THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS
Pennsylvania’s Community Banks. For people and their neighborhoods.
PACB - Working Exclusively For Pennsylvania’s Community Banks FDIC RISK-BASED ASSESSMENT CALCULATION SAVING PENNSYLVANIA COMMUNITY BANKS $100,000,000 ANNUALLY PERMANENT INCREASE IN FDIC INSURANCE COVERAGE TO $250,000 ADVANCED COMMUNITIES FIRST ACT LEGISLATION CONTINUED STRONG OPPOSITION TO FARM CREDIT SYSTEM EXPANDED POWERS ADVANCED LEGISLATION TO INCREASE SHAREHOLDER THRESHOLD CONTINUED SUPPORT OF TIERED REGULATION AND SUPERVISORY POLICIES THAT LIGHTEN THE BURDEN FOR COMMUNITY BANKS VIGOROUSLY SUPPORTED TAXATION AND CRA REQUIREMENTS FOR BANK-LIKE CREDIT UNIONS
UPCOMING EDUCATION EVENTS FEBRUARY • 2012
APRIL • 2012 (CONT)
SEPTEMBER • 2012 (CONT)
Directors Training February 7, 2012 Ramada Altoona Conf. Ctr. - Altoona, PA
Security Seminar April 18, 2012 Holiday Inn Hbg.- Hershey - Harrisburg, PA
ALM Seminar September 27, 2012 DoubleTree Monroeville - Monroeville, PA
Commercial Lending School February 21-22, 2012 Holiday Inn Hbg.-Hershey - Harrisburg, PA
MAY • 2012
OCTOBER • 2012
Leadership Conference May 1-2, 2012 Omni Bedford Springs Resort - Bedford, PA
ALM Seminar October 3, 2012 PACB Headquarters - Harrisburg, PA
HR Conference May 16-17, 2012 Holiday Inn Hbg.- Hershey - Harrisburg, PA
Tech Conference October 10, 2012 PACB Headquarters - Harrisburg, PA
JUNE • 2012
Marketing Conference October 17-18, 2012 TBD - Harrisburg, PA
Directors Training February 6, 2012 Hilton Scranton & Conf. Ctr. - Scranton, PA
Directors Training February 21, 2012 Days Inn Meadville Conf. Ctr. - Meadville, PA Directors Training February 22, 2012 DoubleTree Hilton Pitts.- Meadow Lands - Washington, PA Directors Training February 27, 2012 Crowne Plaza Phil.- Valley Forge - King of Prussia, PA
IT Compliance Seminar April 5, 2012 PACB Headquarters - Harrisburg, PA
Directors Conference June 5-6, 2012 The Nittany Lion Inn - State College, PA
AUGUST • 2012
Directors Training February 29, 2012 Crowne Plaza Hbg. Hotel - Harrisburg, PA
135th Annual Convention August 17-20, 2012 Vail Marriott Resort & Spa - Vail, CO
APRIL • 2012
SEPTEMBER • 2012
Community Banking Week April 2-6, 2012 Statewide
Compliance Seminar September 18, 2012 PACB Headquarters - Harrisburg, PA
IT Compliance Seminar April 4, 2012 DoubleTree Monroeville - Monroeville, PA
Audit Seminar September 20, 2012 PACB Headquarters - Harrisburg, PA
Plan your training for the New Year with our variety of educational seminars and conferences. Registration is easy and just a click away on our website.
2 | Transactions | www.pacb.org
Compliance Seminar September 26, 2012 DoubleTree Monroeville - Monroeville, PA
NOVEMBER • 2012
Directors College November 1, 2012 Doubletree Monroeville - Monroeville, PA
135TH ANNUAL CONVENTION VAIL MOUNTAIN RESORT & SPA 路 VAIL, CO AUGUST 17-20, 2012
CONTACT SAUNDRA CUNNINGHAM, AT (717) 231-7447 OR BY EMAIL AT SAUNDRA@PACB.ORG. www.pacb.org | Transactions | 3
Contents January 2012
FEATURE ARTICLES 10 Five Minutes With Congressman Charlie Dent PACB President Nick DiFrancesco recently had the opportunity to sit with the Congressman for a brief one-on-one meeting. Check out this look at what he does both in Washington and in his free time.
12 That’s My Bank! Your first look at this year’s Community Banking Week! Where did this year’s theme originate? What does the week mean to community banks? Find out here!
14 Making a Statement in 2012 A look back at some of PACB’s accomplishments from 2011 and a look forward at our goals for 2012. We are here for Pennsylvania’s community banks, just like you are there for your communities.
18 Mortgage Loan Assistance and Modifications in Pennsylvania An informative look into the federal Home Affordable Modification Program, or “HAMP.”
20 Hatboro Federal Savings Donates $25,000 to Warwick Fire Company No. 1 Hatboro Federal Savings recently made this donation toward the organization’s $2 million Capital Campaign.
22 Meet PACB’s Staff With the new year comes some new faces to our organization. Introducing the new and improved staff of Pennsylvania Association of Community Bankers!
ADVERTISERS 11 13 24 26 26 26
ParenteBeard Financial Outsourcing Solutions Newtek Business Services Shazam Smith Elliott Kearns & Company Shumaker Williams
ON THE COVER PACB Working exclusively for Pennsylvania’s community banks. What are we doing for you? 4 | Transactions | www.pacb.org
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 Frances M. Harris, 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. LEGISLATIVE Timothy Zimmerman, Standard Bank Frank Godino, First Star Bank MEMBERSHIP Ted Peters, Bryn Mawr Trust Company Andrew W. Hasley, Allegheny Valley Bank *PACB member banks only please.
