dream job would be working in a completely different field with animals. I would love the opportunity to study various species of animals in their natural habitat and help towards conservation of at risk species. If you weren't doing the job you're doing now, what would you do? I would pursue a banking career working within the city of Philadelphia. I have always enjoyed the liveliness and conveniences being in the city brings. Community involvement: I am currently involved with The Cancer Project, a program of the Physicians Committee for Responsible Medicine, of which I am a member. I am also a former member of the Kiwanis Club of Phillipsburg. Biggest success: During my time at PeapackGladstone Bank, the Internal Audit Department has continued to grow in terms of staff and the demands of our regulatory environment. I have continued to evolve with these changes, and have taken on greater responsibilities over the past years. I strive to make a significant contribution to my department and the bank as a whole. Dream job: I believe that I would enjoy a career as an auditor with the CIA or the FBI, which would challenge me to learn governmental processes that I have not yet had the opportunity to fully explore. I would really be interested to examine the inner-workings of these agencies. If you weren't doing the job you're doing now, what would you do? If I was not working in my current position, I would probably pursue a more entrepreneurial route. I have always had an interest in owning a fitness center, as I am also a certified personal trainer and very involved with fitness and nutrition. Left to right: Robert Rogers, Lisa Hagen, Karen Chiarello, and Frank Kissel. Age: 30 Title: Assistant Vice President and Supervising Auditor Bank: Peapack-Gladstone Bank Bank location: Bedminster Town of residence: Hackettstown Career highlights: I joined the Internal Audit Department at Peapack-Gladstone Bank in February of 2004, and have been given many opportunities for growth in my career during this time. In 2008, I received a master's degree in accounting from Fairleigh Dickinson University, and in 2011, I obtained my CPA license from the state of New Jersey. Lisa S. Hagen, CPA 32 New Jersey Banker Winter 2012 Patrick Ryan - EVP and COO Congratulations Pat! First Bank would like to congratulate Patrick Ryan and all of the recipients of the New Leaders in Banking Award for this outstanding achievement. We are proud of you. | Welcome Home. Community involvement: I support several organizations which benefit individuals and families in my community and beyond. Some of these include St. Jude's Children's Research Hospital, the Alzheimer's Association and the Blind Ambition Coalition. Additionally, for over a decade I have been involved with Rebuilding Together Bergen County in various capacities from volunteer to board member. Left, James McKiernan; right, Robert Stillwell. James (Jim) A. McKiernan Age: 39 Title: Vice President Bank: Boiling Springs Savings Bank Bank location: Rutherford Town of residence: Wyckoff Biggest success: Being part of the workout team at Boiling Springs Savings Bank for the last few years has been a most challenging experience for me. We've seen some workout successes, but it is a work- and time-intensive process and not everyone pans out. Being promoted to vice president during this time period is both very humbling and validating. Dream job: Playing music. If you weren't doing the job you're doing now, what would you do? I would be a stay-at-home dad in the near term. Our first child is almost one year old and it would be nice for him to have the benefit of a parent at home, like I did. Career highlights: I began my career with Boiling Springs Savings Bank as a teller in 1997 and moved through various positions as my experience and abilities increased. I have been fortunate to gain experience working in several areas of operations, including customer service, construction loan management, workouts and currently commercial loan underwriting. Congratulations to all of the 2011 new leaders in banking. Boiling Springs is especially proud to recognize a true leader in banking, our very own Jim McKiernan. Come Home to Better Banking Corporate Headquarters: 25 Orient Way, Rutherford, NJ 07070 (201) 939-5000 Visit us at: www.bssbank.com Member FDIC 34 New Jersey Banker Winter 2012 Career highlights: My banking career started as a teller, later a credit analyst, and eventually vice president of commercial lending