5TH ANNUAL SPECIAL 13 DITION NE CONVENTIO
Y ARTICLES B FEATURING PEAKERS NS CONVENTIO
Jeff Gerhart Fourth Generation Banker That’s My Bank 2012 BEST OF THE BEST AWARDS Page 12
Risk Management BANK STRESS TESTING Page 20
CERTIFIED COMMUNITY LENDER Page 22
UPCOMING EDUCATION EVENTS AUGUST • 2012
135th Annual Convention August 17-20, 2012 Vail Marriott Resort & Spa - Vail, CO
SEPTEMBER • 2012
Compliance Seminar September 18, 2012 PACB Headquarters - Harrisburg, PA Audit Seminar September 20, 2012 PACB Headquarters - Harrisburg, PA Compliance Seminar September 26, 2012 DoubleTree Monroeville - Monroeville, PA ALM Seminar September 27, 2012 DoubleTree Monroeville - Monroeville, PA
OCTOBER • 2012
ALM Seminar October 3, 2012 PACB Headquarters - Harrisburg, PA Tech Conference October 10, 2012 PACB Headquarters - Harrisburg, PA Marketing Conference October 17-18, 2012 Hilton Garden Inn - Hershey, PA
NOVEMBER • 2012
Directors College November 1, 2012 Doubletree Monroeville - Monroeville, PA Directors Training November 7, 2012 Radisson Hotel Valley Forge - King of Prussia, PA Directors Training November 13, 2012 Hershey Lodge - Hershey, PA 2 | Transactions | www.pacb.org
Plan your training for this year with our variety of educational seminars and conferences. Registration is easy and just a click away at pacb.org.
NOVEMBER • 2012 (CONT)
SEPTEMBER • 2013 (CONT)
FEBRUARY • 2013
136th Annual Convention September 20-24, 2013 Boston Marriott Copley Place - Boston, MA
Directors Training November 14, 2012 Scotch Valley CC - Hollidaysburg, PA
Commercial Lending School February 19-20, 2013 Harrisburg, PA Credit Administration Seminar February 26, 2013 PACB Headquarters - Harrisburg, PA
ALM Seminar September 10, 2013 PACB Headquarters - Harrisburg, PA
NOVEMBER • 2013 ALM Seminar November 5, 2013 Pittsburgh, PA
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Contents FEATURE ARTICLES
12 2012 Community Banking Week Best of the Best Winners: That’s My Bank! Announcing the Best of the Best Awards from Community Banking Week 2012. 18 Crowdfunding: A New Way to Raise Capital A new method of raising capital enacted by the Jumpstart Our Business Startups Act. 20 Bank Stress Testing: Check the Box Exercise or Competitive Advantage? A look at bank stress testing, a forward-looking risk management tool. 22 Certified Community Lender (CCL): PACB’s Dedication to Education A look at PACB’s CCL program and the first two members that have completed it. 24 PACB & ICBA: Standing Strong on the Front Lines The ICBA Chairman discusses various topics relating to community banking across the country. 32 Emerging Trends in Corporate Governance A preview of one of the topics for Session 1 at PACB’s 135th Annual Convention in Vail, Colorado. 34 How A Bank’s Relations With Its Regulators Impacts Its Relations With Its Shareholders A preview of one of the topics for Session 3 at PACB’s 135th Annual Convention in Vail, Colorado. 36 When Will Rates Ever Rise? Recent FOMC Statements May Give Us A Clue A preview of one of the topics for Session 4 at PACB’s 135th Annual Convention in Vail, Colorado. 38 The Five Enduring Principles of Enterprise Risk Management A preview of one of the topics for Session 5 at PACB’s 135th Annual Convention in Vail, Colorado. 40 Five Minutes With Congressman Mark Critz Pennsylvania’s 12th District Congressman discusses his support of community banks and more.
ADVERTISERS 09 17 23 23 35 42
SR Snodgrass Stradley Ronon AAS Debt Recovery Shumaker Williams, P.C. ParenteBeard Pulse 4 | Transactions | www.pacb.org
ON THE COVER
ICBA Chairman Jeff Gerhart sits down with PACBâ€™s President and CEO Nick DiFrancesco to discuss community banking in Nebraska, his role in ICBA, the biggest threats to community banks across the country, advocacy, ICBA services, and more in this exclusive interview. www.pacb.org | Transactions | 5
d n i F ! k n Fra START HAVING SOME FUN WITH PACB’S MONTHLY PUBLICATION! Find Frank offers a way to get rewarded for reading Transactions’ important articles every month. Somewhere on these following pages, a Frank A. Pinto bobble head is hidden. Want to play? Here’s what you do: 1. Find Frank. 2. Have a bank representative post on the PACB Facebook wall the exact location (page number & exact location). www.facebook.com/PACommunityBanks 3. Make sure your entry has a contact name & email. 4. Submit!
THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS
Pennsylvania’s Community Banks. For people and their neighborhoods.
is published monthly by the Pennsylvania Association of Community Bankers 2405 North Front Street, P.O. Box 5319, Harrisburg, PA 17110-5319 BUSINESS HOURS: 8:30 a.m. - 5:00 p.m. M-F Telephone: (717) 231-7447 www.pacb.org
PACB STAFF: Dominic D. DiFrancesco, email@example.com - President/CEO Saundra J. Cunningham, firstname.lastname@example.org - VP–Education Services Shirley A. Regan, email@example.com - Comptroller/Office Manager Patricia Kuharic, firstname.lastname@example.org - Administrative Assistant Tim Arthun, email@example.com - Director of Government Relations Eric A. Kovac, firstname.lastname@example.org - Publications Manager Natalie S. Bombatch, email@example.com - Publications Manager
2011-2012 PACB LEADERSHIP EXECUTIVE COMMITTEE Chairperson - Chuck Leyh President/CEO, Enterprise Bank Chairperson Elect - Ronald B. Geib President/CEO, Harleysville Savings Bank Vice Chairperson - Dennis D. Cirucci President/CEO, Alliance Bank Secretary/Treasurer - Andrew W. Hasley President/CEO, Allegheny Valley Bank President/CEO - Dominic D. DiFrancesco Pennsylvania Association of Community Bankers Immediate Past Chairperson - Richard L. Meares President/CEO, Fleetwood Bank Ex-Officio/General Counsel - Keith A. Clark, Esq. Chairman, Shumaker Williams, P.C.
STANDING COMMITTEES: CHAIRS & VICE CHAIRS EDUCATION Diane McElwee, Bally Savings Bank Kevin Schmidt, Neffs National Bank FINANCE & BUDGET Frank S. DePaolo, Sharon Savings Bank FIRSTPAC George M. Evans, Indiana First Bank LEGAL Reginald Evans, Esq., Shumaker Williams, P.C. Angela L. Thomas, Esq., Latsha Davis Yohe & McKenna, P.C.
*PACB member banks only please.
CORRECTION: There was a typographical error in our July issue. On page 14, Charles E. Marston should be listed as CPA, MST, Tax Principal. Sorry, Chuck!
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LEGISLATIVE Timothy Zimmerman, Standard Bank Frank Godino, ESSA Bank & Trust MEMBERSHIP Ted Peters, Bryn Mawr Trust Company Andrew W. Hasley, Allegheny Valley Bank STRATEGIC PLANNING David Hunsicker, New Tripoli Bank
PACB CHAIRMAN CHUCK LEYH
A WORD FROM PACB’S CHAIRMAN This is my last column as PACB’s Chairman, and I thought I would simply say…Thank You! For the past twelve months, Nick and I have traveled across Pennsylvania listening to the stories of community bankers. Each stop offered a unique perspective on where we are as an industry, and what our future holds. I am amazed by the diversity of each community and by the unique business models developed to meet each community’s needs. From passbook savings accounts to e-wallets, Pennsylvania has a foundation of very strong and successful community banks serving our economy. I appreciate all that I’ve learned this year. I also appreciate the fact that so many of us are willing to assist each other by sharing best practices and new ideas, as well as by supporting each other’s loan participations. Yes, there is still honorable competition among our banks, but the reality is that we can offer our communities more and better service when we stand together. I believe most of us understand that by standing together we’ll continue to thrive. Clearly, the economic and regulatory environments are as challenging as ever. Imagine how vulnerable
we would be as an industry if it were not for PACB and ICBA. Banks like Goldman, Bank of America, Citi, and Wells Fargo have unlimited resources, and they use them generously to advance their business objectives in Washington. Our strength doesn’t come from large investments in Washington lobbyists. Our political strength comes from thousands of personal relationships in communities throughout our Commonwealth. Together we are strong! The victories we’ve achieved as a community banking industry during the last few years, most notably our FDIC assessment savings, were the saving grace for many community banks. Again, together we can accomplish great things, and that creates stronger businesses and stronger communities. As I return to my “normal” routine at Enterprise Bank, I do so knowing that I am part of a strong and healthy organization that has my bank’s best interest at heart. I can rest easy knowing that from Philadelphia to Erie and Honesdale to Waynesburg there are hundreds of community bank leaders fighting alongside me to protect our industry, and for that I must say…Thank You! Go Steelers!
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PRESIDENT/CEO NICK DIFRANCESCO
THAT’S MY BANK! Your team at PACB is proud to present the August edition of Transactions magazine. This edition is truly a celebration of community banking! From the cover and centerfold featuring ICBA Chairman and fourth generation Nebraska community banker Jeff Gerhart, to the feature on our Best of the Best Community Banking Week award winners, to the announcement of Pennsylvania’s newest Certified Community Lenders, August is a month to celebrate the best of community banking. Community banks serve as the foundation of the US economy, and while many of the traditional service clubs struggle to support community events, our membership continues to embrace a culture of service. PACB’s annual Community Banking Week simply shines a spotlight on what community bankers are doing every day to make their communities better places to live, work, and play. I hope you’ll take some time to review the award winners. Remember, Community Banking week is just eight short months away and it’s never too soon to start planning! Some additional special features in this month’s edition are articles that highlight some of the critical topics being discussed at this year’s 135th Annual PACB Convention. Raising capital, stress testing your bank, the interest rate environment, and regulatory relations are all topics covered within these pages. We
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also take five minutes with Congressman Mark Critz, a true supporter of the community banking industry.