6 | Transactions | www.pacb.org
STRATEGIC PLANNING David Hunsicker, New Tripoli Bank
nurtured by the ICBA affiliated state bank trade groups like PACB. ABA and PBA did not take a position on the FDIC premium calculation change. Do you honestly think this value would have come your way if there was only one voice speaking for community banks? Of course not! That is not to say that ABA or PBA don’t have their own value to an organization or that there won’t be issues where we will be on the same side and we can cooperate. However, clearly the ICBA and PACB have tremendous value to community banks as their one true unbiased trade group team. Value from an industry trade group can be derived from different sources resulting in direct and indirect value. ICBA and PACB are the team that provides so much more than “just” lobbying efforts or bank industry education. The products and services offered through CBA Securities and TCM Bank give our community bank members a competitive edge in the marketplace, particularly when it comes to megabanks. In addition to making your bank competitive, another benefit to our members is that they provide valuable education courses, conferences and webinars. ICBA and PACB are truly a dream team that creates value for their members, in addition to being THE voice for community banks.
PACB CHAIRMAN CHUCK LEYH
A WORD FROM PACB’S CHAIRMAN Now more than ever, community banks must evaluate the “value” associated with every operating expenditure that is made. Operating efficiency is only achieved if every expenditure creates a benefit equal to or exceeding the expenditure made. The PACB staff, executive committee and board of directors recognize this fact, create a benefit that exceeds your dues cost and strives to increase the value each and every year. For those of you that are active in our community bank trade association, you know that ICBA and PACB represent a team where each member works in conjunction with the other to create value for our members. This team is the only bank group that successfully lobbied for the change in the calculation of your FDIC premium. The change in this calculation which moved from a deposit assessment to an asset minus equity assessment created a value for almost every community bank that far exceeds our dues structure. This tremendous value will continue for the foreseeable future for all of us. There are a few Banks that only perceive the value in ICBA. Some Banks believe that Pennsylvania Banks should speak with one voice. If you believe this, then you just don’t understand reality—the reality that there never would have been a value created by a change in the FDIC premium calculations. The reality is the ICBA lobbying strength was only as strong as its grassroots activity which was organized, directed and
When you analyze value you just can’t overlook the tremendous opportunities that are available annually at the ICBA and PACB conventions. No one puts on an exhibitor display like ICBA. It literally is a “football” field full of exhibitors which represent the best place available to experience new banking technologies and opportunities. This is actually the beginning of our Bank’s strategic planning process each year. PACB is making a minor change to its convention schedule in Vail, Colorado this year. We will start the convention off with a day of new ideas and best practices to introduce to our members. There will be six one-hour sessions where the association will introduce new technology, practices and ideas that will make community banks more competitive in today’s market. I don’t know about you, but I was irate to hear an OCC spokesperson state that he didn’t believe a bank could exist today unless it was over five hundred million in size! It is my mission this year to communicate better ideas, technology and PACB programs that will assist you in being more competitive so I can see a certain regulator “eat crow.” You will find this year’s convention to be second to none with ways to improve your operations and bring value to your bottom line. I hope you find, as I do, that when you analyze the true “value” associated with your ICBA and PACB dues, they represent a tremendous value to your community bank staff and ultimately the shareholders, customers and community you serve. Thanks so much for all you’re doing to build and serve Pennsylvania communities and our industry.
www.pacb.org | Transactions | 7
yet calling yourself a community bank and acting like one are two entirely different things. I guess the important point in all this is that most people don’t take the time to explore the community bank difference, and apparently the media can be included in this broad brush stroke. In 2011, countless articles were written in papers all across the country praising credit unions as the consumer friendly (don’t shoot the messenger) “bank.” As recently as this month, the Reading Eagle ran a piece written by the PA Institute of Certified Public Accountants (PAICPA), which also advocated for credit unions. In 2012, we really need to unite as an industry to educate the public.
PRESIDENT/CEO NICK DIFRANCESCO
THAT’S MY BANK! People always ask me how large an institution can grow before they are no longer considered a community bank. My response often catches them off guard. Most people don’t recognize the difference between a community bank and a regional bank. They don’t understand that a community bank is one that is responsive to the needs of the community and not stuck in a rigid set of corporate rules; nor do they understand that as a customer of a community bank, you have access to the business leaders who will be making the decision on your loan; nor do they understand that a hallmark of community banking is the degree to which these special businesses give back to the local community through their philanthropic activities. Community banking is not about size, it’s about philosophy and responsiveness. Now don’t get me wrong. Every bank wants to promote itself as a community bank. After all, HSBC (Hong Kong and Shanghai Banking Corporation) billed itself as “The World’s Local Bank,”
8 | Transactions | www.pacb.org
In this edition of Transactions, we introduce you to the theme for Community Banking Week 2012. This year’s theme, “That’s My Bank!”, gives community banks across this Commonwealth the opportunity to present programs highlighting the importance of Main Street banking. While community banks make a difference everyday, the week of April 2-7 is a special opportunity for our industry to shine. I urge you to get involved in this special week by organizing a community service project spearheaded by your employees. Build a home, promote financial literacy or come up with your own community support project. The idea is to make sure that your local media, business leaders and legislators understand that their community bank is unique and critical to the future of their community. Once again, PACB staff will coordinate Community Banking Week activities. In this January edition of Transactions, you’ll meet our new staff members and become reacquainted with some familiar faces. You’ll also hear a little bit from Congressman Charlie Dent, as well as gain some important information on mortgage loan assistance and modifications. I hope you enjoy this edition. Likewise, I hope you are ready for a 2012 that is full of quality education, critical congressional outreach programs and numerous opportunities for you and your staff to actively promote community banking. PACB is reorganized and charged with new energy, enthusiasm and ideas. Our commitment remains to protect and promote the community banking industry. We are here to serve you!
