Banking New England Sep/Oct 2017

SEPT/OCT 2017

INSIDE: NEW PRESIDENT AT MASCOMA SAVINGS BANK STEERS COMMUNITY OUTREACH

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS PLUS: RISK MANAGEMENT PITFALLS IN BANK M&A CULTIVATING A WELL-FUNCTIONING TEAM STRUCTURING BANK AND FINTECH COLLABORATIONS

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A P U B L I C AT I O N O F T H E WAR R EN G R O U P

CONTENTS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

04

Risk Management Pitfalls in Bank M&A

06

Banking on Savings and Security

08

The Discipline of Growth

9

DUE DILIGENCE

16

MARIJUANA INDUSTRY FINANCING

SAVINGS AND SECURITY TOP PRIORITIES DATA ANALYTICS

The Top Loan and Mortgage Originators in Massachusetts

10

BANK PROFILE

New President at Mascoma Savings Bank Steers Community Outreach

12

Cultivating a Well-Functioning Team

14

Structuring Bank and Fintech Collaborations

18

PERSONNEL FILE

20

COMMUNITY GOOD WORKS

EFFECTIVE COLLABORATION WORKING TOGETHER

TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins EDITORIAL EDITORIAL & MEDIA RELATIONS DIRECTOR Cassidy Murphy EDITOR Malea Ritz ASSOCIATE EDITOR Mike Flaim

www.thewarrengroup.com

22

INDUSTRY NEWS

©2017 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced

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CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini COMMUNICATIONS MANAGER Mike Breed SENIOR BRAND DESIGN MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Elizabeth Rennie & Tom Agostino

BANKING NEW ENGLAND

3

DUE DILIGENCE

Risk Management Pitfalls in Bank M&A

BY KRIS ST. MARTIN

Kris St. Martin has more than 23 years of direct bank experience in audit, procedures, IT security, lending and board training.

He has held many positions in the banking industry including senior lending officer, president, CEO and board chair. St. Martin has been providing risk mitigation services to the financial industry since 2009, including cyber, directors and officers and crime bond insurance.

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BANKING NEW ENGLAND

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egulatory burdens, customer demands and new technologies will continue to encourage smaller community and regional banks to consolidate in response to this shifting landscape. According to S&P Global Intelligence, over 90 bank deals have taken place through the first five months of 2017 at a total deal value of $40 billion.

In spite of due diligence and best intentions, merger and acquisition (M&A) activity invariably heightens the risk of liability and the threat of shareholder lawsuits claiming some degree of economic harm due to a merger. It is important to note that board members can be sued for actions they took on behalf of the bank even before it was acquired.

In such suits, attorneys representing shareholders or other stakeholders will list any number of issues or conflicts to support plaintiff positions. Why was only one valuation made when determining the share price of the company being acquired? Why didn’t the board market the bank to a wider array of potential suiters?

Why did no one realize that a board member’s brother was selected to conduct the valuation? Why did the company being acquired choose not to disclose hidden liabilities on the balance sheet?

To minimize deal-related risk and maximize deal value, sellers and buyers need to develop a comprehensive and organized plan and agreed-upon approach that includes aggressive due diligence around previous, current and potential future risks. Potential liabilities are often overlooked in the due diligence phase, particularly when speed is a factor in closing the deal. Best practices that ensure the process is successful include proper and consistent communication with board members, company officers and shareholders, and inclusion of risk consultants on the advisory team managing the deal.

Keeping everything transparent throughout the merger process goes a long way toward lowering the risk of incurring post-deal liability. No one wants to be accused of being sold a bill of goods. It is critically important for each member of the due diligence team to share findings with the full group and all decisionmakers in the acquiring company need to be fully aware of the liabilities that might exist. In most cases where misrepresentation is alleged, sellers have not placed themselves in that position intentionally. Often transmission of inaccurate information through poor communication channels is the culprit. Acquirers will want to determine what legal and financial exposures

will accompany the acquisition and which exposures are covered by the acquirers insurance. Director and officer (D&O) liability generally has a six-year statute-of-limitation. The acquiring bank typically takes responsibility for actions from the closing date going forward. Therefore, the acquired bank will often purchase a “tail” or “run-off ” policy to protect their directors and officers for their actions occurring prior to the closing date. These policies will allow the sellers to have protection for up to six years after the sale.

Enlisting the assistance of experienced risk advisors during a merger or acquisition seems an obvious best practice, but for many smaller banks, especially those outside of major metropolitan areas, the temptation is to rely on longstanding legal, accounting and risk consulting relationships. Mergers are complicated affairs. Compared with a decade ago, there is greater potential today for unseen risks that could hinder an otherwise sound merger or acquisition.

Having the right insurance policies in place to mitigate risk is an important complement to aggressive due diligence. Directors and officer liability insurance has proven its handiness for bank mergers. D&O insurance provides coverage for officers and board members for damages arising from settlements and defense costs in lawsuits alleging various wrongful acts frequently charged in shareholder’s suits.

A key to addressing D&O liabilities in an M&A context is to leave no ambiguities on the table.

Bank officials should review their existing insurance coverages prior to the start of any serious M&A discussions held at the board level. If a merger ends up in litigation, board decisions that were made early on in the process may be cited in a law suit. It isn’t just a matter of obtaining coverage that will start when a merger is finalized. It is also important to understand existing policies for both the buyer and seller in case any issues from a company’s past are unearthed during or after the merger process. Also, the posttransaction risk profile of the combined entity may be different from that of the separate organizations pre-transaction.

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SAVINGS AND SECURITY

Banking on Savings and Security

BY RAY BELANGER

Ray Belanger is president/ CEO of Bay Copy, based in Rockland, Massachusetts.

Ray Belanger

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sk any bank branch manager to define “banker’s hours” in 2017, and you’ll most likely hear a description of branches which stay open until 6 p.m., are open on weekends and have a 24/7 component for ATM/online banking.

What a world of difference between today and several decades ago when “bankers’ hours” defined a cushy job, where the branch rarely stayed open past 3 p.m.

Just as the ways in which banks do business has changed (from the old-fashioned passbooks to today’s online services), so too has the technology by which banks generate documents, as well as protect and store information. The old practices of throwing out paper documents with vital financial information have given way to intricate shredding systems which assure everyone from banking officials to customers that vital information remains secure.