Each month our goal is to offer you an edition of Transactions filled with rock solid information that will help you navigate the challenges of the day with a broad overview of the latest topics. For a more in depth look at the critical issues affecting community banks, attend one of PACB’s many great education programs. In 2013, we will be offering a brand new industry certification program in Information Technology Security. The Certified Community Bank Security Professional certification was developed with PACB partner and associate member Secure Banking Solutions (SBS). SBS has gained a reputation as an industry leader in IT training, and their programs always garner high praise. This certification, which is introduced in this edition, is another way that PACB is responding to the needs of our membership. Finally, I would be remiss if I didn’t take a moment to thank PACB Chairman Chuck Leyh for his dedicated service to the community banking industry during the past twelve months. Not only did Chuck oversee the implementation of PACB’s brand new strategic vision, he also took the time to travel across Pennsylvania visiting our member banks. Chuck’s passion for and commitment to the community banking industry is sincere and very much appreciated.
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135TH ANNUAL CONVENTION · VAIL MOUNTAIN
THANK YOU TO OUR PACB CONVE 2012 CONVENTION SPONSORS DIAMOND
FHLBank Pittsburgh Jack Henry Banking
Griffin Financial Group, LLC Luse Gorman Pomerenk & Schick, P.C. PNC Capital Markets S.R. Snodgrass, A.C. Stevens & Lee
BFS Group BMO Capital Markets GKST Inc. Buchanan Ingersoll & Rooney, PC Elias, Matz, Tiernan & Herrick LLP Federated Investors, Inc. Fiserv FTN Financial Kilpatrick Townsend & Stockton LLP
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Metz Lewis Brodman Must O’Keefe LLC ParenteBeard LLC PULSE Shumaker Williams, P.C. Stifel Nicolaus Weisel
Boenning and Scattergood, Inc. GTM Risk Management ICBA Services Network
GENERAL SPONSORSHIPS Atlantic Central Bankers Bank John M. Floyd & Associates Malin, Bergquist & Company, LLP Pentegra Retirement Services The Kafafian Group, Inc. Travelers Vantiv
N RESORT & SPA 路 VAIL, CO 路 AUGUST 17-20, 2012
ENTION SPONSORS & EXHIBITORS 2012 CONVENTION EXHIBITORS Accume Partners Allied Solutions Barone Murtha Shonberg & Associates Inc. BFS Group BMO Capital Markets, GKST Inc. ByteSpeed, LLC COCC Comptroller of the Currency Computer Services, Inc. Direct Energy Business GTM Risk Management Harland Financial Solutions Herbein + Company, Inc. Hergenroeder Rega Scotti Ewing & Kennedy, LLC ICBA ICBA Securities ICS Risk Advisors iHELP Private Student Loan Program Investment Professionals, Inc.
Jack Henry Banking John M. Floyd & Associates Mortgage Services III, LLC Northland Securities, Inc. NYL Bank Client Group Pentegra Retirement Services Schneider Downs & Co., Inc. Secure Banking Solutions SHAZAM, Inc. Shumaker Williams, P.C. Star Network/First Data Talaris Terrapin Financial Services, LLC Travelers UniPay Direct, Inc. Vantiv Woodcraft Industries Zions Bank Correspondent Banking
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Community Banking Wee k
BEST OF THE BEST WINNERS THAT’S MY BANK! Overall Winner
MALVERN FEDERAL SAVINGS BANK
Green Home Equity Line of Credit
drive save Green
Hybrid & Electric Auto Loans
Malvern Federal kicked off Community Banking Week volunteering at Good Works, a program that organizes community service projects to help repair and update substandard housing for low-income families in and around Chester County. In addition to Good Works, Malvern Federal employees spent a total of 35 days collectively volunteering at a number of organizations including the Hindu Temple of Delaware, Jewish Relief Agency, The Telsa Science Foundation, Girls Friendly Society, St. Peter and Paul Ukrainian Church, Habitat for Humanity, Tatnall Middle School, Community Lenders and Brandywine Conservancy. Service activities included community building projects, clothing and food collection and distribution, community cleanup and recycling projects.
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Also in April, Malvern Federal launched its “Live Green. Drive Green. Save Green.” campaign to promote preserving the environment through sustainability and alternative energy sources. This eco-friendly campaign integrates products and services that limit resource consumption, reduce waste, and promote the use of alternative energy sources – all while offering customers special products unique to the area. In fact, Malvern Federal Savings Bank is one of the only community banks nationwide – and the only community bank in the Philadelphia market – to offer the special hybrid/electric vehicle auto loan. The bank is also helping customers “Save Green” with its eco-friendly e-statement option. The bank also hosted three shredding events throughout the month of April, providing both customers and non-customers a safe option to recycle unwanted paperwork.
$75 Million and Below
JACK OF ALL TRADES WINNER - COMMUNITY
LIVERPOOL COMMUNITY BANK Liverpool Community Bank employees brightened the bank for Community Banking Week by hanging photo collages of employees and of community service events. They also hung spring pictures that children colored and awarded them prizes for their pictures. Adults were awarded a spring flower after correctly answering a quiz about Liverpool. To top off their celebration, the bank had a cake decorated with “That’s My Bank!” for their customers.
$76 - $175 Million
MOST INFLUENTIAL - CHILDREN’S
C&G SAVINGS BANK
During Community Banking Week, each C&G Savings Bank office held a drawing for customers to win a “That’s My Bank!” piggy bank. The bank also donated to the ATOMS Scholars Program, a hands-on, in-depth science and math-oriented summer program that focuses on students with high aptitude or interest in those subjects. There are 15 schools that are part of the program; C&G Savings Bank chose to designate their donations specifically for children who attend one of the five local school districts.
JACK OF ALL TRADES WINNER - COMMUNITY
THE FIRST NATIONAL BANK OF MINERSVILLE
The First National Bank of Minersville held a book drive, where employees collected hundreds of new and gently used books, benefitting the Minersville Public Library. The bank also was a collection point for donations of canned goods and non-perishable items for the Minersville Food Pantry. In addition to collecting food for the pantry, employees selected the Minersville Food Pantry as the recipient of their dress down day fundraiser. Finally, the bank supported Avenues, a local organization committed to changing the lives of individuals who have physical and/or acquired disabilities, by purchasing small plants to distribute to customers.
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$76 - $175 Million (continued)
BEST CAUSE - COMMUNITY
HUNTINGDON VALLEY BANK Huntingdon Valley Bank is an Apartment Partner for Bucks County Housing Group, an organization that assists families throughout the Bucks County area transition from homelessness to home-sweet-home. In addition to their year-round support, during Community Banking Week, the bank collected change from customers as part of the Bucks County Housing Group’s “Positive Change” program. Employees collected a total of $75 that week.
$176 - $400 Million
BEST USE OF ADVERTISING - COMMUNITY
ALTOONA FIRST SAVINGS BANK
Altoona First Savings Bank invited the community to celebrate Community Banking Week and “Take the Bus on Us.” Residents could ride all regular Amtran bus routes for free from April 2-6. The bank promoted the event by sending press releases to local newspapers and television and radio stations, purchasing radio and newspaper ads, and publicizing in Amtran’s newsletter and buses. Thanks to the promotion, Amtran’s ridership was up 42% compared to the same week in 2011. Additionally, in order to raise awareness of the bank, they produced testimonial television commercials in conjunction with this year’s theme, “That’s My Bank!”
MOST EDUCATIONAL - CHILDREN’S
THE FIRST NATIONAL BANK OF MERCERSBURG
Employees from The First National Bank of Mercersburg taught financial literacy lessons to 1,211 K-12 students through school assemblies, individual classroom lessons, learning support centers, and workforce programs associated with local schools. Younger students were visited by bank mascots, Bill and Penney, and given piggy banks and $1 coins to spur thinking about saving, sharing, and needs vs. wants.
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$176 - $400 Million (continued)
BIGGEST IMPACT - SENIOR CITIZENS’
THE NEFFS NATIONAL BANK
The Neffs National Bank hosted a variety of organizations during Community Banking Week that both highlighted and appealed to local senior citizens. Customers of all ages enjoyed learning about German heritage from the Pastorius Center. The bank also hosted local artisan Dennis Wildnauer who displayed his hand-hammered aluminum and shared the history of an art that only a few people in the country still create by hand. Additionally, the Neffs Church Quilters spent a day sharing the art of quilting with bank customers. The bank also held a blood drive that resulted in enough blood to help save the lives of 39 local hospital patients. For their younger customers, the bank held a coloring contest and “Guess the Jelly Beans” contest, as well as handed out treats at an ice cream stand.
BEST CAUSE - COMMUNITY
SHARON SAVINGS BANK To promote community banking, each Sharon Savings Bank branch held a customer appreciation day with giveaways and refreshments for customers. The bank also held its annual food drive benefitting local food banks in Delaware County. This was organized in part with St. Vincent DePaul Blessed Virgin Mary Catholic Church in Darby, Pa. More than 10 large boxes of food were collected.
MOST KID FRIENDLY - CHILDREN’S
WEST VIEW SAVINGS BANK
In order to spread the word about community banking, West View Savings Bank branches decorated their offices with balloons and signage and offered refreshments and snacks to their customers. The bank held a children’s coloring contest open to children of all ages. In exchange for their artwork, they were given a school tote bag or a piggy bank to help encourage savings.
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$176 - $400 Million (continued)
BEST USE OF THEME - COMMUNITY
WILLIAM PENN BANK
To inform customers about Community Banking Week, William Penn Bank utilized this year’s theme, “That’s My Bank!” They hung posters in all branch offices, included two slides in their PowerPoint presentation announcing the celebration, created a web banner for their website, and included an article in their Spring 2012 newsletter, “Bills E-News.” During the week, employees thanked customers for banking with them by providing giveaways and serving snacks.