re Dates & Locations February 6 Scranton, pA Hilton Scranton & Conf. Ctr. February 7 Altoona, pA ramada Altoona Conf. Ctr. February 21 Meadville, pA Days Inn Meadville Conf. Ctr. February 22 Washington, pA DoubleTree Hilton pitts.-Meadow Lands February 27 King of prussia, pA Crowne plaza phil.-Valley Forge February 29 Harrisburg, pA Crowne plaza Hbg. Hotel
sPeaKers partners at Kilpatrick Townsend: Christina M. Gattuso Sean p. Kehoe paul M. Aguggia Thomas p. Hutton Gary r. Bronstein Scott A. Brown
(Feb. 6 & 7) (Feb. 6 & 7) (Feb. 21 & 22) (Feb 21 & 22) (Feb. 27 & 29) (Feb. 27 & 29)
r e t gis
e n i l on
g! r o . cb a p at
2012 Directors training
agenDa 3:00 – 4:30 pM – Session (All locations) Succession planning is one of the most important roles of the board of directors. While it can at times be an uncomfortable topic to address, it is also one that can be critical to your organization. While management succession may be a process undertaken over a number of years, it can also be very unexpected. Despite its importance, many institutions do not have formal management succession policies. In this session, we will discuss the importance of management succession and practices for implementing and documenting a sound management succession policy. 4:30 – 5:00 pM – reception 5:00 – 6:00 pM – Dinner 6:00 – 7:00 pM – Session (February 6, 7, 27, & 29 locations) One of the more difficult tasks for a board of directors is to define the line between governance (a board’s duty) and management (a duty delegated to the executive team). Where this governance/management line is drawn, and whether the board and management adhere to these parameters, can have a significant impact on the success and efficiency of the institution, while also directly affecting a director’s potential for liability. We will discuss this governance/management issue in the context of loan approvals, committee structure, board policies and other relevant governance and director oversight matters. 6:00 – 7:00 pM – Session (February 21 & 22 locations) Over the last several years, executive compensation has continued to be one of the hottest topics for financial institutions. From regulatory requirements to shareholder expectations, community banks have been pulled in a number of different directions with respect to their compensation programs. In this session, we will discuss some of the more significant current topics regarding compensation and community banks. We will also look at some practical considerations when it comes to implementing and maintaining employment and change in control agreements with management.
QUESTIONS? Contact Saundra J. Cunningham, pACB Vp-Education Services, at 717.231.7447 or firstname.lastname@example.org.
FIVE MINUTES WITH CONGRESSMAN
CHARLIE DENT NICK DIFRANCESCO (ND): Your congressional district has changed pretty dramatically. What does that mean to you over the next few years? CONGRESSMAN DENT (CD): Nearly 25% of my constituency is now new, so that is a significant change. I still represent a very substantial portion of the Lehigh Valley: all of Lehigh County and more than half the population of Northampton County. New areas have been incorporated into the district. I already had a portion of Berks County, now I have more of Berks. I’m also moving into central Pennsylvania including Lebanon County and the Southern and Eastern portions of Dauphin County. I’ve got to do a lot of work to earn the confidence and trust of the people in these new areas, and I intend to do that over the next several months.
financial crisis and what might ignite based on events occurring currently in Europe. That’s a big fear I have. If Europe does not manage their affairs as well as they should, it could set off a new financial crisis. Of course that would certainly disrupt the economy, and make an already fragile situation much worse. We must deal with the big issues of the day. Everybody understands that this country’s long term obligations exceed our capacity to pay for them. Some may disagree, but it’s simply true. It’s also true in Europe. And we keep talking about kicking cans down the road; well, we’re pretty much running out of road down which we can kick the proverbial can. So that means we are going to have to start confronting the issues that are driving this fiscal imbalance. Washington is borrowing 42 cents on every dollar
We’ve got a jobs crisis and a debt crisis.