for an affiliate of a $15 billion bank holding company. In 2007, I joined Capital Bank (in organization), as vice president and Gloucester County market manager. Since that time, I have been instrumental in helping the bank earn an outstanding CRA rating and grow to over $220 million in total assets. Left to right: Harry Hearing, Joseph Rehm, and Dominic Romano. Joseph Rehm Age: 33 Title: Vice President, Gloucester County Market Manager Bank: Capital Bank of New Jersey Bank location: Main Office, Vineland Town of residence: Clayton Community involvement: I am a vice president of the board of directors of the Gloucester County YMCA, a board member of the Gloucester County Chamber of Commerce, an original organizer of South Jersey Construction Financial Management Association and a volunteer coach of various youth sports. Biggest success: Personally, being a husband and father of three children. Professionally, positioning myself to be offered an opportunity to be one of the original employees of Capital Bank of New Jersey. Dream job: Benevolent Dictator of the Universe! If that is not available, I'd want to be a paid football coach! If you weren't doing the job you're doing now, what would you do? Spend more time with my wife and kids. Recognizing an Honor Well Deserved. Fulton Bank of New Jersey congratulates Manny Bermudez on being named one of the 2011 "New Leaders in Banking" by the New Jersey Bankers Association. As the Branch Manager of the Winslow Branch, Manny's dedication to his customers and his professionalism reflects this honor. Manny is always such a positive role model and takes great pride in serving his local community and caring for his customers. 1.855.900.FBNJ I fultonbanknj.com Member FDIC. Member of the Fulton Financial Family. Winter 2012 New Jersey Banker 35 Ira Robbins Age: 37 Title: First Senior Vice President and Treasurer Bank: Valley National Bank Bank location: Wayne Town of residence: Montville Career highlights: I am proud of the fact that I have worked with the same company for the past 15 years. I have ascended the corporate ladder from management trainee to my current role while maintaining my core ethical values and balancing my professional objectives with my personal ambitions. Community involvement: I am proud to say that I currently serve as a board member of Mt. Sinai Synagogue in Jersey City, am a member of the Revitalization Committee at Pine Brook Jewish Center in Montville, and am an active member of the American Institute of CPAs and the New Jersey Society of CPAs. Biggest success: My proudest and most fortunate achievement are my loving and supportive family. Dream job: My ideal dream job would be general manager of the Baltimore Orioles. If you weren't doing the job you're doing now, what would you do? I truly love what I do here at Valley National Bank. However, if I wasn't employed at Valley I'd be laying down the groundwork to pursue my dream job. Jennifer Finer Vice President, Operations and Project Management For nearly 100 years, our greatest asset has always been our associates. First Hope Bank congratulates Jennifer and the other recipients of the New Jersey New Leaders in Banking Award. Andover | Blairstown | Great Meadows | Hackettstown | Hope | Sparta | FirstHope.com Linwood | Morganville | Shrewsbury | FirstHopeMortgages.com 36 New Jersey Banker Winter 2012 Career highlights: I have been fortunate enough to work for some of the best companies in the world. Working as a financial analyst at Goldman Sachs taught me the importance of hard work and intellectual curiosity. As a consultant at Bain and Company, I learned the importance of asking questions and thinking creatively about finding solutions. As a community banker, I've been able to put those qualities together to help local businesses achieve their goals. Community involvement: Since becoming a community banker I've had the great privilege of serving for various local organizations including chambers of commerce, local theatres, workforce development boards, and local economic development organizations. Biggest success: My biggest success has been helping to build and grow a great new community bank (First Bank) during a difficult operating environment. We have been able to build our business, add customers, hire new people and generate profits in the face of significant challenges. Dream job: I hope to keep working at First Bank for many years to come. If you weren't doing the job you're doing now, what would you do? I would be looking for a job where I could have a meaningful impact on the organization and on the lives of those they served. For me, it's all about trying to make a difference. Left, Patrick Ryan; right, Paul Fitzgerald. Patrick L. Ryan Age: 36 Title: Executive Vice President and Chief Operating Officer Bank: First Bank Bank location: Hamilton Town of residence: Pennington 4816_Outstanding_7.25x4.75_FNL.qxp:Layout 1 12/7/11 3:52 PM Page 1 Congratulations to our colleague, Jennifer Gonzalez, for earning the New Jersey Bankers Association's "New Leaders in Banking" Award. 