More Than $400 Million
BIGGEST IMPACT - COMMUNITY
Brentwood Bank used balloons, streamers, posters, press releases, and picnic cookouts at bank branches to thank their customers for their loyalty and to extend a friendly hand to people of the community who may not be bank customers. Additionally, Brentwood Bank sponsored their third annual Community Shred Day, a wildly popular opportunity for people to safely and securely dispose of tax records, legal documents, financial records, invoices, account and medical records.
MOST KID FRIENDLY - CHILDREN’S
HARLEYSVILLE SAVINGS BANK This year’s winning theme, “That’s My Bank!” came from Harleysville Savings Bank seasonal teller Rebecca Michalak. To show off the theme, they hung branded pennants throughout all branch offices and customers were given a piggy bank stress ball printed with the bank’s logo and “That’s My Bank!” To celebrate Community Banking Week, the bank threw Trusty, their mascot, a birthday party and collected food items for the Keystone Opportunity Center.
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More Than $400 Million (continued)
BEST USE OF ADVERTISING - COMMUNITY
One hundred Standard Bank employees continued to build relationships with more than 1,400 customers during their “Customer Appreciation Days” event, held in conjunction with Community Banking Week. To celebrate, the bank raffled off a set of oak Cracker Barrel rocking chairs, gave away coin pouches and refreshments to each customer, and offered product specials, like a Triple Advantage CD, loan fee discounts, and free wealth management consultations. To publicize the event, the bank placed a newspaper ad, included a flyer in monthly customer statements, as well as sent press releases to local media.
Thank you to everyone who participated! Partnering with Pennsylvania banks since 1926 For more than 80 years, Stradley Ronon has helped Pennsylvania banks build their businesses. With combined experience of more than 60 years in banking law, our practice group leaders head a group of 35 attorneys representing over 50 banks – helping them manage their legal challenges, so they can focus on running their institutions. www.stradley.com/banking
Philadelphia Malvern Harrisburg Cherry Hill Wilmington Washington, D.C.
(From left) Stradley Ronon Banking & Financial Services partners Linda Ann Galante, Valentino F. DiGiorgio III and Christopher S. Connell.
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CROWDFUNDING: A NEW WAY TO RAISE CAPITAL By: Jane G. Davis Shumaker Williams, P.C.
he Jumpstart Our Business Startups Act (the a reporting company, through a broker-dealer or a “funding “JOBS Act”) enacted in April 2012 provides portal.” A funding portal can be a third-party website that for a new method of raising capital without is registered as such with the SEC and provides a platform requiring registration of the offering with the where issuers can provide information about their offering Securities and Exchange Commission (the and potential investors can review this information. “SEC”). The securities offered will also be exempt from state registration requirements The JOBS Act contains dollar limits applicable to both the and, in contrast with some issuer and the participating other offerings that Congress investors. The aggregate dolCOMPANIES LOOKING TO RAISE A has exempted from state reglar amount of securities sold istration requirements, the by the issuer in the current SMALL AMOUNT OF CAPITAL states may not require a nooffering, together with all SHOULD KEEP THE AVAILABILITY OF tice filing or the payment of securities sold in reliance on a fee. However, both Federal the exemption in the previTHIS NEW EXEMTION IN MIND and state antifraud laws and ous 12 months, cannot exregulations will apply to ofceed $1,000,000. With respect to investors, the aggregate dollar amount of securities purferings made pursuant to this exemption. chased by any one investor in the current offering, and in The JOBS Act exempts the sale of securities by an issuer that all other offerings under the new exemption (including ofis not an SEC reporting company to an unlimited number of ferings by other issuers) in the previous 12 months, cannot purchasers, who need not be accredited investors and who be more than the greater of $2,000 or 5% of his/her annual will not count as holders of record for the purpose of deter- income or net worth if it is less than $100,000, or 10% of mining whether the issuer has exceeded the threshold (now his/her annual income or net worth if it is $100,000 or more, 2,000 for banks and bank holding companies) for becoming subject to an investment cap of $100,000. 18 | Transactions | www.pacb.org
Although the issuer is not required to file a registration statement with the SEC, the JOBS Act does require it to provide significant disclosure to the broker-dealer or funding portal and to each investor; this information must also be filed with the SEC. The issuer will also be required to provide information annually to investors and the SEC concerning the results of its operations and its financial condition. For a period of one year following their purchase, securities exempt under the crowdfunding provisions of the JOBS Act can only be transferred to the issuer, to an accredited investor, pursuant to a registration, to a member of the investor’s family, upon his/her death or divorce or upon other events to be specified by the SEC in rules it is required to enact. As under many of the provisions of the JOBS Act, the SEC is required to develop rules to further define the parameters and additional requirements of the exemption the Act provides for crowdfunding, including relating to the registration of funding portals and issuer disclosure; such rules are required to be issued within 270 days of the JOBS Act’s enactment on April 5, 2012. It is unclear how onerous
these rules may be, since some SEC officials have voiced their concerns about whether the exemption weakens investor protections too much. Companies looking to raise a small amount of capital should keep the availability of this new exemption in mind and, when the SEC issues its rules, determine whether or not it offers a cost effective avenue for raising capital. Ms. Davis is a shareholder, a member of the Corporate and Financial Services Department and heads the Firm’s Securities Law practice. She counsels clients with respect to corporate and commercial matters, mergers and acquisitions, securities regulation and corporate governance. As part of the Firm’s International practice group, she also assists clients with transactions abroad and advises foreign companies establishing a presence in the U.S.
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BANK STRESS TESTING: CHECK THE BOX EXERCISE OR COMPETITIVE ADVANTAGE?
By: Jack H. Goldstein, Managing Director, Strategic Risk Associates, LLC
ank stress testing is credited with restoring stability during the financial crisis and is featured predominantly as a critical forward-looking risk management tool. In congressional testimony Jamie Dimon recently championed the need for rigorous stress testing and independent review. DoddFrank requires all banks over $10 billion to perform annual company run stress tests and the largest banks get additional annual FED conducted supervisory stress tests. Results from both tests will be disclosed publicly adding a market discipline aspect to stress testing. The intense focus on stress testing is cascading down to community banks. Recent regulatory clarification confirms community banks are not required to perform enterprise wide stress testing, but indicates that all banks should have the capacity to analyze adverse outcomes on financial conditions consistent with existing guidance on commercial real estate concentrations, funding, liquidity, and interest rate risk. A recent regulatory panel held at the PACB Director’s Conference in State College, Pennsylvania, clearly articulated this expectation in their remarks. The bottom line is stress testing is here to stay and if performed correctly can sharpen your bank’s competitive advantage instead of just another check the box exercise. Stress tests at the enterprise-wide, loan portfolio, or individual loan level all answer this key question, “How much stress can be absorbed before the bank is negatively impacted?” The enterprise-wide test quantifies the impact to earnings, the Allowance to Loan and Lease Losses, and impact to capital providing management and the board with a tangible downside limit for the bank. The associated competitive advantage stems from having better informed management and board level risk decisions, improved capital and strategic planning, objective capital at risk estimates for concentration limits, and enhanced regulatory and customer credibility. At its core, a good stress test is uniquely grounded in 20 | Transactions | www.pacb.org
a bank’s risk profile and measures the cash flow/value of assets, liabilities, and contingent commitments under different scenarios. This objective drill down on cash flow/value stress can be applied to loan risk ratings, loan review, and loan monitoring. The effectiveness of these risk management tolls when linked to stress testing can be significantly increased at a reduced cost, further enhancing a bank’s competitive advantage. Jack H. Goldstein is Managing Director for Strategic Risk Associates, LLC (www.srabank.com). Mr. Goldstein in his 30 year banking career has specialized in all aspects of bank operations including credit risk management, strategic planning, capital planning, due diligence, loan review, stress testing, and ALLL analysis. Mr. Goldstein has held various senior management positions with regional and community banks in Pennsylvania and Maryland. Strategic Risk Associates, LLC (SRA) is an innovative consulting and advisory firm specializing in the banking industry. Our partners and associates have a strong commitment to innovation, customer service, and continuous improvement. Their team provides fast efficient, and practical consulting and advisory services on strategic planning, capital management, stress testing, loan review, internal audit, accounting, risk management programs (ERM), and merger and acquisitions advice. Mr. Goldstein may be contacted at 443-907-3000, or at firstname.lastname@example.org.
k n a b r u ? o d e y r is a p e r p 0101011010100011110010101110100110101 0100100101001001010010010100101001010 1001010101010111111110100010001001010 0101010010000000111101010011111010101 1111010000010110101001110101000101111 1100111000101111110001010110010100010 0010101001010010010111100111000101111 11000101010100001000 FRAUD 001010001 0001010010001001100100100101010100000 010010 PHISHING 00111111110000010101 0101001110100111000011110010101001010 010010101000001 IDENTITY THEFT 111010 1001111101010111110100000101101010011 0000000111011111000111111110000010101 1000100010100100010011001001001010101 0010101001000000011110101001111101010 1010100010111111001110001011111101110 1011001010001010001000101001000100110 0100100101010100000001110111110001100 0100000010101010100111010011100001111 Q1 Sessions January 15, 2013 • DoubleTree Monroeville • 101 Mall Blvd., Monroeville, PA 15146 0010101001010010010100101010010000000 January 16, 2013 • PACB Headquarters • 2405 N. Front St., Harrisburg, PA 17110 1111010100111110101011111010000010110 In partnership with: INTERESTED? 1010011101010001011111100111000101111 Please contact Saundra Cunningham, 1100010101100101000101000100010100100 VP-Education Services, at 717-231-7447 or email@example.com about this important, 0100110010010010101010000000111011111 new certification. www.protectmybank.com
IN 2013, YOUR STAFF CAN BECOME CERTIFIED COMMUNITY BANK SECURITY PROFESSIONALS.
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PACB’S DEDICATION TO EDUCATION
By: Saundra J. Cunningham VP-Education Services ongratulations to Rodney Becker of Jonestown Bank & Trust Co. and Ben Contrucci of United American Savings Bank on being the first two PACB members to earn the prestigious designation of Certified Community Lender!