WE MUST DEAL WITH THEM BOTH. I’m very excited about serving this new district. I often refer to it as the I-78 District because it extends from Williams Township along the Delaware River straight out I-78, all the way out to where it merges with 81 near Indiantown Gap, then over the Dauphin County line, through Eastern Dauphin and South to the Susquehanna River. I-78 is really the spine of this congressional district. ND: A little bit about your perspectives on Washington. What do you think you can accomplish this year? CD: In an election year, of course it’s more difficult to enact substantive legislation. But that does not mean that we shouldn’t try. Specifically, I’m very concerned about a 10 | Transactions | www.pacb.org
spent. We all recognize that’s an unsustainable situation and one that cannot continue indefinitely. We’ve got a jobs crisis and a debt crisis. We must deal with them both. We need to focus on creating private sector jobs. A strong economy needs abundant inexpensive energy. To the extent that we’re creating jobs in this country and in this commonwealth, we’re seeing it coming out of the energy sector. Have you seen what’s happening in the Marcellus Shale belt? We have some real opportunities to create jobs in the energy sector. ND: Talk a little bit about your committee assignments and what legislative goals that you would like
to personally achieve. Some of them you may have already covered. CD: Well, first I’m on the appropriations committee and on the ethics committee. My own personal goals right now… I’m working on getting some legislation passed that deals with this epidemic we call synthetic drugs or bath salts. It’s a big issue across the country. This is an issue no one ever heard of a little over a year ago and now it’s reached almost epidemic proportions. We have people who are becoming hallucinogenic and losing control of themselves, and committing just horrible situations for themselves and others, from suicides to other types of destructive behavior. So I have legislation that just passed the house, trying to get that through the senate right now. I’ve also been working on a number of bills dealing with some of the homeland security issues that have challenged this country. ND: I know you keep an extraordinary schedule, but can you share a little bit with us about your personal life? What do you like to do in your spare time? CD: I like to spend time with my family. The job can be pretty consuming when you’re in Washington. You’re obviously not at home, and my family lives in Pennsylvania, so when I get home I like to try to spend as much time as I can with my family. I also like to hit tennis balls and I like to work out. When I’m in Washington, I’ll try to get some exercise early in the morning, either running or playing one-wall paddle ball with my colleagues.
Charlie Dent was first sworn in to the United States House of Representatives in January 2005. He represents Pennsylvania’s 15th District, which includes all or parts of Lehigh, Northampton, Montgomery, and Berks counties. Congressman Dent currently serves on two House committees: Appropriations and Ethics. In the state legislature, Charlie was Chair of the Senate Urban Affairs Committee and a task force focusing on the state’s children and youth placement services. He also championed significant landlord/tenant legislation and the creation of Adult Basic, a program designed to provide health insurance coverage for low-income, working adults. Now in his fourth term in Congress, Charlie has developed an expertise in homeland security and transportation issues, building on his existing knowledge and experiences from 14 years in the state legislature and his educational background. He has championed legislation that would: promote the use of the Civil Air Patrol to better secure our borders; develop a comprehensive screening system that will allow border officials to determine that passengers are who they say they are; enhance chemical plant security; require notification to Immigration and Customs Enforcement and detention of illegal aliens that are arrested on state felony charges; advance the use of clean energy technology in public transportation applications; and establish reasonable security provisions for large aircraft.
www.pacb.org | Transactions | 11
Community banks: Supporting you.
Community Banking Week April 2-7, 2012 12 | Transactions | www.pacb.org
The wait is over… PACB is pleased to announce the theme for Community Banking Week 2012: “That’s My Bank!” We will be celebrating Community Banking Week from April 2-7, 2012, as part of the national Community Banking Month. This is the perfect opportunity to show what your bank and employees do best – serve the community! Reach out to as many local individuals and organizations as you can; inform everyone about all the great things community banks do for the community. PACB will create marketing materials (i.e. posters, table tents, stickers and more) to support your bank. In addition, we’ll provide sample letters and press releases so that you can notify the media about your activities. And speaking of activities, here are some ideas to help make Community Banking Week a success in your area: 1. Show you care by sponsoring a blood, clothing, or even food drive. 2. Host a seminar on retirement planning or smart investing. 3. Invite local schools or scout troops to tour your bank. 4. Host a charity event like a race or an auction. 5. Create a lobby display highlighting your small business customers.
6. Speak to civic groups or senior centers to reach new audiences and convey the importance of community banking. 7. Host an open house complete with tours, refreshments, contests and giveaways. These are just a few of the endless possibilities to make your bank shine. We hope you will take advantage of this wonderful opportunity to share your love of community banking. Be sure to include your entire organization in your festivities, invite the media to participate, and take lots of pictures! If you need anything to ensure a successful Community Banking Month, the PACB staff is happy to oblige. We are here to help you in all your efforts. Good luck and have fun!
to Rebecca Michalak of Harleysville Savings Bank for supplying the winning theme, “That’s My Bank!”, from a pool of more than 100 theme entries! Thank you as well to all who participated in this year’s contest.
Navigating a complex regulatory environment? FOS is a leading provider of internal audit and compliance services to Jersey, Maryland, and New York. Our professionals are dedicated solely to providing internal audit and compliance services to • Internal Audit Outsourcing • • • • Internal Audit Co-sourcing • •
• • • • • •
Regulatory Compliance Training Quality Assurance Reviews Asset Liability Management Audits Special Projects
...Work with the best.
Harrisburg • Lancaster • Lehigh Valley
www.pacb.org | Transactions | 13
14 | Transactions | www.pacb.org
PACB is the only trade association in Pennsylvania that advocates exclusively for the community banking industry. We were formed by community bankers in 1986, and we continue to be governed by community bankers.
by: Nick DiFrancesco President/CEO, PACB www.pacb.org | Transactions | 15
ow do you answer your friends and relatives when they ask, “What makes your bank so special?” Do you take pride in the time and resources that you give back to the communities you serve? When Occupy Wall Street or any one of a dozen other Occupy groups attacks the “banking” industry, are they referring to your community bank? After all, what is a community bank anyway?