1-800-SUN-9066 www.sunnb.com Over 60 NJ locations Member FDIC Winter 2012 New Jersey Banker 37 AT THE END OF THE DAY, YOU WANT RESULTS. SO THAT'S HOW WE BEGIN EACH DAY. When our banking clients have questions, they need the right answer at the right time. So they need lawyers who combine deep legal experience with sound business sense. This is what motivates us to work harder, continually expanding our versatility and pushing the limits of our collective skills. At Riker Danzig, we understand that no matter how much success we have realized, what you're interested in are the results we get today. MORRISTOWN, NJ 973.538.0800 TRENTON, NJ 609.396.2121 NEW YORK 212.302.6574 LONDON AFFILIATE +44 (0) 20.7877.3270 W W W.RIKER.COM Meet Our Endorsed Service Provider It was Never a Matter of If, It was Only a Matter of When By Chuck Daniels and Christian Ericson to varying end-dates for circuit contract renewals, or depreciation expenses from a new phone system, routers and switches. In fact, once the timing is right for banks to finally execute the strategic decision to join BITS, we have heard from more than one CEO, "It was never a question of if we were going to join; it was just a matter of when." By implementing a comprehensive solution in just 12 to 16 weeks, BITS not only eliminates many steps in the due diligence process of obtaining vendors by consolidating services, it saves the internal IT/operations team thousands of hours over the next five years. And to top it all off, BITS provides banks with bottom-line savings of $500 per branch, per month. So how will you know when the timing is perfect? BITS makes it easy by offering a communication infrastructure assessment (CIA), free of charge, identifying all of your existing contractual and equipment commitments related to BITS. Valued at a minimum of $5,000, the assessment establishes, from a financial perspective, an optimal time to join. Furthermore, the CIA pinpoints and recommends any short-term contractual or hardware-related decisions to ensure you are aligned for the perfect timing, even if it proves to be a few years out. Without the CIA, you are likely to keep missing the chance to make the strategic decision in joining BITS, because of factors like circuit renewals and other new telecom investments not compatible with BITS. We encourage you to contact BITS today, to not just find out the hefty amount of money your bank can save � but how soon! n Chuck Daniels is CEO and Christian Ericson is chief marketing officer for BITS. Ericson can be reached at 973-474-1828 or email@example.com. T he BITS family has continued to grow throughout 2011, as we begin to wrap up our seventh year in business. More community banks joined BITS in 2011 than in 2010, bringing our total to 85 banks, 500 branches and 7,500 phones in 15 states � a testament to the value we provide for our community bank customers. Twenty of these banks are in New Jersey. Are you on track to join us soon? Time after time, potential customers tell us that the biggest obstacles they face in joining BITS are the ramifications from the traditional way in which banks spread out telecommunications decisions over multiple years. These can range from anything Upcoming NJBankers Events March 19 - 21 ABA Government Relations Summit Omni Shoreham, Washington, DC March 30 Directors & Managing Officers Conference Renaissance Woodbridge Hotel, Iselin April 3 Women in Banking Conference The Palace at Somerset Park, Somerset April 19 Security Seminar Crowne Plaza Monroe, Monroe Twp. May 30 - June 3 Annual Conference Charleston Place, Charleston, SC June 7 Annual Marketing Conference Location TBA June 11 Fifth Annual Golf Outing to Benefit Financial Literacy Mercer Oaks Golf Course, West Windsor June 19 Tools for a Compliance Officer Crowne Plaza Monroe, Monroe Twp. June 20 - 22 Compliance University Crowne Plaza Monroe, Monroe Twp. June 26 - 27 Washington, DC Regulatory Visit Mayflower Hotel, Washington, DC September 12 - 14 Senior Management Conference Borgata Hotel & Casino, Atlantic City Winter 2012 New Jersey Banker 39 Bank Notes Jim Gould Marty Gallagher Brian Myers Thomas J. Kemly Raymond G. Hallock Martin D. Jessen Gary T. Jolliffe Michael A. Shriner Joseph G. Mulrooney BENEFICIAL BANK Beneficial Bank announced that it has expanded its credit and lending teams. The bank appointed Jim Gould as executive vice president and CLO, Marty Gallagher as senior vice president and COO, and Brian Myers as director of mortgage banking. Gould directs and oversees all of the bank's lending operations in Pennsylvania and New Jersey with a specific focus on growing Beneficial's middle market commercial lending team. He holds a bachelor's degree from Arkansas State University. Gallagher is responsible for overseeing the bank's credit and portfolio management disciplines, with specific focus on enhancing infrastructures to support lending portfolio growth. Gallagher holds a master of business administration and a bachelor's degree from St. Joseph's University. Myers is responsible for directing sales of residential mortgages and oversees the conceptualization of all residential mortgage products for the bank. He holds a bachelor's degree from William Paterson University. COLUMBIA BANK Thomas J. Kemly has been named successor to Raymond G. Hallock, president and CEO of Columbia Bank, who officially retires on Dec. 31, 2011, following a 33-year Columbia Bank career. Hallock will remain a member of Columbia's board of directors. Kemly will begin his leadership on Jan. 1, 2012. Kemly joined Columbia in 1981 as a management trainee. Upon completion of the bank's Management Training Program, he was promoted to accounting supervisor. In 1986, he was promoted to assistant controller; was named controller in 1986, and was appointed vice president in 1988. Kemly was appointed vice president and CFO in 1992 and appointed senior vice president a year later. In 2001, he was appointed senior executive vice president 40 New Jersey Banker Winter 2012 and COO, and was appointed to the board of directors in 2006. A well-known figure in banking, business and community affairs, Kemly actively serves local and charitable causes. He earned an MBA from Fordham University and a bachelor's degree in business administration and psychology from Trenton State College. Hallock joined Columbia in 1978 and served in several senior level positions including vice president, branch administration and senior vice president and funds acquisition officer. He was named executive vice president and chief administrative officer in 1996 and was appointed to the bank's board of directors in 1999. Hallock became president and CEO in 2002. Prior to joining Columbia, he was a CPA with KPMG Peat Marwick for more than 13 years. Hallock earned a bachelor's degree in accounting from St. Peter's College, attended the Graduate School of Savings and Loans at Indiana University, and earned a Degree of Distinction from the Institute of Financial Education. METUCHEN SAVINGS BANK Metuchen Savings Bank Chairman Martin D. Jessen was honored by the YMCA of Metuchen, Edison, Woodbridge & South Amboy as "Citizen of the Century." This award is an important part of the YMCA's yearlong celebration of 90 years of service in the community. MILLINGTON SAVINGS BANK Gary T. Jolliffe, president and CEO, will retire effective Dec. 31, 2011. Michael A. Shriner, COO, will become president and CEO effective Jan. 1, 2012. Jolliffe joined Millington Savings in 1986 as executive vice president and was appointed president in 1990. In 1992, he was also appointed to CEO and became a bank director. Jolliffe served as a member of the board of governors of the NJ League of Community Bankers in numerous positions, including chairman. He has 48 years of banking experience, including nearly 26 years with Millington Savings Bank. He will continue to serve on the board of directors after his retirement. Shriner has been with the bank since 1987, was appointed to the board of directors in 1999 and appointed COO in 2006. He is a member of the NJBankers Operations and Technology Committee. Previously, he was chairman of the Mortgage Steering Committee of the NJ League of Community Bankers, a member of the Residential Lending and Affordable Housing Committee and a member of the Consumer Lending and CRA Committee. He is a graduate of the University of New