A Certified Community Lender (CCL) is a designation created to professionalize the position of a community bank lender. Similar to a Certified Public Accountant, the designation establishes a standard of knowledge for community bank lenders. It also helps community bank lenders demonstrate to their employers that they have achieved that standard of knowledge. To become a CCL, a candidate must have a minimum of three years of lending experience at the time of examination, demonstrate the requisite number of educational hours based upon years of experience, and pass an exam. To maintain CCL designation, a candidate must take 24 hours of continuing education every two years. We began offering this exam this year, and it will be available every two years. Next year, we will begin to offer the new Certified Community Bank Security Professional (CCBSP) program, specifically designed to help Information Technology employees defend their institutions from threats of Internet crime. This program will include similar requirements in order for candidates to earn and maintain the CCBSP designation. These certifications are just two of the many ways that we are improving and renewing our educational offerings. Overall, our members find the Annual Convention to be valuable and informative, and it is our goal for our edu22 | Transactions | www.pacb.org
cation sessions to be just as beneficial. Whether our convention or education programs, we want our community banks to know we’re working toward the best educational offerings with the most knowledgeable speakers, so that they can compete with big banks with confidence. We have a commitment to offering quality education programs that establish high industry standards. This year, Chairman Chuck Leyh took on the task of visiting as many member banks as possible. Though he didn’t reach all of our banks, he spoke to more than 80% of the membership – an impressive feat! The knowledge that he gained during those visits is helping us to formulate programs that our members want and need in order to succeed. Improving our education programs is a dedicated effort to provide our membership with the very best opportunities. We will continue to reach out to our members, gather feedback, improve upon, and expand our education programs in years to come. Saundra J. Cunningham is VP-Education Services for PACB. Please feel free to contact her for more information on the Certified Community Lender program or with any other education related questions at firstname.lastname@example.org or 717-231-7447.
Ben Contrucci graduated Cum Laude from Allegheny College in 2002 with a BS in Mathematics and was also a 2-year letter winner on the baseball team. He went on to attain an MAT at the University of Pittsburgh and taught high school mathematics for two years. Contrucci entered into loan origination in 2004 with Allpointe Mortgage. In 2007, he became a branch manager of the Philadelphia-based Capital Financial Mortgage Corporation. Contrucci began with United American Savings Bank in 2008 as a loan originator. He was then promoted to Chief Lending Officer in February of 2012. Contrucci currently resides in Scott Township and coaches a 13-year-old AAU travel baseball team out of the All American Baseball Center in Trafford, PA in his spare time. Contrucci can be reached at the United American Savings Bank at 412-431-1134 or at email@example.com.
Rodney Becker has managed Jonestown Bank & Trust Co.’s Northside Commons office in Palmyra for nearly three years, serving individuals, businesses and community organizations in Hershey, Palmyra, and Campbelltown. With 15 years of financial industry experience, Becker has expertise in consumer and commercial lending as well as branch management and business development. In July 2012, Becker earned recognition as “Certified Community Lender” through PA Association of Community Bankers based in Harrisburg, PA. With this certification, community residents and business owners can feel confident that Becker is fully qualified to guide them to the proper financial products and services offered by JBT. When the workday ends, Becker enjoys spending time with his wife and two children at their home in Palmyra, plus he gets in some extra ‘play’ time with friends on the local basketball courts. Becker can be reached at the JBT Northside Commons branch at 717-838-2265.
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& ICBA: STANDING STRONG ON THE FRONT LINES
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When our customers succeed, we succeed, too. We want them to remain viable and we want our bank to remain viable; the relationship goes hand-in-hand. 26 | Transactions | www.pacb.org
NICK DIFRANCESCO (ND): Thank you for agreeing to participate in this interview. I know you’ve been traveling across the country and your time is tight. Can you give us a little perspective on the communities that you serve back home? How important is community banking on Main Street in Nebraska?
many stops you’ll make this year as you travel across the country. Being the President of a community bank is challenging enough, so why did you take on the challenge of leading ICBA?
(JG): First, I think a lot of the reason goes back to the multigenerational involvement my family has had in the banking industry. I’m a fourth generation banker, following in JEFF GERHART (JG): The Bank of Newman Grove, founded in September of 1891, is a family-owned bank that has the footsteps of my father, grandfather, and great grandfabeen providing banking services to our rural community ther. My father was even President of the association forty years ago when ICBA was for five generations. Proknown as the Independent viding banking services A LOT OF THE REASON GOES BACK TO THE Bankers Association of for our friends and family America (IBAA). since 1891 lets you know MULTI-GENERATIONAL INVOLVEMENT MY that our roots run deep in FAMILY HAS HAD IN THE BANKING INDUSTRY. Also, having grown up in our community. a small town, participatI’M A FOURTH GENERATION BANKER. ing in a small community, It’s crucial as a community I learned very early on that bank in a rural area that we if change and growth are going to happen, people need to provide our farming customers and small business owners participate. When I began my banking career, I never really with a good, strong lending environment. It’s important that we take care of our customers, whether a local farmer, gave this opportunity much thought. I just wanted to be inor a Main Street business, grocery store, café, or body shop. volved and participate in our industry. When our customers succeed, we succeed, too. We want I had an interesting conversation twenty-five years ago with them to remain viable and we want our bank to remain via community banker; we had a part-time executive on the able; the relationship goes hand-in-hand. state level and several of us were asked to make phone calls to gather opinions on the issue that day. I called a banker in (ND): Serving as the Chairman of the ICBA must be very the area and asked him his opinion on a particular piece of demanding. PACB’s Annual Convention is just one of the www.pacb.org | Transactions | 27
legislation. He said, “Oh, I don’t know, I don’t really care nor have an opinion. You guys just do what you want to do.” So, I thought, “This guy had an opportunity to weigh in and he didn’t do it.” I think that being active over the course of my banking career is probably what led me to this spot today.
they’re from New Mexico, Florida, Maine, Pennsylvania, or Nebraska. Of course with the financial crisis that we’ve all been working through, everyone is frustrated with the current environment. As I travel across the country, I will encourage bankers to turn their frustration into action and become involved in fighting back.
(ND): During the past few years, you’ve had the opportuIn my travels, I have seen that the American spirit runs nity to really get to know community bankers throughdeep in each of us. We have out the country. I know a strong resolve to make toour members are thrilled IN MY TRAVELS, I HAVE SEEN THAT THE morrow a better day. While to have you on the agenda as community bankers at our Annual Convention AMERICAN SPIRIT RUNS DEEP IN EACH OF we’re frustrated and beat in Vail. What are the comUS. WE HAVE A STRONG RESOLVE TO up about the future, I’ve mon themes that pop up noticed, especially with the as the biggest threats to MAKE TOMORROW A BETTER DAY. younger bankers, that we community banking? have a positive attitude. I think it’s a good sign that community bankers understand (JG): This won’t come as much of a surprise, but the most not only the importance of ICBA, but of their local commucommon threats to community banking, whether this year, nity bankers associations. If advocacy doesn’t happen at the last year, or 20 years ago are regulatory and compliance isgrassroots level, it makes it very difficult for advocacy to sues. It’s the environment that we live in, and being a heavhappen in Washington. ily regulated industry, we can certainly identify areas where there is a lot of overkill. ICBA has been working to pull back (ND): Clearly, the challenges we face as community banks on these regulatory and compliance issues. are vastly different from those affecting Wall Street banks, yet there are those out there that believe one trade assoThe frustration of bankers from across the country stems ciation can represent all masters. How do you respond to from these issues. They have the same concerns whether
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that point of view? At a time when more than 300 community bank charters disappear each year, why is it so important to have a strong ICBA, supported by a vast network of healthy state associations like PACB? (JG): Yes, there are those associations that proclaim to represent all banks regardless of whether they are on Wall Street or Main Street, but we all know that this is not practical and never has been. Trillion dollar banks have their own in-house lobby shops advocating for them and community banks need their own association too. Time and again we see examples where the “one voice speaks for all” mantra results in either no position because of diverse views or worse yet, a position that is not in the best interest of the community banking industry. ICBA was organized more than 80 years ago, back in the depression days of 1930. It was founded by roughly 28 bankers in central Minnesota who wanted to give voice to community banks. Up until that point, they had no exclusive voice. The nation’s largest banks were buying up community banks throughout the country leaving local communities without control of their financial destiny. ICBA ultimately moved their national headquarters to Washington D.C., but
bankers because I think that some bankers feel like their voice doesn’t count, but it certainly does. Collectively, we can give community banking a strong chorus if we have strong membership and strong trade associations across the country. And the latter part of your statement is exactly why ICBA is so critical for community banks. ICBA is the only national trade association that exclusively represents the nation’s community banks. In fact, a key driver of ICBA’s purpose is to preserve competition in financial services and to oppose the concentration of control of financial services resources. This is something that only ICBA can fight for since our membership only includes community banks. Also, ICBA’s network of strong healthy state associations, like PACB, serves a tremendous role as we help each other amplify the advocacy message for community banks both on a national and state level. The number of community bank charters may be declining; but our members are growing and ICBA’s voice is stronger than it’s ever been. With the support of independent state banking associations like PACB, ICBA is able to accomplish great things for the franchise of community banks, both now and for generations of community bankers to come.