Community banks are a unique sector of the financial services industry. With a generally well defined and limited geographic market, community banks find success through serving their customers well. A thriving community bank is not only responsive to the needs of the neighborhoods they serve; they are woven into the fabric that comprises their market. Different from the regional, nationwide and worldwide institutions, community banks focus attention on serving families and building small businesses. Com-
People pose these questions every day. Unfortunately, the answers to these questions aren’t always clear. What is clear is that there is mass misconception about the definition of a community bank. We’ve seen many articles this past year advising the public that the best community bank option for consumers is a credit union. When you’re done gasping and writhing with anger, take a moment and consider the reason for the confusion.
IN 2012, PACB’S GOALS REMAIN DEDICATED TO MEETING OUR MEMBERS’ NEEDS.
Credit unions spend billions of dollars collectively marketing the credit union brand. They spend millions of dollars annually in political contributions, making them one of Washington’s darlings. Add to this the fact that the general public isn’t concerned about tax status, nor is there any evidence of a public outcry over the statistical fact that credit unions no longer serve the financially underserved in our communities, and you have a dilemma that can only be solved through the marketing efforts of a united community banking industry. 16 | Transactions | www.pacb.org
munity banks still support Little League, Main Street, the local Chamber, and a host of other community-based organizations that create the quality of life in our hometowns. While they are deeply invested in giving back, all too often their efforts go unseen. Far too frequently, the policy makers in Washington and Harrisburg don’t fully realize the community banking industry’s commitment to Main Streets and Elm Streets across the Commonwealth. These policy makers don’t comprehend how policies aimed at Wall Street too often miss their target, causing massive collateral damage on Main Street.
As your trade association, rallying the community banking industry is what we are all about, yet the unification of an independent industry is not the easiest task. In fact, over the last decade through multiple attempts (the last being the “Real Community Bank” campaign), our joint marketing attempts have received the cold shoulder. Keep watch, because in 2012 PACB will be launching a new campaign using the latest social media and marketing techniques in order to promote a “PA Go Local” campaign. Last year was a banner year for PACB. After more than a decade of decline, our membership grew. Through the years, there were many reasons why bankers chose to belong to one trade association or another; most of the time it was social circles that defined your membership. In 2007, the stakes were raised, and in 2010 it became clear that membership in the right trade association mattered. The partnership between the ICBA and PACB yields very real cost savings to Pennsylvania’s community banks. The changes to the FDIC insurance assessment model alone resulted in 20 times return over the cost of your PACB membership. In addition, PACB continues to take aggressive stands on important legislation that will support the community banking industry. It was PACB in partnership with the ICBA and the Independent Bankers Association of Texas (IBAT) who first introduced the Communities First Act (CFA). Because of CFA, the community banking industry has a bold legislative agenda moving forward in Congress. We are the only state association to take a stand in support of CFA. PACB is the only trade association in Pennsylvania that advocates exclusively for the community banking industry. We were formed by community bankers in 1992, and we continue to be governed by community bankers. In 2012, PACB’s goals remain dedicated to meeting our members’ needs. We will continue to provide the finest, topical education programs in a manner that is both convenient and cost-effective; we will continue to provide a first-class convention that offers community bankers cutting edge ideas and an expo center to test drive the latest technology innovations; we will continue to defend against unwarranted regulations and fight for economic policies that help our communities; and, we will continue to work with technology companies that invest in making community banking a stronger, more competitive industry. While staff runs the business, it is bankers who drive the agenda. Our legislative successes are a direct result of our Legislative Committee. The quality of our education is a result of the hard work of the community bankers serving on our Education Committee. PACB is the trade association of the community banking industry. Your dues keep us alive, but your participation ensures our success. I urge you to get involved and to authorize and encourage your staff to participate, as well.
INDUSTRY VOICES: WHO WILL SPEAK FOR YOU?
Voices on the Influence of TBTF Institutions: “Invariably, these behemoth institutions use their size, scale and complexity to cow politicians and regulators into believing the world will be placed in peril should they attempt to discipline them.” - Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas.
Voices Against Tiered Regulatory Burden: “Washington policymakers must acknowledge the reality and genius of this well integrated economic ecosystem and renounce the two-sizes-fitsall approach to bank regulation.” “I hope and believe the Federal Reserve will see this for what it is: another attempt to camouflage bad public policy under the guise of protecting community banks.” - Frank Keating is the president and CEO of the American Bankers Association and a former governor of Oklahoma.
Voices Supporting Credit Union Expansion: “We need to reframe the debate. Lifting the MBL cap is an important means to increase lending to small business and create jobs without cost to the taxpayer. We must find a way to communicate this. At the same time, we need to aggressively respond to the inconsistencies in the attack on our income tax-exempt status.” - Ken Gonyer is vice president of marketing and communications at Park View FCU, Harrisonburg, Va.