Hampshire and The National School of Banking (Fairfield University). NORTHFIELD BANK Joseph G. Mulrooney has joined Northfield Bank as senior vice president and CRO. Mulrooney is responsible for the enterprise risk management for the bank. He has over 25 years of bank internal audit experience, including more than 14 years as a chief audit executive. Mulrooney earned a bachelor's degree in accounting from Manhattan College. He is a member of the NJBankers Enterprise Risk Management Committee. continued on page 42 Unparalleled experience serving New Jersey financial institutions Stifel, Nicolaus & Company, Incorporated has been serving banks and thrifts for over 40 years. Since 2000: � Managed or Co-Managed 498 Public and Private Offerings, raising $69.1 billion in capital � Managed 52 Mutual-to-Stock Conversion Offerings, raising $13.7 billion in capital � Advised in 229 Financial Advisory Transactions, totaling $14.8 billion Over 220 Financial Service Companies under research coverage, 67 of which reside in the Mid-Atlantic Region Large retail and institutional sales distribution channel Senior Executive Involvement For more information, contact: Rick E. Maples, Head of Investment Banking (314) 342-2038 � firstname.lastname@example.org Michael F. Barry, Managing Director Head of Financial Institutions Group M&A (212) 847-6458 � email@example.com Robin P. Suskind, Managing Director (973) 549-4036 � firstname.lastname@example.org We have defined the Mid-Atlantic region to include: Delaware, Maryland, New Jersey, New York, and Pennsylvania. The information presented includes transactions effected and matters conducted by Stifel Nicolaus Investment Banking, the Capital Markets Division of Legg Mason Wood Walker, Inc. (acquired on December 1, 2005), Ryan Beck & Co., Inc. (acquired on February 28, 2007), Thomas Weisel Partners LLC (acquired on July 1, 2010), and their respective affiliates. Stifel, Nicolaus & Company, Incorporated and Thomas Weisel Partners LLC are affiliated broker-dealer subsidiaries of Stifel Financial Corp. which are collectively referred to herein under the marketing name Stifel Nicolaus Weisel. Ben A. Plotkin, Executive Vice President, Vice Chairman (973) 549-4025 � email@example.com David P. Lazar, Managing Director (215) 861-7179 � firstname.lastname@example.org member sipc and nyse | www.stifel.com Winter 2012 New Jersey Banker 41 Bank Notes Securities and Exchange Commission Series 7 and 63 licensing requirements and finished all course work requirements for SRA designation of the Society of Real Estate Appraisal Institute. He recently attended a "High Potential Leaders Program" at the University of Pennsylvania's Wharton School of Business. PEAPACK-GLADSTONE BANK Stephen M. Kozuch was appointed to the position of first vice president and co-director of wealth management at PGB Trust & Investments, the wealth management division of the holding company's wholly owned community bank, Peapack-Gladstone Bank. Kozuch joins PGB Trust & Investments from U.S. Trust/Bank of America Private Wealth Management, where he most recently served as market trust director. His career began in public accounting; however, he made the transition to wealth management early, holding positions at Fleet Trust & Investment Services and Citigroup Trust in Palm Beach, Florida, as well as Bessemer Trust in both Palm Beach and New York City, and Arthur Robert S. Monteith Robert Rey Stephen M. Kozuch Peter Crocitto Alan D. Eskow NVE BANK Robert S. Monteith, president and CEO of NVE Bank, will retire in January after 25 years of service with the bank. Robert Rey, executive vice president and CFO, will succeed him as president/CEO. Monteith will continue to serve as a member of the board of directors. Monteith joined NVE Bank in 1985 and was named president and CEO in 1993. Monteith, who received a bachelor's degree from LeMoyne College in Syracuse and an MBA from Rutgers University, spent 15 years with United Jersey Bank before joining NVE. He served on the board of governors of the NJ League of Community Bankers, now the New Jersey Bankers Association and as a member of their Executive Committee. He also served as chairman of the association. Rey has been involved in the banking industry for over 25 years, the last 13 years at NVE Bank. During his tenure, he has held increasing levels of responsibility and currently holds the positions of CFO and COO. Additionally, he serves on the board of directors for NVE. Prior to joining NVE Bank, he was senior vice president and CFO of Mellon Bank. He also worked in bank regulation and supervision with the FHLBNY and a department of the U.S. Treasury. Rey has a bachelor's degree from Rutgers College and received his MBA with a concentration in finance from Rutgers University. He has successfully completed the Increasing efficiency takes more than technology � it takes teamwork to re-engineer bank workflows and processes. That's why COCC offers the best support to help banks do more with the same staff. Client-owned core processing from COCC � We work with you to increase bank efficiency. 42 New Jersey Banker Winter 2012 Andersen & Company in Roseland. With more than 25 years of wealth management experience, he is now part of the team responsible for directing and guiding PGB Trust & Investments wealth advisory services and solutions. Kozuch received his bachelor's degree from Saint Peter's College and attended Seton Hall University School of Law. He is a member of the New Jersey Society of Certified Public Accountants (NJSCPA) and the Estate Planning Councils of Bergen County, and Lehigh Valley, Pennsylvania. He is also a member of the New York State Bar Association-Trusts and Estates Section and the Florida Bar Association. Kozuch is an active member of the Glen Rock community, and enjoys coaching youth sports. He is a past president of the Glen Rock Youth Basketball League and is a parent volunteer for sports activities at Saint Joseph Regional High School, Montvale. PASCACK COMMUNITY BANK Pascack Community Bank has elected Larry Inserra, Jr., to the board of directors of Pascack Community Bank and its holding company, Pascack Bancorp, Inc. Inserra is the president and CEO of Inserra Supermarkets, Inc., a family-owned business founded in 1954. Inserra Supermarkets is one of the largest supermarket chains in the metropolitan area, currently operating 22 ShopRite stores. PWCAMPBELL Andrew C. Johnson has been appointed as national accounts manager, retail communications at PWCampbell. He will be responsible for aligning retail branding strategies with the goals and objectives of clients. He joins PWCampbell with more than five years of experience in servicing the financial institution industry. He holds a bachelor's degree from Washington & Lee University and is affiliated with state leagues and associations. VALLEY NATIONAL BANK Peter Crocitto and Alan D. Eskow have been appointed to the board of directors of Valley National Bank and Valley National Bancorp. As COO and senior executive vice president, Crocitto has played an integral part in Valley's success for over 34 years. He joined Valley in 1977 and has held various positions throughout the bank in consumer lending, retail banking, MIS, business development and operations. Crocitto was promoted to executive vice president in 1996 and assumed the title of COO in 2008. The title of senior executive vice president was added in 2009. Eskow joined Valley in 1990 as a vice president in the financial administration department. He is a licensed CPA in New Jersey and a member of both the American Institute of CPAs and the New Jersey State Society of CPAs. Eskow was designated controller in 1998 and CFO in 2000. His current responsibilities include overseeing the accounting, finance and treasury functions, the investment portfolio, and responsibility for Valley's wealth management division. In 2009, he was promoted to senior executive vice president. WELLS FARGO Wells Fargo & Company was one of four companies selected in the Top Banking Team category by American Banker as part of its annual "Most Powerful Women in Banking" list. Wells Fargo was recognized for addressing diversity in its business plans and for its new executive mentoring program that grooms high potential candidates. Among the 32 women from across the country included on the Wells Fargo Top Banking Team were three from New Jersey: Michelle Y. Lee, Wells Fargo's regional president for the Northeast; Lucia DiNapoli-Gibbons, regional president for Northern New Jersey; and Brenda Ross-Dulan, regional president for Southern New Jersey. n Some say success is found. At EisnerAmper we know success is made. EisnerAmper Banking Group has the expertise and resources to provide a wide array of services to the banking industry. Our professionals offer the following services, Internal Audit, Regulatory/404 Compliance, Fiduciary & Trust Operations, Bank Secrecy Act & Anti-Money Laundering, IT, Tax Services and Consulting (ERM). For more information on how EisnerAmper can meet your banking needs contact: Bridget Day, CPA Partner, EisnerAmper LLP 732.287.1000 email@example.com www.eisneramper.com EisnerAmper LLP Accountants & Advisors Independent Member of PKF International New York | New Jersey | Pennsyl vania | Cayman Islands Winter 2012 New Jersey Banker 43 Bank Shots AMBOY BANK � Kicking off with a "spooktacular drive" on Halloween, all 23 offices of Amboy Bank collected food and household items for food banks in their branch areas. Every Amboy office manager has selected a food bank to collect for in their community. Key partners include Elijah's Promise, the Old Bridge Food Bank and the Samaritan Center. Pictured, from left to right: Gregory Scharpf, Amboy Bank senior vice president and chief retail banking officer with daughter Katie "Lamb Chop" Scharpf, Marilyn Schamber and Annelie Kulcsar. BANK OF NEW JERSEY led a food drive for the Center for Food Action (CFA). Bank employees spent the day at the Stop & Shop supermarket in Dumont and collected more than 15 shopping carts full of much-needed items. The food was then donated to CFA, which provides emergency food packages and essential services to those in need living in northern New Jersey. Pictured from left to right are the following Bank of New Jersey participants: Ryan Petrillo, assistant branch manager of the West Street, Fort Lee branch; Domenic Bussanich, teller at the Palisade Avenue, Fort Lee branch; and Anna Maria Alberga, vice president and branch manager at the Main Street, Fort Lee branch. Bergen County's United Way Director of Development, Cheryl Moses, and members of BOILING SPRINGS SAVINGS BANK celebrate the bank's $10,000 donation to Bergen County's United Way Compassion Fund to benefit flood victims. The Compassion Fund helps to get individuals and families back on a stronger financial track that have been affected by the current economic crisis and is a leading provider of direct relief for victims of the recent flooding throughout Bergen County. Pictured, from left to right: J. Christopher Ely, Boiling Springs' vice chairman of the board; Kenneth Grimbilas, chairman of the board; Moses; and Robert E. Stillwell, Boiling Springs' president and CEO. 44 New Jersey Banker Winter 2012 NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE Commissioner Tom Considine spent a morning at Franklin High School with a group of Junior Achievement High School Heroes discussing finances � an avoided topic between parents and children in most homes today. Considine, through examples from his personal life, explained to students that how they manage their money today will affect the opportunities they will have as adults. He talked about credit card debt, credit scores and interest rates, loans and the economy. V. Barry Corridon was the recipient of the Warren Hill Award at the NJBankers Senior Management Conference. The award, named for Warren Hill, the NJ League's president from 1966 � 1975, recognizes individuals who have significantly contributed to NJBankers through its committee structure. Presenting the award is John E. McWeeney, Jr., president and CEO, NJBankers (left), and Corridon, senior vice president, HUDSON CITY SAVINGS BANK. FIRST HOPE BANK held a ribbon cutting ceremony to celebrate the completion of a solar field behind their Blairstown office. The ceremony featured members of the community, the team that constructed the nearly two-acre project and First Hope board members and associates. The solar field will offset nearly 100 percent of the Blairstown office's energy consumption on a yearly basis and will reduce its carbon emissions by 8.6 million tons over the next 25 years. Pictured: Dan Beatty (left), COO of First Hope, shakes hands with Kurt Gewecke, project general contractor and president of KG Companies of Sparta. For 30 years, we've been alongside our participants through calm seas and rough waters. Today you are faced with new regulatory developments and more uncertainty than ever before. As we face the unknown together, know that we'll be by your side as an advocate and trusted advisor � empowering you to make smart decisions and build a successful debit program. We see debit opportunities in everything we do, because it's all we do. Profit from our passion. Stay informed by visiting our Durbin Amendment Resource Center at pulsenetwork.com/debitregs Collaboration Professional Development Customer Service A Discover Financial Services Company pulsenetwork.com/debitregs �2011 PULSE Winter 2012 New Jersey Banker 45 Bank Shots MILLINGTON SAVINGS BANK � Banking industry associates, local government dignitaries and friends recently gathered to commemorate Millington Savings Bank's 100th anniversary. Special recognition was also given to Gary Jolliffe, who will be retiring at the end of the year. Pictured at the celebration are, from left to right: E. Haas Gallaway, Jr., MSB director; James M. Meredith, NJBankers; W. Scott Gallaway, MSB director; Fred J. Rossi, MSB director; Michael Shriner, executive vice president and COO, MSB; Bridgewater Mayor Patricia Flannery; Albert N. Olsen, MSB board chairman; Gary T. Jolliffe, MSB president and CEO; Howard Turbowitz, Bridgewater Township economic development officer; Thomas G. McCain, MSB director; John E. McWeeney, Jr., NJBankers; Gordon Ur, TICIC; and Lou Bringuier, TICIC. FREEDOM BANK, headquartered in Oradell, announced the opening of their second location in Guttenberg. C. Mark Campbell, Freedom Bank president and CEO, indicated that the new branch fills a void in Guttenberg and neighboring communities and that the entire staff is bi-lingual (English/ Spanish) so customers will enjoy immediate service free of language barriers. While the branch opened its doors in midNovember, a larger grand opening celebration will be held in the spring. NORTH JERSEY COMMUNITY BANK marked the grand opening of its eighth branch with a ribbon cutting ceremony. At the ceremony in Holmdel, pictured from left to right, are Executive Vice President and COO Laura Criscione, Chairman and CEO Frank Sorrentino III, Holmdel Mayor Patrick Impreveduto, and Vice President and Holmdel Branch Manager Carleen Lombardi. OCEAN CITY HOME BANK recently presented Walk for the Wounded, a three-mile walk on the boardwalk. Over 500 people participated in the walk that raised $62,000 to support Operation First Response, a nonprofit group that provides both financial and emotional support to wounded soldiers returning home from overseas. A ceremony was held just prior to the walk honoring our military heroes. Rep. Frank LoBiondo spoke at the ceremony, and walked in the event. PEAPACK-GLADSTONE BANK celebrated its anniversary commemorating 90 years of community banking. Founded on Sept. 21, 1921, the bank has grown from a single rural branch adjacent to Hill's Hardware Store in Gladstone into an institution with 23 unique branch locations scattered throughout Hunterdon, Middlesex, Morris, Somerset and Union counties. Peapack-Gladstone Bank's 90th anniversary grand prize winner, Judith G. Davis (left) stands at the bank's Pottersville branch with branch manager Tracey Goodroad. Dominick Mazzagetti, president and CEO of ROMASIA BANK (third from left) is joined by Angel Denis, CFO and Christina Hungrige, senior vice president and CLO, to welcome a delegation of Japanese bankers who visited the bank to explore and learn more about community banking in the U.S. 46 New Jersey Banker Winter 2012 If Zach lives on his mobile phone and your bank doesn't offer mobile banking, how long will it take Zach to switch banks? Maybe he already has. The good news? Evolving to mobile services is easier than you think. All you need is the right partner. Diebold can help you scale your offering and provide marketing support. And we can do it all � in any technology format. If you're not offering mobile banking, does that make you an immobile bank? Zach might think so. diebold.com/moreinfo THE POWER OF AN ADVANCE One advance can help fund hundreds of neighborhood needs. FHLBNY advances are a reliable liquidity source for our member lenders to finance home mortgage, small business, and economic development activities. The Provident Bank, an FHLBNY member, tapped an advance to help provide construction funding for Spruce Senior Housing in Dover, New Jersey. The three-story, 90-unit senior housing complex offers its residents a full suite of amenities, including health screenings, landscaped recreation areas and a community garden, as well as access to local retail and commercial districts. This project helped revitalize the neighborhood and increased the availability of affordable housing for seniors in Morris County. Contact us to see how the power of an advance can improve your community. 101 Park Avenue, New York, NY 10178 | (212) 441- 6700 | www.fhlbny.com Note: The Federal Home Loan Bank of New York uses the word "advances" to refer to the loans it provides to our member lenders.