Our members are growing and ICBA’s voice is
STRONGER THAN IT’S EVER BEEN still has offices and staff in Minnesota, California, Tennessee, and Florida. In addition, ICBA partners with nearly 50 state and regional partners throughout the U.S. to carry the community banking message. There has been a lot of change in our industry over the past 82 years, but our core values remain the same. ICBA’s mission is to promote an environment where community banks flourish. That mission is as important today as it was 82 years ago. As we stand taller and stronger together, we set the direction for both a resilient and responsible banking industry and banking system across the country. With community banks, our strength comes from everyone pitching in to help on both the state and national level. One of the things I tell Pennsylvania bankers is that your zip code in Pennsylvania gives you access to your elected representative, and my zip code in Nebraska does not. Of course, the reverse is also true. My son, when he was in college a few years ago, worked one summer as a mail room intern for a senator. He told me that his office had instructions explaining what to do with every piece of mail. If there was a letter from Nebraska, someone probably looked at it. On the other hand, if there was a letter from Pennsylvania, for example, it was likely overlooked. So, your zip code and your home town are very important when reaching out to elected officials in your area. That is a strong message that I try to convey to community
(ND): Almost every community banker takes the time necessary to monitor and adapt to current economic conditions. I’m surprised at how many do not take the time to monitor and adjust to the changing political conditions, even though their regulatory burden is a major cost center. America’s largest financial institutions spend vast amounts of money to protect their interests. The credit union industry can mobilize large numbers of people to rally to their cause. What is the advocacy strength of the community banking industry? How do we maximize our ROE when defending against policies that do harm to the franchise value of our community bank members? (JG): That’s a good statement, and a great question. I think that at the heart of this, ICBA and PACB obviously are excellent resources for all bankers to utilize. Of course, as bankers, we are all very busy on a daily basis simply running our own banks. This is where participation between ICBA and PACB comes into play. With the recent Wall Street Reform and Consumer Protection Act of 2010, we were able to increase deposit insurance coverage from $100,000 to $250,000 and lower FDIC premium assessments for probably 98% of the banks across the country. Those are just two examples. I’ve noticed over the years that our community banking voice is getting stronger, which I think goes back to the frustration many bankers experience. Often, individual bankwww.pacb.org | Transactions | 29
ers feel as though their opinions don’t make a difference, but I think that’s the importance of a trade association – to help them set the course, to help them walk the halls of Congress and make sure that together we knock on the door and explain our position, thoughts, and concerns. Again, I can’t emphasize enough that our community bankers take the time to participate with state and national trade associations. As community bankers, we spend a lot of time determining how our banks are performing or how we can improve, but it’s also just as important that we take some time to make sure that our state and our national trade associations remain healthy. What is important to remember is that community banks don’t have the huge legal departments and lobbying teams that the megabanks enjoy. They also have a significant tax disadvantage to the credit union industry. Community banks necessarily must focus all of their resources on their customer relationships and developing their communities. They know that if their communities aren’t successful, they won’t succeed either. Therefore, community banks rely heavily on their state and national community banking associations to lead them in their advocacy efforts. However, ICBA’s strength comes from the passion of its membership, its staff, and its state affiliated associations like PACB. Powerful grassroots advocacy, combined with a stellar industry reputation, gives community banks and ICBA a
user of the ICBA Bank Director’s Continuing Education Program that is completed online, just to name one. ICBA has the education program available to ensure that bankers who don’t have those opportunities on a state level can at least have them on a national level. I know that across the country, we have some very strong educational arms of a variety of state trade associations, creating a win-win situation for everyone. In addition, ICBA Preferred Service Providers (PSPs) are among a select group of service providers to the community banking industry that have earned the ICBA “Stamp of Approval.” ICBA Preferred Service Providers are selected by the ICBA Bank Services Committee and approved by the executive committee. The committee, comprised of community bankers, seeks solutions to critical member needs. Service Provider selection criteria includes financial strength, commitment to the community bank market, reference checks with existing community bank customers, and sales, service, and distribution capabilities. ICBA Preferred Service Providers offer unique benefits to community banks, as well. ICBA also offers services programs through the subsidiary companies of the ICBA Services Network. In general, these programs provide members with negotiations with service providers, due diligence, and the guarantee that community bank customers will not be cross sold competitive products.
Community banks and ICBA mean business and we won’t stop until
OUR VOICE IS HEARD LOUD AND CLEAR huge edge when lobbying in Washington and at the state level. ICBA has been labeled time and time again as one of the most powerful banking lobbies in Washington. When it comes to the large financial institutions, they know community banks are a passionate constituency that won’t back down. In fact, in a blog post from June, Mark Calabria, director of financial regulations studies at a D.C.-based think tank, The Cato Institute, said, “Anyone who thinks that say JP Morgan has a lot of pull has never gone up against the Independent Community Bankers of America (ICBA). Believe me, from having been in those fights, ICBA makes JP Morgan look politically weak…” This post says it all. Community banks and ICBA mean business and we won’t stop until our voice is heard loud and clear. (ND): Aside from advocacy, the ICBA also invests in several programs that help community banks thrive in the marketplace. What advantages do community bankers gain through their participation with ICBA services? (JG): I feel strongly that ICBA advocacy on behalf of community banking is legendary. Of course, they have some other facets to the organization, one being an array of educational services. For example, our bank is an active 30 | Transactions | www.pacb.org
Depending on the service offering, ICBA Services Network companies offer additional enhancements like service-level agreements and dividend programs. (ND): Great. Just one last question. Being the ICBA Chairman takes up a great deal of your time; when you have the opportunity to relax, what do you like to do? How do you spend your free time? (JG): Well, when I do get some free time, if I’m at home, I will pick up one of my guitars and play. I am trying to keep my calluses on my fingers so that those guitar strings don’t hurt too much if I don’t play for a while. That’s definitely one of my releases. Also, my wife and I both enjoy yard work and I enjoy biking, so I can always find something to do. I find that I have to squeeze that in when I can. Also, when time permits, I enjoy being involved in the local community. One of the things I knew had happened, and I didn’t realize it until I was in the middle of it, was I found out that I don’t have all of the time that I had hoped to participate in community events that are going on. In a small town, every warm body helping out really helps. I miss it, but I’ll get back to that.
When time permits, I enjoy being involved in the local community...In a small town, every warm body helping out really helps.
to 2004, he was a Class A board member of the Federal Reserve Bank of Kansas City.
Jeffrey L. Gerhart is chairman-elect of the Independent Community Bankers of America (ICBA), the only national trade association that exclusively represents community banks. Chairman of the Bank of Newman Grove, Neb., and a fourth-generation banker, Gerhart has served ICBA and the community banking industry for many years. He is a member of the ICBA Executive Committee and chairman of the Congressional Affairs Committee. He has served as a member of a variety of ICBA committees, including Education, Federal Legislation, Payments and Technology, Regulatory Review and Strategic Planning, and as chairman of the Policy Development Committee. He has also served as chairman and board member for the Nebraska Independent Community Bankers. From 1999
Gerhart also manages Gerhart Insurance Agency in Newman Grove. He is president and manager of Marbu Inc., a family-farming operation. He is a member and past officer of the Newman Grove Community Club, treasurer of the Newman Grove Medical Clinic, cochairman of the Newman Grove Community Foundation, a member of the Vision/Newman Grove economic group and a member of the Newman Grove Masonic Lodge #305. Gerhart attended the University of Kansas from 1971 to 1973 and received his bachelor’s degree in business from the University of Nebraska in 1975. He is a graduate of the Colorado Graduate School of Banking. Both community banking and ICBA service are a family tradition. Gerhart’s parents, H.L. “Bud” Gerhart Jr. (bank director) and Georgianne, were active in ICBA for many years, with Bud serving a term as ICBA president in 1972. Three generations of Gerharts serve as directors of First Newman Grove Bankshares and the Bank of Newman Grove. He lives in Newman Grove, Neb., with his wife, Becky; they have two adult children, son Patrick and daughter Kyle. www.pacb.org | Transactions | 31
EMERGING TRENDS IN CORPORATE GOVERNANCE
By: Eric M. Marion, Esquire Elias, Matz, Tiernan & Herrick LLP
ecent high profile revelations of financial loss and mismanagement have added support for the demands for more extensive federal regulation of corporate governance and risk management at financial institutions. Frequently, poor management oversight, lack of internal controls, and the â€œtone from the topâ€? have been cited as the cause of the financial breakdown. The most recent driver of many regulatory initiatives continues to be the Dodd-Frank Wall Street Reform and Consumer Protection Act. 32 | Transactions | www.pacb.org
Among the vast number of new regulations driven by the Dodd-Frank Act is a proposed rule addressing enhanced prudential standards which will require affected institutions to establish a risk committee. In addition, a proposed regulation on incentive-based compensation arrangements has been published. Corporate governance practices increasingly are being prescribed by legislation and regulations in an attempt to address the public and political perception that the breakdown in the financial and credit markets was due in large part to flawed corporate
governance practices and increased risk-taking without adequate Board oversight. While the rules acknowledge the need to be tailored for the size and complexity of the financial institution, the restricted framework of some proposals appears counter to the proposition that there is no “one size fits all” in matters of corporate governance. Traditionally, organizations operated under a framework of best practices when developing and implementing corporate governance strategies while deciding among a variety of committee structures and policies to find those that worked best for them. RISK COMMITTEE Contained within the proposed rules for enhanced prudential standards is the requirement that covered financial holding companies establish a risk committee. The proposed rule includes specific membership requirements and outlines certain responsibilities of the risk committee, including oversight of enterprise-wide risk management policies and practices.
The proposed rule is premised on the notion that incentivebased compensation encourages inappropriate risk-taking unless it balances risk and financial reward, is compatible with effective controls and risk management, and is supported by strong corporate governance. While many corporate governance practices and policies are being imposed on financial institutions, it is important to remember that each organization must tailor such policies and practices for its own size and the complexity of its operations. It is all too common that policies and procedures are adopted without fully considering how they are interrelated or whether they create conflicts. The concept of enterprise risk management was developed in part to respond to the concern about gaps in oversight. However, vesting the oversight of company-wide risks in a single risk committee has its limitations as well.