And, as banks evolve more and more toward “paperless,” there are other changes in the industry as well. Increasingly, directors and trustees are scrutinizing bottom lines for banking operations, while also looking over their shoulders to make certain that information is protected securely. One data breach becomes a public relations nightmare.

Faced with the challenges of protecting information and lowering costs to produce paper documents, banks increasingly may seek to adopt 6

BANKING NEW ENGLAND

the MPS (Managed Print Services) means of generating their paper documents.

Banks and financial institutions spend up to 3 percent of annual revenue on document output, underscoring the need to track equipment usage, reduce costs and increase efficiencies. This has given rise to a major shift in how organizations generate documents and communicate internally and externally.

Within that 3 percent, MPS can reduce the institution’s costs by 15-20 percent. So if an institution spends $200,000 annually to generate paper documents, the right program will save a bank up to $40,000.

It looks at the per-page cost as the bottom line, in contrast to the final price point of office equipment – and all costs associated with leasing/owning and using printing and imaging equipment, including maintenance and ongoing support – an element that is of particular significance for lending institutions with multiple branches. Print management software tracks the number of prints each piece of equipment uses and produces reports, that help manage for increased efficiencies.

While there is an abundance of fairly inexpensive desktop printers, copiers and multifunctional devices at virtually every “big box” store, when the cost of replacing cartridges

is added to the mix, the $129 printer can end up costing 7 cents or more per page. And with many lending institutions now using color when copying, it becomes even more critical to have current technology that allows the control and management of usage.

It begins with an initial in-depth analysis of an institution that evaluates the existing printer fleet, current costs, operational bottlenecks and IT department time spend. Then it’s an evaluation of at all phases of document generation, from the cost of the equipment and supplies through necessary service support. And it helps institutions take an objective look at the amount of internal IT resources it is using to support its users printing equipment.

The right configuration could remove a lot of printing and document generating devices, and streamlining the flow of communication.

Many institutions have multiple and different types of printers, toner, copiers and scanning units. Operating them independently can be very costly. With a plan in place for fewer machines, but which are used efficiently, there can be other saving initiatives.

Simple strategies such as going from a single sheet of paper to duplexing can not only save costs but contribute to a greener culture.

And, security is critical! With increasing concerns about data breaches, information must be secure and compliant. Many of the copying and printing devices have hard drives and can store information, which in turn must be overwritten or deleted before the machine is returned to the leasing company in favor of a newer piece of equipment. It’s critical to have a plan in place to be certain that information stored on a printer or copier hard drive is secure, through being over-written or in some cases through having the hard drives shredded.

An increasingly important component of an MPS system is an in-place tracking software program that enables the provider to monitor clients’ systems remotely, alerting them to potential misfeeds or low toner, thereby averting work stoppage.

MPS is an effective mechanism to reduce waste, recycle paper, ink and other resources. It is a “green” document solutions approach that is not only cost effective, but can also lower the carbon footprint of a healthcare facility.

And in the banking industry in particular, where sensitivity and protection of equipment is essential, it makes sense to have the most efficient and secure means of generating documents – as well, of course, as a secure system. BNE

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7

TOP PRIORITIES

The Discipline of Growth

BY TOM LONG Tom Long is the principal at The Long Group LLC. For more than 20 years, The Long Group has been providing tactical guidance and insights to financial institutions through strategic planning, customer and market analytics, expansion planning, staffing and productivity analysis and marketing. The Long Group’s ongoing research places the firm as a thought leader within the industry. Tom Long can be reached at tomlong@ longgrouponline.com or at (603) 424-5664.

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reating operating leverage or growing revenue faster than expenses is the essence of business. With compressed margins the new normal, lifting or accelerating the growth trajectory is an economic necessity. In a thin margin business, stimulating top line revenue growth is a priority for every financial institution.

The Law of Diminishing Returns

An organization’s ability to grow is impacted by two factors, sales volume and attrition.

Consider that there is a sales and attrition dynamic within each product line determining not only the composition of the balance sheet but its growth rate as well. Furthermore, every product line and market that the bank competes for business can be plotted on a growth curve.

Uncovering benchmark statistics will allow the financial institution to anticipate the challenge.

Generally, as each product line portfolio grows, should the attrition rate remain unchanged, the absolute volume of business that is required to be replaced expands. This attrition volume will eventually approach or exceed annual sales volume, compromising growth. Stagnation arises when attrition equals sales volume while contraction occurs when attrition exceeds sales volume.

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BANKING NEW ENGLAND

The Growth Paradigm

The core activities to ensure growth include improving the stability of the account base, competing in new product lines, or entering new markets to leverage the existing product set. For the last 24 years, The Long Group has been surveying both consumers and businesses regarding financial service usage (ownership) and behavior (the access and maintenance of their relationship), capturing evolving trends.

Here is what the proprietary database suggests as financial institution priorities.

The Advantage of Focus: Improving Retention

At the typical financial institution, four months of the year are spent on growth. The sales volume acquired over the remaining eight months of the year is invested in replacing business lost through attrition. Reducing attrition is a quantifiable exercise. Specifically, customers that maintain a one or two account relationship generate churn. Therefore, the average size of a client relationship determines longevity with client tenure expanding by 50 percent among those households that maintain three or more CONTINUED ON PAGE 15

DATA ANALYTICS

New Data Analytics Available for Readers of Banking New England

I

n addition to its publishing division, The Warren Group, publisher of Banking New England, also has a data product and analytics division.

Presented here is part of its analysis of the New England marketplace, specifically Massachusetts; analysis from Maine, New Hampshire and Rhode Island will appear in subsequent issues of the magazine.

Here are the top three loan originators for six of Massachusetts’ counties, along with the institution they represent and their ranking in the previous year. Here too are the top three institutions for mortgage origination and their rankings at the same time last year.

Both data sets are for the second quarters of 2016 and 2017 and include all residential loans, both purchase and refinance, for all residential loan categories (single-families, condominiums and twoand three-families). HELOC and home equity loan products are not included in the rankings. Loan originator rankings are derived from The Warren Group’s Loan Originators Module; lenders are derived from the Mortgage Market Share Module. For more information please visit www.thewarrengroup.com/business/data-solutions, email customerservice@thewarrengroup.com or call (617) 896-5388.

BNE

Top Loan Originators Essex

Middlesex

Norfolk

Plymouth

Worcester

Berkshire

Top Mortgage Originators

2017

2016

Name

Institution

2017

2016

Institution

1

1

Thomas G. Toland

Salem Five Mortgage Co.

1

1

Salem Five Mortgage Co.

2

n/a

Ryan Brosnahan

Salem Five Mortgage Co.

2

2

Guaranteed Rate Inc.

3

3

Elena E. Campbell

Residential Mortgage Services Inc.

3

5

Mortgage Network Inc.

1

1

Shant Banosian

Guaranteed Rate Inc.

1

1

Salem Five Mortgage Co.

2

6

Andrew Marquis

Guaranteed Rate Inc.

2

2

Guaranteed Rate Inc.

3

2

Marcus J. Sohn

Leader Bank NA

3

5

Mortgage Network Inc.

1

n/a

Tara Brady

Quincy Credit Union

1

3

Guaranteed Rate Inc.

2

1

Jennifer Bloom

Quincy Credit Union

2

4

Bank of America NA

3

3

Brian P. Gallagher

Norwood Cooperative Bank

3

2

Leader Bank NA

1

n/a

Deborah S. Pages

Rockland Credit Union

1

3

Rockland Trust Co.

2

15

Ryan J. D. Morgan

Mortgage Corp. East III

2

5

Residential Mortgage Services Inc.

3

1

Andrew Van Dyk

William Raveis Mortgage Co.

3

4

Quicken Loan Inc.

1

2

William B. Murphy

Fairway Independent Mortgage

1

3

Fairway Independent Mortgage

2

5

Brian M. Moore

Fairway Independent Mortgage

2

4

Guaranteed Rate Inc.

3

8

Kelly J. Lizotte

Security First Mortgage Funding

3

2

LoanDepot.Com LLC

1

12

Robert Salinovici

Greylock Federal Credit Union

1

3

Adams Community Bank

2

1

Jamie Pollard

Academy Mortgage Corp.

2

1

Greylock Federal Credit Union

3

3

Erin Carlotto

Greylock Federal Credit Union

3

2

Lee Bank

Essex

Middlesex

Norfolk

Plymouth

Worcester

Berkshire

Figures are for loans originated in 2Q2017 and 2Q2016 Top Lenders ranked by volume of loans; Originators ranked by number of loans All rankings include purchase and nonpurchase loans for all residential categories HELOCs and home equity loans are excluded Source: The Warren Group’s Loan Originator and Mortgage Market Share modules

BANKING NEW ENGLAND

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PROTECTING BANK PROFILEVULNERABLE CLIENTS

New President at Mascoma Savings Bank Steers Community Outreach

BY LINDA GOODSPEED

C Clayton R. Adams President & CEO Mascoma Savings Bank

10 BANKING NEW ENGLAND

layton R. Adams sees many similarities between his old job as president of a national retail company and his new job as president of New Hampshire’s largest bank.

“I absolutely have a retail perspective,” explained Adams, former CEO of glassware maker Simon Pearce of Quechee, Vermont. “I came from a business that didn’t have branches and online banking. We had retail stores and e-commerce.

Our customer base wanted to be served where they want, when, how they want. It’s no different from banking – mobile devices, offices, bank locations, call it omni-banking. The adoption of technology is going up each year; in-branch transactions are going down. We have to accept that and listen to the voice of the customer. I think the regulatory environment the last several years allowed many banking institutions to take their eye off that. The voice of the customer is paramount. It gets back to remaining relevant.”

Adams, the first new president and CEO in 27 years at Mascoma Savings Bank, is well-suited to keep the Granite State’s largest mutual bank relevant.

A graduate of Dartmouth College and its Amos Tuck School of Business, Adams is an experienced CEO. In addition to leading Simon Pierce for the last five years, he spent a decade with White River Junction-

based strategic consulting firm RSG Inc, and is former chairman of Vital Communities and Delta Dental Plan of Vermont. Although new to banking, he is not new to Mascoma, having spent the last six years on the board.

“I relish the opportunity to lead,” said Adams, who took over Mascoma in January from Stephen F. Christy, president since 1990. “I feel strongly about the role community banks play in society and making communities stronger.”

Mascoma Savings Bank, headquartered in Lebanon, has been making communities stronger since 1899. Today, it has $1.5 billion in assets and 27 offices up and down both sides of the Connecticut River in New Hampshire and Vermont. It has 340 employees, two loan production facilities, another $300 million under management and a property and casualty insurance business.

Northern New England is a dynamic and competitive banking environment with several strong community banks, regionals and credit unions. In the last year, two major mergers – Bar Harbor, Maine and Lake Sunapee, New Hampshire; and Community Bank, New York and Merchants Bank, Vermont – have rocked the region.

In addition to being New Hampshire’s largest bank with a total loan portfolio of about $1.3

billion evenly split between residential and commercial loans, Mascoma has further distinguished itself as the only bank in its market with a Community Development Financial Institution (CDFI) designation. As a result, Mascoma can receive New Markets Tax Credits (NMTC) allocations from the U.S. Treasury CDFI Fund to direct capital investment into underserved communities.

Since 2015, Mascoma has received two rounds of funding totaling $105 million, and has recently applied for a third round.

“First and foremost, the CDFI designation allows us to fulfill our mission as a community bank, and, in particular, serve underserved communities,” Adams said. “The program is primarily for job creation. We’ve had some success in parts of our market that have not seen job growth. The program also helps us as a source of non-interest income. And competitively, it helps us distinguish ourselves.”

Among the projects Mascoma has helped fund are a new state-of-the-art steel fabrication plant in Berlin, New Hampshire, a food co-op, an automotive group and has several more projects in the pipeline.

“If they all close, we will be fully subscribed,” Adams said.

Mascoma was also the first mutual bank in New Hampshire and Vermont to form and fund a charitable foundation (1988).

Since then, the Mascoma Community Foundation has contributed nearly $4 million to local charities and nonprofits, including $937,000 in 2016. This year, Mascoma started a volunteer time off program that gives employees two paid days off annually to volunteer in their communities.

“I view it as a catalyst to get people involved in their communities, if they are not already,” Adams said.

Another of Adams’ first initiatives was to hire a chief information officer – someone with a software background, rather than banking – “We wanted that perspective,” Adams explained. “And we have the scale to do it.”

He said the flip side of technology – the bank’s branch network – “will look different tomorrow than it does today, whether that means expanding in different places or finding different ways to serve customers in existing communities, it all gets back to being relevant down the road.”

One of the biggest challenges facing Mascoma and other northern New

England banks is demographics. Maine, New Hampshire and Vermont are among the oldest states in the country, all experiencing alarming losses of young people.

“Demographic trends are affecting everything from recruitment to new business,” Adams said. “With the exception of certain markets, growth is flat or declining in most of our region.”

Increased regulation is another challenge, but Adams said being new to banking gives him a different perspective.

“I have nothing to compare it to. I don’t know what it was like before,” he said. “My view is it’s just something we have to adapt to.

With our scale and products, New Markets program, commercial lending, retail lending and products, technology and people, we have a lot to offer customers and communities.” BNE

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603.424.5664 • tomlong@longgrouponline.com BANKING NEW ENGLAND

11

EFFECTIVE COLLABORATION

Cultivating a Well-Functioning Team

BY ANGIE O’DONNELL

Angie O’Donnell is an executive coach and cofounder of 3D Leadership Group, a Boston-based leadership development firm. For 15 years, she has coached individuals and teams, and her clients have included c-suite executives, physician leaders, scientists, engineers, entrepreneurs and family-owned businesses. For more information, please visit www.3dleadershipgroup.com.

Angie O’Donnell

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s a financial executive, you probably find yourself pulled in multiple directions all day long. To achieve what needs to get done, you have to rely heavily on your team to execute on both the long and short-term objectives. Given this, it is vital that your team is strong and well-functioning, and agile enough to keep pace with constant organizational change.

But highly functional teams don’t just “happen” – they require intentional focus and attention on a regular basis from the leader – and while this may seem like another daunting task to add to your list, the payback is worth it. In fact, some research indicates that well-functioning teams are up to 30 percent more productive than average teams.

In my work with teams over the years, one of the most common things I hear leaders say is: “My team is a group of highly qualified professionals and they can figure it out.” If this was as easy and obvious as it sounds, the team effectiveness industry wouldn’t still be growing!

Evidence of this is the September issue of Harvard Business Review where the lead article is dedicated to avoiding team burnout. The reality is that cultivating a well-functioning team, whether it be a soccer team or a loan origination team, requires that the team act collectively, and not as just a group of individual subject matter experts. As the leader, it will force you to flex your style to become more facilitative and less authoritative, so that the team can learn to function effectively without your constant guidance. When a team can achieve this kind of independence from the leader and greater peer-to-peer interdependence, the team hits its stride.

We’ve developed a team effectiveness framework that guides teams through a day-long process of thinking collectively, with plenty of experiential learning, and can be done with or without the team leader.

The framework is called PRIMED, which stands for purpose, roles and responsibilities, information

sharing, measurable goals, engagement rules and decision making. Intuitively, the PRIMED framework probably makes sense to you, but our experience is that common sense does not equal common practice when it comes to teams. They get it intellectually, but they’re not disciplined in the practice of team effectiveness behaviors, and the list of deliverables will dominate the team’s time and energy.

As an experiment, ask everyone on your team to send you an email with a one-sentence summary of the purpose of the team. You may be surprised at the lack of alignment in what seems to be an easy request, and one that you believe should be obvious to everyone.

Too often, we see that the purpose statement is overly simplistic like: Hit our revenue goals, and doesn’t reference any qualitative or behavioral aspects of teams that have great reputations internally. If you follow or play sports, you know that common purpose is a critical aspect of every successful sports team, yet we often make the mistake of assuming the purpose is understood and shared among team members.

Once purpose is clear and agreed upon, the team can cascade that to the rest of the elements of the PRIMED framework by working through a set of guiding questions and quick team exercises.

The most difficult part for many teams is defining their Engagement rules, which includes defining the behaviors that won’t be tolerated on the team and how the team will approach members who violate the engagement rules. Teams may also struggle with how they will resolve conflicts that arise among team members, but the struggle will be worth it when the team learns to defuse interpersonal tensions that make them uncomfortable without triangulating with the leader. These are aspects of healthy team dynamics that allow the team to focus their collective intellectual horsepower on the business goals, and not get mired down in toxic team behavior.

Cultivating a well-functioning team is an on-going leadership imperative as team members change, team purpose shifts, and organizational change occurs.

You may want to use a framework like PRIMED to refresh a team, launch a team or take a team to a new level of greatness. All teams like to win, and to be perceived as the team that everyone else would like to be part of; this creates a positive team mood and the needed optimism when the team is struggling. As the leader, you don’t have to provide all the inspiration – the team can create its own environment if they have the right tools and some space to cultivate a positive team culture. Imagine the business impact of your team being 30 percent more productive, and having a reputation as the best team to be part of. BNE

ALAN DeTOMA

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As we continue to grow, who better to lead our northern expansion than Alan DeToma, a New England native himself with over 20 years invested in the design/build industry with financial institutions.

For a complete listing of PWCampbell’s products and services, please contact Alan at alan.detoma@pwcampbell.com or 508.918.2428 or visit www.pwcampbell.com

WORKING TOGETHER PROTECTING VULNERABLE CLIENTS

CONTINUED FROM PAGE 6

Structuring Bank and Fintech Collaborations

BY STANLEY V. RAGALEVSKY AND ROBERT M. TAMMERO JR. Stanley V. Ragalevsky is a partner and Robert M. Tammero Jr. is an associate in the Boston office of K&L Gates LLP.

Stanley V. Ragalevsky

Robert M. Tammero Jr.

14 BANKING NEW ENGLAND

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ome bankers view the rapid rise of “fintech” as an existential threat to traditional banks, especially community banks. But while fintech surely is changing financial services, it is also creating new opportunities for banks. For fintech companies, banks are potential partners with a loyal customer base, stable and inexpensive funding and extensive infrastructure to support financial transactions and regulatory compliance.

For banks, fintech companies can be partners that help provide the technology and innovation that bank customers now demand. Given these potential synergies, it is no surprise that the pace of bank and fintech collaboration is growing exponentially.

Structuring a collaboration between a bank and a fintech company can be a substantial and complex undertaking. In addition to the traditional business considerations for any investment, joint venture, licensing or business combination transaction, there are significant additional legal and regulatory considerations for both the bank and the fintech company when the two decide to “partner” in some way.

The business of banking is heavily regulated in order to protect the public. A fintech company cannot simply decide to go into the banking business without coming into contact with the bank regulatory system. Likewise, a bank may not establish a significant third-party relationship or invest in a business without complying with applicable banking laws and regulations. So what are the options for a fintech company and a bank considering a collaboration?

As an initial step, the bank and the fintech company should determine what they hope to achieve from the collaboration. Relevant considerations include: What are the business objectives that each seeks to address by collaborating with the other? Is the bank merely looking to purchase a product or service from a vendor, or would it like to establish an ongoing relationship with a fintech company in which the bank has an ownership interest? Is the fintech company looking to the bank as a potential customer, investor or partner to help bring its product or service to market, or some combination of these? Will the fintech company provide products or services exclusively to the bank or to other (perhaps competing) banks as well, and is

this expected to change over time?

On one end of the collaboration spectrum is the traditional third-party vendor arrangement where a bank engages a fintech company to license or provide a product or service in exchange for fees. A bank’s relationship with its core processor is an example. Such arrangements are typically governed by a written contract that sets forth the respective rights and obligations of the parties.

Regulatory guidance in this area focuses primarily on the bank’s due diligence, selection and ongoing oversight of the third-party relationship and associated risk management principles, policies and procedures.

On the other end of the collaboration spectrum are situations in which a bank makes an equity investment in fintech – that is, to have some manner of economic rights or control with respect to a fintech company or its technology.

The maze of legal and regulatory requirements and restrictions for this type of collaboration can be difficult to navigate. It is important for both parties to get the structuring right - the bank due to regulatory expectations, and the fintech company due (often) to limited resources and runway.

Many banks are owned by a bank holding company. Those that are may consider structuring their investment in a fintech company through a nonbank subsidiary of the bank holding company.

The Bank Holding Company Act allows bank holding companies to own or control non-banking companies that are engaged in certain activities that are closely related to banking. If the fintech company is not engaged in activities that are permissible under the Bank Holding Company Act, then any investment by the bank holding company must be non-controlling. “Control” by a bank holding company over a fintech company subjects it to regulation, supervision and examination by the Board of Governors of the Federal Reserve System. Most fintech companies would want to avoid this. Furthermore, if a bank holding company makes a controlling investment, the bank holding company must monitor the activities of the fintech company to make sure they remain permissible, or it must negotiate contractual provisions that prevent the fintech company from engaging in impermissible activities (or, ideally, do both). For these and other

business reasons, such investments are often structured to be noncontrolling.

In the case of a bank without a holding company that wishes to make an equity investment in a fintech company, generally the fintech company’s activities must be activities that would be permissible for the bank to conduct directly under applicable law.

National banks have broad authority under the National Bank Act and OCC policy to engage in electronic activities that are functionally equivalent to or a logical outgrowth of a recognized banking activity. “Wild-card” state banking statutes allow statechartered banks to engage in activities that are permissible for national banks. Under Massachusetts law, for example, Massachusetts state-chartered banks generally may engage in activities that are permissible for national banks upon notice to the Massachusetts Commissioner of Banks.

As a corporate structuring matter, a bank or a bank holding company may make an investment either in a fintech company directly or in an entity created to facilitate the collaboration – either to form a joint venture or partnership with the fintech company or as a special purpose entity owned by the bank or holding company and formed to hold its investment. Legal, tax, and accounting considerations may cause the parties to favor one structure over another. The manner and scope of the investment will dictate the initial regulatory requirements, such as whether a

PROTECTING TOP PRIORITIES VULNERABLE CLIENTS

CONTINUED CONTINUED FROM FROM PAGE PAGE 08

balance sheet account relationships with the institution. While automating sales production has strategic benefits, the typical financial institution remains in search of an executable plan to expand share of wallet.

Improving Market Penetration

The branch is rapidly morphing from a transaction center to a sales center with many financial institutions unprepared for this opportunity. Often financial institutions operate within specific branch markets without the knowledge of focus. Knowing the product lines that will contribute to each branch’s growth is essential. Establishing feasible, realistic and appropriate product line sales volume frames expectations. In addition, creating a plan to capture the identified opportunity produces accountability. It starts with the knowledge necessary to generate the strategy and focus required to launch impactful business development activities on a branch-by-branch basis.

Entering New Markets

regulatory application or notice is required, as well as any ongoing regulatory requirements and restrictions. Banks may want to meet with their regulator early on in the process to discuss whether the collaboration is workable from a regulatory standpoint and any particular regulatory concerns.

Collaboration structuring will also, of course, depend on the business terms of the relationship. For example, any rights of the bank to terminate its investment (for regulatory reasons or otherwise), to protect its investment through additional purchases of equity, to sell its equity in the event that the fintech company engages in an initial public offering, or even to ultimately acquire the fintech company, should be thought through and appropriately reflected in the documents governing the relationship. Attention should also be paid to the regulatory consequences of any of these actions.

The considerations discussed above are just a sampling of the many business, legal, and regulatory issues that banks and fintech companies must confront when seeking to collaborate.

While these issues may seem daunting, the potential rewards of a successful collaboration - more engaged, satisfied customers doing more business with the bank through better technology – are significant. Moreover, there is a growing sense that banks which do not embrace the innovative technologies being developed by fintech companies may soon find themselves left behind by their competitors. BNE

Branching today represents a significant investment and as such requires a disciplined approach to making decisions. To sustain

10

growth necessitates a thoughtful process to evaluate potential new markets each of which are competing for capital. Once de novo branch market priorities are established, discovering a specific site with the locational advantages to successfully penetrate the market reveals a means of entry. However, branching momentum is determined pragmatically by quantifying the profit and loss impact of the branching decision. New markets, successfully identified, accelerate top line revenue growth and drive financial performance.

The benefits to branching are great. So are the consequences.

Manage the risks with an analytical approach to branch expansion.

Think Strategically

Growth requires discipline and discipline requires focus.

Thinking strategically will allow the financial institution to behave tactically. Examine whether or not the institution has a solution to expand customer relationships. Create a mechanism to understand, evaluate and capture the incremental product line opportunities available within each existing branch market. Construct a profitable branch expansion blueprint. Plan for success by closing the knowledge gap to improve performance. BNE BANKING NEW ENGLAND

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PROTECTING BANKING ON MARIJUANA VULNERABLE CLIENTS

CONTINUED FROM PAGE 10

Banks Cautiously Enter

Marijuana Industry Financing From Business Checking to Mortgages, FIs Warm to Pot Shops

Bram Berkowitz is a staff writer for The Warren Group, publisher of Banking New England. He may be reached at bberkowitz@thewarrengroup.com.