It has never been a more important time to stand up for your industry. www.pacb.org | Transactions | 17
MORTGAGE LOAN ASSISTANCE AND MODIFICATIONS IN
By: Rachel M. Wolf, Esq. & Reginald S. Evans, Esq. SHUMAKER WILLIAMS, P.C. 18 | Transactions | www.pacb.org
he Home Affordable Modification Program, or “HAMP,” is a federal program designed to help millions of troubled borrowers avoid foreclosure by enabling them to modify the terms of their existing mortgage loans with their current lenders. However, due to the concern of regulators that homeowners are being duped by loan modification companies that collect huge fees, often in advance, and make guarantees to consumers who ultimately are not able to obtain the requested loan modification, the new federal Consumer Financial Protection Bureau (“CFPB”), in conjunction with the Department of the Treasury and the new Special Inspector General Troubled Asset Relief Program (“SIGTARP”), recently issued a Consumer Fraud Alert entitled “Tips for Avoiding Mortgage Modification Scams.” The CFPB Alert advises struggling consumers to “beware of con
rious one. Since June 2011, the Pennsylvania Housing Finance Agency’s (“PHFA”) Homeowners’ Emergency Mortgage Assistance Program (HEMAP) has no longer been accepting homeowner applications for home mortgage assistance. PHFA indicated that lenders and counseling agencies may access funds available under the federal Emergency Homeowners Loan Program (“EHLP”) and that any new applications for mortgage assistance should be completed as an EHLP application. PHFA also indicated that if funds become replenished in sufficient amount, by an appropriation or otherwise, to continue the HEMAP Fund, then a notice will be published in accordance with Act 91 that governs HEMAP and requires home mortgage foreclosure procedures to include an opportunity for the homeowner to seek HEMAP financial assistance. There may be demand from consumers to obtain assistance
The Department of Treasury and HUD provide a wealth of resources for
CONSUMERS INTERESTED IN MODIFYING THEIR MORTGAGES artists and scams that promise to save their homes and lower their mortgage debt or payments.” The Pennsylvania Department of Banking (“Department”), based on similar consumer protection concerns, has declared that the Pennsylvania Mortgage Licensing Act (“MLA”), which sets forth the licensing requirements for mortgage companies and individual loan officer originators, applies to the activities of businesses that provide mortgage loan modification services to Pennsylvania consumers. According to the Department’s position, businesses and individuals licensed under the MLA are subject to the requirements and restrictions under the MLA including a prohibition against collecting any fees in advance. Banks can assist their borrowers who inquire about mortgage loan modifications by being aware of the following: • Consumers can apply for a HAMP mortgage loan modification on their own, for free. • Consumers can obtain free assistance with obtaining a HAMP mortgage loan modification from a housing counselor approved by the U.S. Department of Housing and Urban Development (“HUD”). • Pennsylvania homeowners working with third-party mortgage loan modification companies may contact the Department for information regarding license status and enforcement action. • The Department of the Treasury and HUD provide a wealth of resources for consumers interested in modifying their mortgages, which can be found at www.makinghomeaffordable.gov.
from an experienced and professional loan modification service provider to guide them through what is often a challenging, complicated, and stressful process. Consumers are by no means required to seek government mortgage assistance program money from the federal or state government. Banks and the third party companies should remain aware that there may be licensing issues with the Department regarding the non-bank entities that seek to provide mortgage loan modification assistance to Pennsylvanians. Ms. Wolf routinely counsels non-depository and depository financial institutions on matters involving multi-jurisdictional compliance and federal consumer financial protection laws and has assisted clients with issues involving, among other things, the Federal Truth-in-Lending Act, RESPA, Dodd-Frank Act, SAFE Act, Fair Credit Reporting Act, Gramm-Leach-Bliley Act, the Federal Trade Commission’s Telemarketing Sales and Mortgage Assistance Relief Services Rules in addition to state usury, debt management/debt settlement and consumer credit business licensing laws. Ms. Wolf also provides businesses with advice in the areas of entity selection, formation and reorganization, shareholder and operating agreements, intellectual property matters, employment issues, and general business matters.
The problem of funding mortgage loan assistance remains a sewww.pacb.org | Transactions | 19
atboro Federal Savings recently donated $25,000 to the Warwick Township Volunteer Fire Company No. 1 for the organization’s $2 million Capital Campaign for the construction of a new and modern firehouse.
“We are proud to step up and support this 100% volunteer community fire company whose dedicated members put their lives on the line to protect our citizens and property on a daily basis,” says Hatboro Federal President and CEO Joseph J. Tryon. “Giving assistance to such a critically needed organization is part of what being a community bank is all about.” The current facility, located at 2390 York Road in Jamison, is almost 50 years old and the bank’s donation will help Warwick 20 | Transactions | www.pacb.org
WE WERE SERVING FEWER THAN 2,000 RESIDENTS, AND NOW WE SERVE MORE THAN 14,000 construct a new building enabling them to meet all necessary National Fire Protection Association (NFPA) standards. “When we moved into our current building, we were serving fewer than 2,000 residents, and now we serve more than 14,000,” says Fire Company President Philip Ramos. “Our township is 11 square miles with a high density population of single family homes, industrial parks, farms and a busy shopping center. We need the best vehicles, equipment and space to accommodate the community’s needs.”
HATBORO FEDERAL SAVINGS
TO WARWICK FIRE COMPANY NO. 1 photo by Aaron Mitchell Photography
The Warwick Township Fire Company members responded to almost 300 calls in 2010, volunteering more than 4,600 hours of their time. Their services include responding to alarms, training drills, traffic control for emergencies and community events, as well as fire protection education for area schools. Fire Chief Robert Weber says, “Although Hatboro Federal’s Jamison Branch is a relatively new Warwick Township neighbor, the staff and management have proven to be generous and supportive, and we are truly thankful for their help with our modernization efforts.” For more information about the Warwick Fire Company’s services and capital campaign, call 215.768.0861, or log on to www.warwickfd.com.