Like many areas of corporate governance, community bankers have reason for concern that these proposed new regulations, that are ostensibly applicable only to larger organizations, in practice will be subsequently applied to POOR MANAGEMENT OVERSIGHT, LACK The requirement to estabsmaller institutions through lish a risk committee applies OF INTERNAL CONTROLS, AND THE “TONE the supervisory process. In to bank holding companies point of fact, with respect to FROM THE TOP” HAVE BEEN CITED AS THE the proposed rules on incenwith $10 billion or more in assets. The Federal Reserve tive-based compensation the CAUSE OF THE FINANCIAL BREAKDOWN. Board intends to address banking agencies note that savings and loan holding the standards in the rule are companies at a later time. The rule, which was proposed consistent with the principles for sound compensation pracin December 2011, has been the subject of significant com- tices in published agency guidelines that are applicable to ment. One critique of the proposal is that other Board com- all financial institutions. mittees may already have risk oversight responsibilities, such as financial risk by the Audit Committee or liquid- For further information on this subject, please attend Sesity, interest rate, and operational risk by the ALCO Com- sion 1, “Emerging Trends in the Role and Responsibility of mittee. Some have questioned whether the requirement to Outside Directors for Oversite document a company’s risk management practices goes of Governance and Operations” beyond the Board’s oversight responsibility and imposes from 8:30-9:30am in Salon AB at additional duties and potentially increased liability on the PACB’s 135th Annual Convention in Vail, Colorado. members of the risk committee. INCENTIVE-BASED COMPENSATION In April 2011, the various federal banking agencies, National Credit Union Association, Securities and Exchange Commission and Federal Housing Finance Agency published joint rules on incentive-based compensation arrangements. To date, final rules have not been adopted, although they are expected to be forthcoming. As proposed, all financial institutions with assets in excess of $1.0 billion will be subject to the rule. The proposed rule on incentive-based compensation is intended to limit excessive compensation and prevent assuming inappropriate risks that may lead to material financial loss. Each of the agencies would be tasked with the determination of whether compensation is excessive based on specific factors included in the proposal. All compensation is covered in the analysis, including post-employment benefits.
Mr. Marion has specialized in representing financial institutions since joining the firm in 1998. With a focus on corporate and securities law he has assisted institutions to effect mergers, acquisitions, equity offerings, and mutual to stock conversions and advised on corporate governance, executive compensation, and employee benefit plans. Member of the Virginia State Bar, District of Columbia Bar and American Bar Association; Graduate of Franklin & Marshall College and William & Mary School of Law; Summer clerk, Commodity Futures Trading Commission; Staff assistant to the Honorable L.F. Payne, U.S. House of Representatives.
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HOW A BANK’S RELATIONS WITH ITS REGULATORS IMPACTS ITS RELATIONS WITH ITS SHAREHOLDERS
By: Kenneth J. Rollins, Esquire Rhoads & Sinon LLP
or community banks and their holding companies, maintaining a positive relationship with shareholders is of paramount importance. Because many of the bank’s shareholders are among its most loyal customers, a community bank is uniquely dependent on its shareholders as sources of both income and capital.
the bank’s dividend rate and overall profitability, which may lead to other concerns.
These regulatory concerns can become a shareholder relations issue in any number of ways. Perhaps the examiner has expressed concern over a specific loan relationship with a customer who is also a significant shareholder or community leader. The bank may be pressured to take certain acFor many community banks, the current regulatory climate tions with respect to the credit that the bank views as unwarcontinues to put a strain on the relationship between the bank ranted or as negatively affecting the customer relationship, and its regulators, and deteriorating relations with regulators such as downgrading the credit or transferring the relationship to the bank’s workout often leads to pressure on department. Whereas the shareholder and customer IT IS IMPORTANT FOR COMMUNITY bank and customer may relations. It is important for have been able to work community bankers to unBANKERS TO UNDERSTAND HOW THE through issues in the past, derstand how the current CURRENT REGULATORY ENVIRONMENT the short timeframes within regulatory environment can which regulators typically impact shareholder relaCAN IMPACT SHAREHOLDER RELATIONS require banks to take cortions, so that they are best rective action may cause positioned to prevent, mitithe customer to take offense to what they perceive to be a gate and respond to the impact of negative developments. sudden lack of willingness on the part of the bank to work It should come as no surprise that the primary concern with them. It is not uncommon for the customer to voice dissatisfaction within the community, adding a degree of of examiners (whether or not warranted) continues to be asset quality. An examiner’s determination that the bank reputational risk to the equation. exhibits poor asset quality can quickly snowball into a number of other perceived issues, including the adequa- Another example would be a requirement to reduce or suscy of the loan loss reserve and overall capital levels. Con- pend the bank’s regular cash dividend. This news is probcerns over capital levels may then lead to concerns over lematic for any company, but particularly so for community 34 | Transactions | www.pacb.org
banks given their unique relationship with their shareholders and the limited interest in the bank’s stock outside its community. Dividend restrictions may make the stock less attractive, decreasing the prospects for a successful capital raise. Additionally, the bank may find itself answering to frustrated older shareholders who have come to rely on the dividend, and to younger shareholders who may be less patient in waiting for the bank to work through its issues and restore the dividend. All of this makes it more difficult for the bank to manage its shareholder base. Maintaining positive relations with regulators and avoiding this snowball effect requires prior preparation. Conduct an honest self-assessment. Better yet, retain an outside consulting firm to perform one for you. Identify your bank’s issues before your examiner does, and develop a plan to address them before your regulator requires you to. Be advised that examiners continue to focus on asset quality and capital levels, along with an increased emphasis on compliance with laws, regulations, and statements of policy. Loan documentation and, more recently, lending limits continue to receive significant attention. These should be areas of focus for you. Between June 1, 2011 and May 31, 2012, more than 130 banks with less than $1 billion in assets entered into consent orders or formal agreements with their primary federal regulators. A reduction in the number of enforcement actions is not expected in the near term. In the event that an enforcement action appears likely, understand your bank’s rights and retain experienced outside advisors early in the process.
Finally, understand that facing an enforcement action does not mean the demise of your institution. A dedicated board of directors and management team, together with experienced outside advisors, will give the bank its best chance at overcoming these issues and remaining a source of pride within its community for years to come. For further information on this subject, please attend Session 3, “Shareholder Relations in a Challenging Regulatory Environment” from 11:00am12:00pm in Salon IJ at PACB’s 135th Annual Convention in Vail, Colorado. Mr. Rollins is a member of Rhoads & Sinon LLP’s Financial Institutions and Corporate Finance & Securities practice groups. His practice focuses primarily on advising financial institutions on matters involving regulatory compliance, acquisitions and divestitures, capital raising, strategic planning and compliance with federal and state securities laws. In this capacity, Mr. Rollins routinely represents clients before the Board of Governors of the Federal Reserve System, FDIC, OCC, Pennsylvania Department of Banking and SEC.
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WHEN WILL RATES EVER RISE? RECENT FOMC STATEMENTS MAY GIVE US A CLUE
By: Jim Reber President and CEO ICBA Securities
eems like every time another economic wag starts prognosticating on the “go” date for a real, live, interest rate rally, the date has been pushed backward by another month, quarter, year. Or even years.
at its January meeting to announce that it expects to maintain “exceptionally low levels for the federal funds rate at least through late 2014.” And with that, the bond market rallied hard, with the benchmark 10-year Treasury note falling in yield by 26 basis points in just 5 trading days.
Let’s give the Federal Open Market Committee (FOMC) its due in this debate. The FOMC, which actually sets the target rate for Fed Funds, was helpful enough
What this illustrates is that it is possible to move the bond market through words, and not just actions. Fixed-income investors cling breathlessly to FOMC and individual Fed
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Governor comments, and are most assuredly going to do so again whenever it is that rates are poised to rise. The fact we will be starting near zero makes the stakes that much higher. INFLATION VS. YIELDS It’s almost an axiom that higher inflation leads to higher yields. In fact, that’s only partly right: higher inflation expectations lead to higher yields. And based on the shape of the yield curve, which is almost always positively sloped, investors are wrong about half the time. Let’s look at what happened in the year of 1999. The economy was heating up, and the Fed had inflation on its mind. It tightened three times in 1999, and its bias was that inflation was of a greater concern than was growth, the “dual mandates.” In the calendar year Fed Funds
KEEP ABREAST There are a number of tools that the banker on Main Street can access to keep up-to-speed on Fed announcements and actions. One is by subscribing to Economic Flash, a periodic document that is created and distributed by ICBA Securities whenever market events warrant (e.g., conclusion of an FOMC meeting). Most full-service institutional brokers have some version of a breaking-news article. Another is the Fed’s own website, www.federalreserve.gov. It contains prodigious amounts of data on Fed activities, releases, projections, and current investments. It is the source of some of the historical information used in this article. Still another is www.bloomberg.com. This site is handy for viewing current yields on benchmark fixed-income investments, and for viewing upcoming economic calendars. It
Prepare yourself to
STAY AHEAD OF THE PACK rose from 4.75% to 5.50%, and the yield on the two-year Treasury went from 4.44% to 6.20%. In other words, investors built in way more inflation protection than did the Fed. What’s noteworthy to this analysis is that the core rate of inflation in 1999 started at 1.6 percent and ended at 1.5 percent—so the Fed either guessed wrongly, or their monetary policy, in fact, stamped out price pressures. Either way, inflation fears were not realized, and the real rate of interest was enormous, certainly by today’s standards. RECENT HISTORY This has a “Field of Dreams” sense to it. Say it, and they will react. The market’s moves in January seem to indicate that’s the case. About a year ago, when “Operation Twist” was announced, the curve reacted in the manner which the Fed very much desired, as shorter maturities in the Fed’s portfolio were swapped for longer bonds. This duration extension strategy brought down long yields, and both flattened the yield curve and lowered mortgage financing costs. Actually, the truth is that the Fed’s announcement and its actions both contributed to this effect. So far, the U.S. market has not factored in one iota of rate hike expectations. The FOMC continues to talk about “late 2014,” and thinks “inflation expectations…remain stable,” so accordingly Fed Funds futures project no tightenings until early 2015. Also, with inflation running at about 1.9 percent, the ten-year Treasury note has a negative real yield. This is proof of the conviction the bond market has toward the Fed’s recent statements.
also has a news link that displays headlines as well as an archive of opinions and commentaries. In closing, a prudent investor will want to stay informed about Federal Reserve intentions as it approaches the next tightening phase. The market has and will overreact, at least for short periods of time. These actions, rational or not, have a direct impact on your bank’s performance. Now is a great time to prepare yourself to stay ahead of the pack. For further information on this subject, please attend Session 4, “When Will Rates Ever Rise?” from 2:15-3:15pm in Salon GH at PACB’s 135th Annual Convention in Vail, Colorado. Jim Reber is President and CEO of ICBA Securities. He has more than 25 years of financial services experience, and is a frequent speaker and lecturer at bank investment seminars and workshops. Jim also writes a monthly investment column for Independent Banker magazine. He is a member of the Board of Regents at Barret School of Banking in Memphis, TN. Jim is a Certified Public Accountant and a Chartered Financial Analyst, and holds a BS degree in Accounting from Christian Brothers University, where he serves on the Board of Trustees. Jim Reber can be reached at 800-422-6442 or firstname.lastname@example.org
www.pacb.org | Transactions | 37
THE FIVE ENDURING PRINCIPLES OF ENTERPRISE RISK MANAGEMENT
By: Jack R. Salvetti and Nancy D. Schell S.R. Snodgrass, A.C.