16 BANKING NEW ENGLAND

BY BRAM BERKOWITZ

A

s a financial executive, you probably find yourself pulled in multiple directions all day long. To achieve what needs to get done, you have to rely heavily on your team to execute on both the long and short-term objectives. Given this, it is vital that your team is strong and well-functioning, and agile enough to keep pace with constant organizational change. But highly functional teams don’t just “happen” – they require intentional focus and attention on a regular basis from the leader – and while this may seem like another daunting task to add to your list, the payback is worth it. In fact, some research indicates that well-functioning teams are up to 30 percent more productive than average teams.

Hudson-based Calare Properties earlier this month acquired a 34,000-square-foot warehouse in Littleton for $2.7 million and secured a 10-year lease with medical marijuana provider Premier Health Group LLC for the entire building.

Calare, which declined to comment for this article, obtained $1.8 million in mortgage financing for the property from Salem, New Hampshire-based Bank of New England. The bank, which also has branches in Massachusetts, did not respond to multiple requests for comment.

The fact that Calare obtained a mortgage is significant.

While medical and recreational marijuana is legal in many states, it is still illegal on the federal level; federally insured lenders typically have a clause in their mortgages noting that owners cannot conduct an illegal activity.

This makes banks very cautious about lending to facilities that house medical marijuana businesses. But the tide may be turning, at least for smaller community banks.

“We are seeing more state-chartered loans on properties with cannabis operations,” said Frank Segall, co-chairman of the Cannabis Business Advisory group at Boston-based law firm Burns & Levinson. “Some state banks and credit unions and private finance companies are getting more comfortable in that space, particularly on the real estate side, because they have hard collateral.”

FIs Ease into Lending Calare properties may be an outlier, but it is not the only property owner that has obtained a mortgage for a property that would be leased to a medical marijuana establishment.

Theory Wellness, a Bridgewater-based medical marijuana facility, leased its 12,000-square-foot space from the entity 1050 Realty Trust, according to leasing documents posted on the state’s Department of Public Health website.

According to Plymouth County Registry of Deeds, 1050 Realty Trust obtained a $750,000 mortgage from Mutual Bank, which has nine locations in Southeastern Massachusetts.

The lease was signed in March 2016 and the mortgage for the property was filed with the registry in May 2016.

Also in early 2016, Lowell-based Jeanne D’Arc Credit Union granted an entity called Pagson LLC a mortgage for $1.275 million for the property at 70 Industrial Ave. in East Lowell. The mortgage required cross-collateralization and came with a variable interest rate.

Although DPH did not post leasing documents online, as it has with nearly all other state medical facilities, that property is now occupied by the medical marijuana company Patriot Care Corp.

Navigating a New Lending Landscape Since states began legalizing medical and recreational marijuana, there has been a legal gray area – some states allow it, others do not, and the federal government does not.

Even when the Obama administration took a fairly hands-off approach toward enforcing marijuana laws, there was uncertainty between banks and marijuana. And after current U.S. Attorney General Jeff Sessions requested Congress remove federal protections that prevented the Department of Justice from cracking down on medical marijuana patients, cultivators and dispensaries that are in line with state laws, there has been even more ambiguity.

Banks, not wanting to get in trouble at the federal level, have mostly stayed away from the marijuana business.

“Most banks have taken a very cautious approach to this and particularly on the lending side that is getting into a little more highrisk activity,” said Jon Skarin, senior vice president at the Massachusetts Bankers Association, who deals with regulatory issues. “It’s a little bit less challenging to do transactional as opposed to a lending relationship [with marijuana companies] even if the relationship is indirect.”

Skarin also said working with marijuana companies is resourceintensive due to regulatory and compliance issues.

Warming to the Idea Still, with the marijuana industry in Massachusetts valued at potentially more than $1 billion, some banks have started to warm to the idea.

Media reports at the end of 2016 revealed that Century Bank, a family-owned bank in Massachusetts, started doing business with marijuana dispensaries and allowing them to store their deposits there.

Even some of the larger banks, despite their denials about working with marijuana companies, seem to be doing business with some medical facilities.

Documents on the DPH website show that Bank of America allowed 4Front Ventures, a player in the marijuana industry, to set up a business checking account.

Adam Fine, a managing partner for the Massachusetts office of the marijuana law firm Vicente Sederberg, said he thinks more banks are more receptive to lending to the marijuana industry because there hasn’t been any major problems from the federal government thus far.

Segall, of Burns & Levinson, said while it hasn’t happened a lot with traditional financial institutions, there have been private funds that have formed solely for the purpose of acquiring real estate and leasing it to marijuana businesses.

And Segall suspects that more traditional banks and private equity firms will soon be lending to the marijuana industry.

“I am upbeat and confident on the industry and feel medical (marijuana) is here to stay and recreational (marijuana) will continue to gain acceptance as well,” he said. “The voters have spoken overwhelmingly. This is not a train you slow down.” BNE BANKING NEW ENGLAND

17

PROTECTINGFILE VULNERABLE CLIENTS PERSONNEL

Career achievers in banks across New England are constantly on the move, with their professional journeys reflecting a combination of mobility and longstanding service. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Malea Ritz at mritz@thewarrengroup.com

Featured Banks • Androscoggin Bank • Blue Hills Bank • Coastal Heritage Bank • Katahdin Trust • Kennebunk Savings • Lake Sunapee Bank • Leader Bank • Ledyard National Bank • Meredith Village Savings Bank • Needham Bank • Savings Bank of Walpole • SIS Bank

Appointments and Elections Katahdin Bankshares Corp.

Katahdin Bankshares Corp., parent company of Katahdin Trust Co., recently announced the election of Richard B. Harnum Jr. to its board of directors. Harnum fills the seat left vacant by Richard B. Harnum Jr. the recent passing of Arthur L. Shur of Island Falls, who had served on the board since 1983. Harnum is the president of Webber Group in Bangor, Maine, focusing on overseeing the Real Estate division and plumbing and HVAC division of Webber Supply Inc. He previously served as vice president of real estate of Webber Group for five years. Harnum’s professional experience includes working in business development, marketing, accounting, human resources as well as owning and managing his own private real estate property company for eight years before joining the Webber Group.

Needham Bank Roughly eight months after taking the helm of the nearly $2 billion asset Needham Bank, CEO Joseph Campanelli has appointed his new executive management team.