Hatboro Federal Savings, one of Bucks and Montgomery Counties’ leading community banks, was chartered by the Federal Home Loan Bank Board in February 1941, and has current assets of $526 million. Consumers’ Checkbook readers gave Hatboro Federal a perfect score of 100% for customer service in its October 2011 edition, and the bank was awarded the Pennsylvania Association of Community Bankers (PACB) 2011 Community Service Award in August. Headquartered at 221 S. York Road, Hatboro Federal Savings also has branch offices in Warrington, Warminster and Jamison, offering financial products and services to individuals and families. - JAMISON, PA www.pacb.org | Transactions | 21
“I’m Saundra, VP-Education Services. Please feel free to contact me with all of your education or convention questions. I look forward to working with you in 2012!”
I’m Nick, President and CEO of PACB. Please allow me to briefly introduce you to your new PACB team!
“I’m Patty, PACB’s administrative assistant. I provide support to all members of the PACB staff. When you call the office, I’m the voice you hear on the phone. If I can’t answer your question, I’ll be happy to find someone who can!”
22 | Transactions | www.pacb.org
“I’m Shirley, PACB’s Comptroller/Office Manager. Please contact me with any invoice or billing questions. I look forward to working with you in 2012!”
“I’m Eric, one of PACB’s new Publications Managers. Do you have an article that you want to submit for use in future issues of Transactions? If so, I’m the guy for you!”
“I’m Natalie, one of the new Publications Managers at PACB. I’m very excited to put my marketing, public relations, and design skills to use. If you need help with any of these things, please contact me!
“I’m Fran, your new Director of Government Relations. Perplexed by what’s going on in the PA Legislature or in Congress? Mystified as to what a bill is really all about? Give me a call!”
www.pacb.org | Transactions | 23
LOAN PORTFOLIO SERVICING
YOUR SBA BUSINESS LENDER SERVICE
Newtek can provide you with comprehensive Business Lending services to promote customer & deposit retention, reduce your
costs and mitigate risk from Guaranty repair issues.
Th e R e fe rra l Pro g ra m Newtek offers a unique fee based business model originating form our referral partnerships. Includes relationships with: Banks
Credit Unions Other Finance related entities such as Morgan Stanley
Newtek provides one or more of its services to more than 100,000 business accounts throughout the United States. Newtek has
been branded as a one-stop shop of business
“ Wh i te L a b e l ” O ri g i n at i o n s
services to the small- and medium-sized business market
Underwriting, Closing and Secondary Market Sale of YOUR loans by SBA professionals Loans are underwritten to meet SBA Guaranty Eligibility, with your institution providing necessary Credit Committee & funding
Our clients utilize the Newtek proprietary platform for the broad based marketing and sale of the SBA guaranteed portions of your SBA 7(a) The Newtek platform facilitates solicitation of bids from up to 13 participating
institutions and broker-dealers Upon acceptance of a bid by you, Newtek will prepare and issue the Loan Sale Package (Security documents, 1086, etc.) to the investor. Upon acknowledgement of Colson’s acceptance of the loan for Servicing,
Newtek updates the portfolio database and all ancillary reports
full suite of business solutions
Lo a n S e r v i c i n g / Sp e c i a l S e r v i c i n g
-Accounts Receivable Financing
Party Loan Servicing of small balance ($50,000 to $10,000,000) “conventional”
-A/R Management Services
loans, SBA Loans originated in the 7(a) and Express Loan Programs and other government guaranteed loans from programs originated by USDA and other agencies
with receivables Financing and Merchant Cash Advance Divisions
Standard & Poors rated as a Commercial Loan Servicer/Special Servicer for Third
Active Commercial Lender, providing SBA 7(a), 504 and Express Lending along
Newtek Business Services, Inc.’s
C O N T A C T Robert T. Hawes Senior Vice President 212-273-8197 email@example.com
24 | Transactions | www.pacb.org
-Insurance Services -Merchant Cash Advance -Merchant Processing -Ecommerce -Web Services -Data Storage -Payroll Services
r e t gis
in l n o
g! r o . cb a p at
Holiday Inn Harrisburg - Hershey
CommerCial lending SChool CourSe overview
Lending to commercial borrowers is a core function for most banks. Commercial loans can be highly profitable but can expose banks to a high level of risk if they are not properly investigated and analyzed. Since the loan portfolio composes the majority of most banks’ total assets and net interest - plus loan fee income make up the bulk of banks’ earnings, it is vital that commercial loans are selected and analyzed carefully before they are approved and funded.
CreditS CPe Credits Attendees are eligible to earn up to 14 hours of CPE credits. PaCb Certified lender Credits Attendees are eligible to earn up to 14 credits.
inStruCtor Jeffery w. Johnson CEO and Executive Consultant Bankers Insight Group
QueStionS? Contact Saundra J. Cunningham, PACB VP-Education Services, at 717.231.7447 or firstname.lastname@example.org.
The purpose of this two-day Commercial Lending School is to provide participants with the fundamentals required to be successful in the Commercial Lending Process. The phases in this process include:
1. Application • Common methods used for Loan Prospecting, Business Development and Customer Retention • Role of the Commercial Loan Officer (Relationship Manager)
2. Evaluation • Thorough Analysis of the Commercial Borrowers’ Financial Condition, Management, Business and Industry risks 3. Decision • How to make the right call after the analysis process is completed and the best method to convey that message in a credit memorandum 4. Documentation • Review the five steps in the Documentation Process (Identify the Borrower, Identify the Collateral, Evidence the Debt, Attach the Collateral and Perfecting a Security Interest) and knowing the documents required to accomplish each of these steps. 5. Administration • Common practices utilized to administer commercial loans once they are on the books including Risk Rating, Loan Covenant Compliance, etc. Upon completion of this two-day school, the participant will have a better understanding of the lending process from start to finish. The featured section will be the Evaluation phase where the participant will be exposed to the Principles of Accounting and Review of Financial Statements and Corporate Tax Returns; then followed by calculating credit ratios and cash flow analysis. From this starting point, it will flow into the Decision, Documentation and Administration stages as described earlier.
freedom of choice Choose an EFT Network Invested in You While some would like community financial institutions to have fewer choices and less control, SHAZAM believes that community financial institutions must remain in control of their own futures. SHAZAM is owned and operated by community financial institutions. We understand who you are and what you believe in. We’re here for you, providing the cost-effective technology that makes you more effective. You do have a choice in EFT networks. Choose the only EFT network invested in your success.
is a premier, client-focused law firm assisting individuals and businesses throughout Pennsylvania, Maryland and New Jersey with a wide range of services, including: • Financial Services, Banking and Mortgage Regulation • Securities and Capital Enhancement • Corporate and Business Services • Employee Benefits and Labor Law • Residential and Commercial Real Estate Settlements • Real Estate, Land Development and Financing • General Business Law and Business Formation • Trademark Registration and Protection • Litigation, Arbitration and Mediation • Estate Planning, Taxation and Asset Preservation • International Law and Contracts • Immigration • Liquor Licenses and Hospitality Services Law
HARRISBURG, PA 3425 Simpson Ferry Rd. Camp Hill, PA 17011 (717) 763-1121
YORK, PA 1 East Market St. York, PA 17401
TOWSON, MD 901 Dulaney Valley Road, Suite 610 Towson, MD 21204 (410) 825-5223
For more information about our confidential advice and services, visit:
26 | Transactions | www.pacb.org
WEBINAR & TELEPHONE SEMINARS FEBRUARY
FEBRUARY 2, 2012
MARCH 6, 2012
FEBRUARY 3, 2012
FEBRUARY 7, 2012 FEBRUARY 9, 2012
FEBRUARY 14, 2012
FEBRUARY 15, 2012
FEBRUARY 16, 2012
FEBRUARY 22, 2012
FEBRUARY 23, 2012 FEBRUARY 28, 2012 FEBRUARY 29, 2012
Loan Stress Testing for Today’s Banking Reality S. Wayne Linder, Young & Associates, Inc. Understanding New Federal Bankruptcy Procedures & Forms Line-By-Line Elizabeth Fast, Bankers Choice New BSA Officer Training Deborah Crawford, gettechnical inc Loan Participations: Compliance, Documentation, Servicing & More Elizabeth Fast, Bankers Choice Accepting Powers-of-Attorney: 10 Deposit Account Hotspots Deborah Crawford, gettechnical inc Community Bank Actions for Debit Card Interchange Rules: Effective April 2012 Lee Wetherington, ProfitStars® Required Compliance Series: Regulatory Compliance for the Board & Senior Management Ann Brode, Brode Consulting Services, Inc. Business Account Takeover Alert: What You Need to Know Now! Jackie Marshall, Gladiator Technology GFE & HUD 1: Issues & Update Bill Elliott, Young & Associates, Inc. IT Security 2012: Regulator Hot Buttons Dr. Kevin Streff, Secure Banking Solutions Understanding Borrowers’ Tax Returns, Part 2: Income from Rentals, Royalties, Partnerships, S Corps & Farms Tim Harrington, TEAM Resources
MARCH 7, 2012
MARCH 8, 2012
MARCH 13, 2012 MARCH 15, 2012
MARCH 20, 2012
MARCH 22, 2012
MARCH 27, 2012
MARCH 29, 2012
Overdraft Protection Update: Regulations, Lawsuits & Guidance Deborah Crawford, gettechnical inc Commercial Lending Series: Lending to the Small Business Owner/Guarantor in Today’s Economy David Osburn, Osburn & Associates, LLC Accounting/Auditing Series: Troubled Debt Restructuring Issues: The Accountant’s Perspective S. Wayne Linder, Young & Associates, Inc. Flood Compliance 2012: Review & Update Ann Brode, Brode Consulting Services, Inc. Writing Effective HR & E-Policies to Manage Behavior, Maximize Compliance & Mitigate Risks Nancy Flynn, The ePolicy Institute™ Director Series: Managing Liquidity Risk: The Board’s Role Gary Young, Young & Associates, Inc. You Received a BSA Exam Request Memo, What are the Proper Steps? Ann Brode, Brode Consulting Services, Inc. Real Estate Loan Workouts, Foreclosures, Short Sales & Deficiency Judgments Elizabeth Fast, Bankers Choice Identifying & Preventing Elder Financial Abuse Luann Kohlmann, WACHA
www.pacb.org | Transactions | 27
PRSRT STD U.S. POSTAGE PAID HARRISBURG PA PERMIT NO. 547 RETURN SERVICE REQUESTED 2405 N. FRONT STREET HARRISBURG, PA 17110
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.