RM is certainly the buzz right now, raising questions as diverse as: Is it just one more regulatory requirement? Is it a sophisticated management method to build performance? Is it a welcome aid in difficult operating environments? Does it identify the risk/reward dynamic that captures the essence of banking? ERM addresses risk in a systemized and robust process. The subject of risk describes the potential impact and probability of loss. ERM in the banking industry calculates and relates the risk exposure to loss of earnings, capital, the potential to pay shareholder dividends, maintaining a positive regulatory relationship, and solvency. In fact, the measurement of risk of loss may include a combination of these elements. There are so many opinions, descriptions, approaches, and methodologies concerning ERM that the level of confusion is not surprising. While ERM includes a number of existing risk management principles and activities, it is a relatively new approach and absolutely is unique in its own right. In fact, there are five enduring principles that guide the development of every authentic ERM process. 38 | Transactions | www.pacb.org
The First Principle of ERM – ERM is not just about risk: • ERM is a management system designed to boost performance, so the reward must always be considered, actually combined with risk in a uniquely practical framework. • Early in the process an executive summary statement describes the organizational appetite for the level and nature of risk. How much and what types of risk do you want to take after determining how much reward you want, such as yield on earning assets, or net interest margin or return on capital? Risk and reward are indelibly connected. In banking, you cannot have one without the other. It is the essence of the business of banking. The Second Principle of ERM – ERM is a management model that leads to action: • Involves top down participation of directors, executive management, middle management, line of business leaders and non-bank subsidiaries execs. • Combines categories of risk (credit, market, liquidity, operational, compliance and legal, strategic, and reputational risk) across the company, identifying and measuring each. • A method of self-assessment and transparency that gets the right people together to discuss quantitative and qualitative factors to determine the level of risk
and compare it with the corresponding reward (performance) of the risk areas being considered. Influences the resource allocation (budget) of expenses to optimize risk and opportunity. The ERM process answers the question, “Are we spending money in the right places to enhance earnings while controlling and monitoring our risk exposures?” ERM provides the coordination of all the various risk management activities that are currently in place in the organization, evaluating them in their entirety and interaction, not just on a stand-alone basis. The ERM process also evaluates the current trends in each risk/reward category, providing a predictive indicator of potential financial performance. Key Risk Indicators (measures and metrics) are designed to determine that the enterprise is operating within pre-established risk tolerances and that the risk
ERM is NOT JUST: • About risk levels. • Intended to satisfy the regulators. • An assessment of internal controls. • An extension of regulatory and legal compliance. • Simply an expansion of SOX. • A further elaboration of FDICIA. • A further description of the CAMELS regulatory rating process. The Fourth Principle of ERM – An effective ERM process answers four key questions: 1. Do we understand the risks we are taking across the company (enterprise)? 2. What is the reward? 3. Is the risk acceptable? 4. Is the reward great enough?
ERM adresses risk in a
SYSTEMIZED AND ROBUST PROCESS appetite and risk profile are in sync. • ERM is a dynamic decision-making process that evaluates the potential risk/reward of opportunities, such as new products and services, business acquisitions, market expansion and others. As such, each opportunity is assessed to determine the potential reward and the impact on the organization’s risk profile, by evaluating whether the organization will be riskier, less risky, or risk-neutral. • ERM always leads to actions taken to increase, reduce or accept the balance of risk and reward for each risk category, asset class, and new opportunity under consideration. The Third Principle of ERM – While Enterprise Risk Management integrates many of the risk management activities currently in operation, it creates a very different and unified approach. So ERM does have a life of its own. Although the following certainly have a place in the ERM conversation, ERM is a new and unique management process. Jack R. Salvetti is the President of S.R. Snodgrass, A.C., an expert accounting and consulting firm specializing in services to financial institutions. His unique combination of consulting experience and CPA background helps institutions understand and define their business to facilitate the development of plans that deliver measurable results.
The Fifth Principle of ERM – ERM is a dynamic link between strategy, opportunity, risk, and reward. In the end, the operating principles of authentic Enterprise Risk Management assess the dynamic principles of risk and reward in providing the link between strategy, performance, and risk management. An important aspect is the ongoing identification and evaluation of internal and external events that have the potential to positively or negatively impact the company’s strategic objectives. Event scenario planning addresses the “what if” or emerging risks and opportunities, avoiding surprises furthering the consistency of performance. Employing the ERM principles will create a better, stronger, and more effective company. For further information on this subject, please attend Session 5, “Whatever Happened to High Performance?” from 3:304:30pm in Salon IJ at PACB’s 135th Annual Convention in Vail, Colorado. Nancy D. Schell is a Senior Vice President with S.R. Snodgrass, A.C. Nancy is the 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.
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FIVE MINUTES WITH CONGRESSMAN
MARK CRITZ NICK DIFRANCESCO (ND): Reapportionment touched each of our Congressional districts, but none as much as it did yours. By combining the former 12th and 4th districts into the new 12th, you faced an immediate primary election and had to get to know your new district very quickly. Tell me a little about how your district has changed. What is the character of your new district? CONGRESSMAN MARK CRITZ (MC): My old district went all the way from Tarentum to Kittanning to Indiana to Johnstown through Somerset to Mt. Pleasant, Uniontown, Monongahela, Waynesburg to Canonsburg. My new district runs from Cambria/Somerset, through Derry & Lower Burrell to the North Hills of Pittsburgh and on into Beaver and Law-
you believe community banks are so important to wellbeing of the communities you represent. (MC): In my district, community banks are the lender of choice for home loans, small businesses and community organizations. Community banks are a vital component to our small community’s economic health and that’s the reason I opposed the 2010 Dodd-Frank financial industry reform bill. I listened to your concerns and lobbied my leadership because of the undue regulations this legislation placed on community banks. We all agree that the 2008 economic meltdown had to be addressed, but community banks did not cause these financial problems. However, they were lumped with the big banks as part of these new regulations.
Community banks are a vital component to our small
COMMUNITY’S ECONOMIC HEALTH rence Counties. Seventy percent of the new district is new to me, and you’re right, I had to get to know these new parts and new constituents very quickly. I’ve enjoyed spending time in the new district and getting to know the people and the issues most important to them. Many of our local communities in western Pennsylvania have similar demographics based on our steel/coal background, but more of this new district is impacted by its closeness to Pittsburgh. It has given me a reason to become more involved in the greater Pittsburgh region and I’m honored to be representing this area in Congress. (ND): In your district you have a reputation of supporting community banks, even when your caucus is headed in a different direction. Give me a sense of why 40 | Transactions | www.pacb.org
(ND): You are going to have a full agenda this fall, including a debate on taxes, debt ceilings, and funding the government. It seems the divide in Washington between political parties is growing wider. What is it going to take to accomplish everything that needs to get done before the end of 2012? (MC): You’re absolutely right, and we saw the divide firsthand last August when the United States almost defaulted on its financial obligations because partisan-politics got in the way of doing what was necessary to ensure the U.S. Treasury could pay our bills. As you mentioned, there are a lot of important decisions that will take place this fall, including passing the fiscal year 2013 budget, another vote
to raise the debt ceiling, the expiring Bush tax cuts and the threat of sequestration. Many times a good compromise means that no one walks away happy, and that is what it’s going to take to solve these big issues. I’m hopeful that at the end of the day, both Democrats and Republicans can put their ideological differences aside and do what’s right for the American people. I will continue to work in a bipartisan fashion to help move our government to reasonable, practical solutions. (ND): What are your personal policy goals? That is, the issues that may not be in the daily news, but are important to the constituents in your district. (MC): When I won my first special election and got sworn into office, many of my Democratic colleagues said to me, “Great job, Mark, and way to run on the jobs message…it really worked.” I would say to them, “We’ve been talking about jobs and the economy for over 30 years in western Pennsylvania.” Ever since the decline of the steel industry, jobs and the economy have Mark Critz is currently serving his second term as U.S. Representative for Pennsylvania’s 12th Congressional District. Since coming to Congress, Mark has been a tireless advocate for seniors, veterans, and working families. He is currently focusing on initiatives to create jobs, grow the economy, improve our fiscal situation, and support active and retired members of our armed forces and their families. Mark was born and raised in Irwin, Pennsylvania. He attended Norwin High School in Westmoreland County before earning a Bachelor of Science in Management Information Systems from Indiana University of Pennsylvania in 1987. From an early age, Mark had an abiding desire to enhance the economic vitality of the region and helped motivate him to pursue a career in public service. In 1999, Mark began a ten-year stint as a staffer for the late Congressman John P. Murtha. During his time working for Congressman Murtha—first as Economic Development Director and then as District Director. Mark came to Congress in May of 2010 after winning a Special Election to finish out Congressman Murtha’s term following his death several months earlier. In November of 2010, Mark was re-elected to serve a full two-year term. He currently sits on the House Armed Services and Small Business Committees. Mark feels that a thriving Marcellus Shale Natural Gas industry is also vital to getting our economy moving again. He is a Co-Chair and founding member of the House Marcellus Shale Caucus, and has introduced H.R. 1396, the Marcellus-Shale On-the-Job Training Act, which would require the Secretary of Labor to make grants to local areas for adult on-thejob training or dislocated worker on-the-job train-
always been our number one issue. Since being elected to Congress, my number one priority has been creating jobs and economic development and I have worked with both my Democratic and Republican colleagues on common-sense legislation to improve our economy and put Americans back to work. That will continue to be my primary focus in the years ahead. (ND): Too often people judge you as an elected official and forget you’re human. What do you like to do outside of your formal duties in Congress? What do you like to do in your free time? (MC): The hardest part of this job is being away from my family. My wife and two kids live in Johnstown, and while they do get to come with me to D.C. for a few weeks in the summer, we’re separated most of the year. When I’m not in the office or on the road, I spend most of my free time with my family attending sporting events, movies, supporting the arts, trying new local restaurants, and just hanging out together. ing at worksites devoted to exploiting the Marcellus Shale natural gas play. A member of the Congressional Task Force on Seniors, Mark is working hard to preserve the integrity of the programs elderly Americans rely on to live happy and healthy lives. In September of 2011, he was awarded the Social Security and Medicare Hero Award from the Pennsylvania Alliance for Retired Americans in recognition of all he has done for senior citizens throughout his career in public service. Mark is also focused on promoting fair international trade practices. He feels that by leveling the playing field between us and our trade partners, we can put Americans back to work in well-paying manufacturing jobs, stimulate economic growth and achieve meaningful deficit reduction. He is a co-sponsor of H.R. 639, the Currency Reform for Fair Trade Act, which would allow countervailing duties to be placed on imports from countries like China, which engage in large scale currency undervaluation that causes us to amass large trade deficits and sends American jobs overseas. While the Currency Reform for Fair Trade Act has been sitting in the House Ways and Means Committee since 2011 without action, Mark is the sponsor of a discharge petition, which will force this bill to the House floor with the signatures of 218 House members. Mark has successfully served his constituents since coming to Congress through his intimate knowledge of western Pennsylvania, years of experience promoting economic development and passion for public service. Moving forward, he will continue to support policies and initiatives that advance the interests of Pennsylvania’s 12th Congressional District. Mark resides in Johnstown, PA with his wife, Nancy and twin children, Sadie and Joe.