The former CEO of Joseph Campanelli Sovereign Bank and more recently of Flagstar Bank earlier this week announced the hiring of former

colleague Sal Rinaldi as chief administrative officer and executive vice president of the bank.

Rinaldi worked with Campanelli at both Sovereign and Flagstar. He will oversee information technology, human resources, loan and deposit operations, facilities and the project management office.

Campanelli also announced three promotions: Laura Dorfman, who runs the bank’s residential lending group, and Stephanie Maiona, who runs the commercial real estate lending group, have both been promoted to executive vice president.

Eric Morse, formerly senior vice president, has also been promoted to executive vice president and will oversee marketing, business development, wealth management, the bank’s advisory council and retail distribution.

Barry Whittaker, who has been at Needham Bank for six years, will remain COO and oversee finance, data and analytics, investments and credit.

Savings Bank of Walpole Savings Bank of Walpole announced that New Hampshire Housing Finance Authority (NHHFA) recently chose Christine Greenwood, mortgage loan officer for New Hampshirebased Savings Bank of Walpole, to participate in its Homeownership Fellowship Program. The NHHHFA offers mortgage professionals an interactive and educational opportunity to explore the issues and challenges of the mortgage finance system. Each year, up to 10 individuals are selected through a competitive application process to participate in this unique program.

Promotions Blue Hills Bank

Massachusetts-based Blue Hills Bank announced the promotion of Mary Rezendes to senior vice president and information security officer. With 32 years at Blue Hills Bank, 17 in information technology related positions, Rezendes Mary Rezendes has been a key contributor to the development of the bank’s risk management department. Rezendes is responsible for improving the awareness of and response to information and cyber security threats, as well as overseeing the bank’s IT systems, process analyses and governance.

18 BANKING NEW ENGLAND

Katahdin Trust

Allissa Given has been promoted to branch manager and retail services officer of Katahdin Trust’s branch office in Patten, Maine. She will be responsible for the day-to-day management of activities at the Patten branch, sales and Allissa Given business development, and retail lending. Allissa started with Katahdin Trust in 2006 and most recently held the title of customer service representative and consumer lender.

Promotions

New Arrivals Lake Sunapee Bank

Kristy Goodson has joined Lake Sunapee Bank, a division of Bar Harbor Bank & Trust, as senior vice president and treasury services manager. Goodson focuses on creating services to help businesses optimize daily banking operations, regulate cash flow and capitalize on liquid assets.

Goodson has decades of experience developing Kristy Goodson treasury management, merchant services and payroll services in the banking industry, most recently as senior vice president and manager of treasury services and municipal banking at a New Hampshire-based financial institution.

Leader Bank

Jay Tuli has been promoted to executive vice president of Arlington, Massachusetts-based Leader Bank. Tulli oversees residential lending, retail and business banking, product development and marketing.

Jay Tuli

Meredith Village Savings Bank

Eric MacDonald has been promoted to vice president and commercial credit manager at New Hampshire-based Meredith Village Savings Bank. MacDonald will continue to oversee the underwriting of commercial loans for the bank.

He joined the organization in 2005 as a credit analyst for Bow Mills Bank and Trust, and Eric MacDonald joined Merrimack County Savings Bank when it acquired Bow Mills in 2007.

New Arrivals Androscoggin Bank

Ben Geci has joined Maine-based Androscoggin Bank’s commercial lending team as chief lending officer and executive vice president. Geci was prior director of southern commercial banking and the senior vice president for Cumberland and York counties at Camden National Bank. In that role, he oversaw the successful merger of Bank of Maine and Camden National Bank with a focus on customer transition. He also supervised the commercial banking team and was influential in growing the bank’s southern Maine presence.

Coastal Heritage Bank

Weymouth, Massachusetts-based Coastal Heritage Bank announced that William Bowers has joined the bank as senior vice president of commercial lending. Bowers is responsible for commercial lending in the bank’s Eastern Massachusetts market with a particular emphasis on commercial real estate lending. He joined William Bowers the bank from Hingham Institution for Savings where he was vice president of commercial lending.

Kennebunk Savings Bank

Maureen Flaherty has joined Kennebunk Savings Bank as chief marketing officer. She will be responsible for overseeing the marketing and corporate communications departments, developing new digital strategies and guiding the organization through its strategic objectives.

Flaherty comes to Kennebunk Savings with Maureen Flaherty significant experience as a branding and marketing executive. In her most recent role, she was a senior product manager at IDEXX.

Ledyard National Bank

Michael Urnezis has joined Hanover, New Hampshire-based Ledyard National Bank as senior vice president, senior consumer and mortgage lending officer. Urnezis brings over two decades of financial services experience. Prior to joining Ledyard, he co-founded Vision Mortgage & Insurance Group in 1999 with offices in Michael Urnezis the Midwest and Pacific Northwest which he managed until 2012 when Northwest Bank acquired the group.

SIS Bank

Catherine Buffum has joined New Hampshire-based SIS Bank as a commercial lender. Buffum will be responsible for soliciting and servicing prospective customers producing a variety of commercial loans, as well as generating and managing a portfolio of business and corresponding relationships. She has had Catherine Buffum past roles in real estate, property management and banking, working as vice president, commercial loan officer, at established institutions such as TD Bank and Androscoggin Bank prior to landing at SIS. BNE

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19

PROTECTING GOOD VULNERABLE COMMUNITY WORKS CLIENTS

Financial institutions large and small have been making a difference in their communities for years. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Malea Ritz at mritz@thewarrengroup.com

Featured Banks • BankNewport • Blue Hills Bank • Cornerstone Bank • First County Bank • Franklin Savings Bank

BankNewport

BankNewport Vice President and Middletown, Rhode Island Branch Sales Manager Linda Buchanan (left) recently joined Newport/Fall River Star Kids Scholarship Program representatives Karen Flanagan, program director (center) and Cindy Babka, board member and mentor (seated), for a visit with youth participating in an academic after-school activity held at All Saints Academy in Middletown.

BankNewport extended $10,000 in grants over the past two years in support of academic and enrichment programming for Star Kids.

Cornerstone Bank

Cornerstone Bank employees donated to the “Stuff the Bus” campaign, helping to support Catholic Charities in its mission provide to local children. The employees donated backpacks, school supplies, among other back-to-school necessities.

Blue Hills Bank

• Katahdin Trust Co. • Merrimack County Savings Bank • North Brookfield Savings Bank • SIS Bank

The Blue Hills Bank Foundation granted Father Bill’s & MainSpring funds to help them construct a playground at one of their family shelters, Evelyn House, in Stoughton, Massachusetts. A team of Blue Hills Bank volunteers also donated their time to help spruce up the playground and surrounding area. Their more than 40 hours volunteering saved the organization up to $4,000 in landscaping fees.

First County Bank

Connecticut-based First County Bank employees participated in the Human Services Council’s “Donate a Backpack for Family Day” program to provide students with backpacks and school supplies for the 2017-2018 school year. Employees donated over seven grocery bags of pens, pencils, crayons, rulers, calculators, highlighters, erasers and three large boxes filled with notebooks and binders to fill 102 backpacks. The backpacks and school supplies were distributed by the Human Services Council as part of its Family Day celebration.

20 BANKING NEW ENGLAND

Franklin Savings Bank

North Brookfield Savings Bank

North Brookfield Savings Bank donated $1,000 to Top Floor Learning, a nonprofit organization dedicated to providing adult education throughout 24 towns in Central Massachusetts.

Franklin Savings Bank presented Mountain Ridge Center of Franklin, New Hampshire with a $400 donation through its participation in a national Veterans Initiative in partnership with the Senior Crimestoppers program and CRA Partners, powered by the Senior Housing Crime Prevention Foundation.

Northfield Savings Bank

Katahdin Trust Co. Vermont-based Northfield Savings Bank donated $100,000 to support construction of the Robert E. and Holly D. Miller Building at the University of Vermont Medical Center, which will contain 128 new single-patient rooms. Completion of the building is expected in the fall of 2019.

Katahdin Trust Co. presented a $5,000 donation to RSU #22. The funds will be used to support the Pre-K programs at Earl C. McGraw School in Hampden, Maine and Newburgh Elementary School.

SIS Bank

Merrimack County Savings Bank

Sanford, Maine-based SIS Bank made a $25,000 corporate donation to the Wells Public Library for its facility expansion.

Merrimack County Savings Bank committed $110,000 to the Concord Coalition to End Homelessness to support its mission. The purchase will be made through the Community Development Finance Authority of New Hampshire’s tax credit program.

SIS Bank

Merrimack County Savings Bank

Merrimack County Savings Bank purchased $20,000 in tax credits from the Boys and Girls Club of Greater Nashua to help the club reach its goal of purchasing new busses and vans.

SIS Bank made a $500 donation to Safe Kids Maine by means of the bank’s monthly employee donation program. Safe Kids Maine is a program of the Tall Pine Safety Resource Center that conducts programs that address child passenger, bicycle and pedestrian safety, as well as fire and burn prevention; home, water and sports safety; and many other risk areas for young people.

BANKING NEW ENGLAND

21

PROTECTING INDUSTRY NEWS VULNERABLE CLIENTS

Featured Banks

Optima Bank & Trust Scoops Up Dover Site For New Branch

• Franklin Savings Bank • Optima Bank & Trust

“lenders’ appetites for extending credit,” although WalletHub expects “there will be a tipping point eventually.”

Average credit card debt per household at the end of the second quarter was $7,996, up more than $400 from the same time last year.

Franklin Savings Bank Opens Merrimack Office Construction is underway at the site of the new Optima Bank & Trust branch in Dover.

The bank’s newest location will be constructed at 920 Central Ave., the former home of Fiddlehead Farms Marketplace. The Dover Planning Board gave its stamp of approval to plans on June 13 and crews have been busy preparing the site for the construction ahead.

The new location will be a 2-story building, consistent with the design of the bank’s Stratham and North Hampton locations. The building will occupy 3,400 square feet on the first floor, plus more office space upstairs, and will have two drive-up windows and 25 parking spaces.

The bank announced plans to build a fullservice branch in Dover in January of this year. The bank’s current Dover loan office, at 130 Central Ave., will continue to serve customers until the new branch opens.

Daniel Morrison, chairman, president and CEO of Optima Bank & Trust, says he expects the new branch to be open by the end of this year.

US Consumers On Pace For $1 Trillion In Credit Card Debt U.S. consumers are on pace to hold more than $1 trillion in credit card debt by the end of 2017, according to a recent WalletHub study.

The study shows that after paying down more than $30 billion in credit card debt during the first quarter of 2017, U.S. consumers proceeded to rack up $33 billion in new credit card debt.

WalletHub is projecting an additional $60 billion in new credit card debt by the end of the year, which would push total credit card debt past $1 trillion.

As of the end of the second quarter of this year, outstanding credit card debt is at the second highest point since the end of 2008.

According to WalletHub, U.S. consumers ended 2016 with $87.2 billion in new credit card debt, the most in a single year since 2007 and 130 percent above the post-recession average.

However, despite the sharp ascent in credit card debt, charge-off rates are at historic lows, fueling 22 BANKING NEW ENGLAND

Franklin Savings Bank held an official ribbon cutting ceremony to commemorate the grand opening of its new full-service office in Merrimack, New Hampshire.

The new 2,161 square-foot office, located at Merrimack Village Shopping Center at 1 Dobson Way, features two drive-up lanes, two smart ATMs, a coffee bar and a technology bar with digital displays to enable staff to demonstrate the bank’s diverse line of electronic services to customers.

The ribbon cutting event was attended by those involved with the project to include Paramount Partners, Sullivan Construction, TF Moran and DeStefano Architects. A few members of the bank’s Merrimack Advisory Group were also in attendance, including Melissa Ballard Sullivan, president of the Merrimack Chamber of Commerce; Kara Olsen, owner of Laconia Refrigeration; and Randy Turmel, president of Randy Turmel & Assoc., Inc.

Nine Fewer Banks In Massachusetts From One Year Ago At the end of the second quarter, there were nine less banks in Massachusetts from one year ago and roughly $6 million fewer assets controlled by the remaining 128 banks in the state, according to recently released FDIC data.

However, the return on assets among banks in the state had increased slightly and Massachusetts banks had a marginally higher net interest margin from a year ago.

The median net loans-to-assets ratio among state banks had increased to just over 77 percent, up 3 percent from the second quarter of 2016, while asset quality remained strong.

The median ratio of past current and nonaccrual loans to total loans was up .68 percent from one year ago, compared to the second quarter of 2016 when the ratio had increased .85 percent from 2015. BNE

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