www.pacb.org | Transactions | 41
The 2012 PULSE Conference is an ideal opportunity for your financial institution to gain valuable insight into how your debit card program can turn with confidence. October 1-3, 2012 The Bellagio Hotel Las Vegas, Nevada For more information about the conference, scan the code or visit
42 | Transactions | www.pacb.org
COMPLIANCE SEMINAR SEPTEMBER 18, 2012 | PACB HEADQUARTERS | 2405 N. FRONT ST., HARRISBURG SEPTEMBER 26, 2012 | DOUBLETREE MONROEVILLE | 101 MALL BLVD., MONROEVILLE TOPICS: • Compliance Hot Topics • Managing the Surge of New Laws and Regulations • Compliance Roundtable - Addressing Your Questions and Concerns • BSA/AML - Best Practices for the Current Regulatory Focus
to learn how to Attend the PACB Compliance Seminar hot water. keep your institution out of regulatory
AUDIT SEMINAR SEPTEMBER 20, 2012 | PACB HEADQUARTERS | 2405 N. FRONT ST., HARRISBURG TOPICS: • Audit Committee Internal Oversight • How to Audit Vendor Management Programs • Management and the Internal Audit Risk Assessment • How to Audit Enterprise Risk Management • Allowance for Loan & Lease Losses, Key Risks
Register for seminars online at pacb.org/pacb-education.
Attendees are eligible to earn up to: • 7 CPE credits - Compliance Seminar • 6 CPE credits - Audit Seminar • 6 CPE credits - ALM Seminar
Contact Saundra J. Cunningham, PACB VP-Education Services, at 717.231.7447 or email@example.com.
to learn about how Register for the PACB Audit Seminar common risk issues. internal audits can help you manage
ASSET/LIABILITY MANAGEMENT SEMINAR SEPTEMBER 27, 2012 | DOUBLETREE MONROEVILLE | 101 MALL BLVD., MONROEVILLE OCTOBER 3, 2012 | PACB HEADQUARTERS | 2405 N. FRONT ST., HARRISBURG TOPICS: • Current Environment • Managing Bank Risk • Managing Assets in the Current Environment • Managing Liabilities in the Current Environment
understand the Attend the PACB ALM Seminar to in 2013. critical issues bank ALCOs will face www.pacb.org | Transactions | 43
44 | Transactions | www.pacb.org
SECONDARY MARKET RESIDENTIAL MORTGAGE PRICING SPECIALIST
Malvern Federal Savings Bank, located, in Paoli, Pa. is looking for a talented Secondary Market Residential Mortgage Pricing Specialist with excellent verbal and written communication skills, and problem solving skills to join our Residential Mortgage Department. Under the direction of the Chief Lending Officer, this position is responsible for reviewing and verifying price quotes and lock requests, committing loans with investors, issuing confirmations, and entering lock requests into the Loan Origination System to sell loans to market investors.
The successful candidate will have a bachelorâ€™s degree in finance or accounting and 5 years of secondary market experience, preferably in residential mortgage operations. In addition, this individual must have a working knowledge of investor requirements for pricing and commitments, be registered as a mortgage loan originator, and 2-3 years of rate lock experience. Paperless eStatements CONTACT INFORMATION: Maureen Wroblewski, Human Resource Manager Malvern Federal Savings Bank P: 610-695-3647 F: 610-644-1943 firstname.lastname@example.org
PACB welcomes our
PACB welcomes our
NEW ASSOCIATE MEMBER
NEW ASSOCIATE MEMBER
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CONTACT INFORMATION: Michael D. Ryan President 218 Ardmore Avenue Ardmore, PA 19003 P: 610-733-9955 email@example.com www.innovativefinancingsolutions.net
For more than 80 years, Weltman, Weinberg & Reis Co., LPA (WWR) has been providing innovative and comprehensive creditor representation and legal services to businesses and financial institutions through bankruptcy, collection, litigation, and real estate default services. We are committed to providing high quality legal services and constantly striving for outstanding service and performance excellence. CONTACT INFORMATION: Keri P. Ebeck Attorney 1400 Keppers Building, 436 7th Avenue Pittsburgh, PA 15219 P: 412-434-0085 F: 412-434-7959 firstname.lastname@example.org www.weltman.com
www.pacb.org | Transactions | 45
THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS
Pennsylvania’s Community Banks. For people and their neighborhoods.
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Each issue of Transactions is overflowing with timely news and information concerning all aspects of community banking, including:
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PACB Members & Associate Members:
$60 PER SUBSCRIPTION
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46 | Transactions | www.pacb.org
WEBINAR & TELEPHONE SEMINARS AUGUST
AUGUST 7, 2012
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AUGUST 30, 2012
Recent Accounting Developments & a Look Ahead Bruce Richter, Eide Bailly, LLP Regulator Issues for the Credit Analyst S. Wayne Linder, Young & Associates, Inc. Beware! Signature Card Danger Zones: Account Titling, Ownership & Access Deborah Crawford, gettechnical inc Understanding & Navigating ACH Rules for RDFIs Shelly Simpson, EPCOR Head Teller Development: Improving Teller Performance Ann Brode, Brode Consulting Services, Inc. Garnishments, Subpoenas, Summonses, Levies: Getting It Right! Elizabeth Fast, Bankers Choice Ten Lessons Learned When a Depositor Dies Deborah Crawford, gettechnical inc Call Report Preparation: RC-C Part I & Related Lending Schedules Judith Jenkins, Bank Training Services Preparing Your Bankâ€™s Health Care Reform Strategy: Effective January 1, 2013 Paul Sirek, Eide Bailly, LLP Preparing for Your FFIEC Authentication Guidance Regulatory Exam Debi Randol, Gladiator Technology
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Network Security 101 Dr. Kevin Streff, Secure Banking Solutions The Legal Side of Dealing With Powers-ofAttorney & Living Trust Documents Elizabeth Fast, JD & CPA, Bankers Choice Not Strategic Planning, Action Planning! Jeffrey C. Gerrish, Gerrish McCreary Smith ACH Exceptions & Returns: Unauthorized, Revoked, Stop Payment: Which is it? Luann S. Kohlmann, AAP, NCP, WACHA Conducting Effective Appraisal Reviews & Evaluations for Residential Property Ann Brode, Brode Consulting Services, Inc. Opening Donation, Memorial, & Other Accounts for Non-Profit Organizations Deborah L. Crawford, gettechnical inc Regulatory Compliance for All Staff: Red Flags for Identity Theft, Bribery & Privacy Ann Brode, Brode Consulting Services, Inc. Imaged Documents: What to Keep, What to Shred, What Holds Up in Court Elizabeth Fast, JD & CPA, Bankers Choice Cunducting Investigations: The Basic for New Security Officers Barry Thompson, CRCM, Thompson Consulting Group, LLC Conductiong the 2012 ACH Audit Shelly Simpson, AAP, EPCOR
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PACB PREFERRED VENDORS JUST ANOTHER VALUE INCLUDED IN THE PRICE OF PACB MEMBERSHIP! PACB PREFERRED VENDORS OFTEN OFFER DISCOUNTS OR PROMOTIONS ON PRODUCTS AND SERVICES TO PACB MEMBERS.
CALL PACB AT 717-231-7447 TO FIND OUT HOW YOUR ORGANIZATION CAN BECOME PART OF THIS SELECT GROUP OF PROFESSIONAL FIRMS. WITH THE EXCEPTION OF OFFICIAL ANNOUNCEMENTS, THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS AND STAFF DISCLAIM RESPONSIBILITY FOR OPINIONS EXPRESSED AND STATEMENTS MADE IN TRANSACTIONS. THIS PUBLICATION IS INTENDED AND DESIGNED TO PROVIDE ACCURATE AND AUTHORITATIVE INFORMATION, NOT TO PROVIDE LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES.