Banking New England Jan/Feb 2016

JAN/FEB 2016

INSIDE: CENTREVILLE BANK EYES EXPANSION IN 2016

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

The Year of

Going Granular PLUS: A Solution to the Credit Analyst Crisis How Banks Can Stop Overpaying for Real Estate Group Benefits Captives Help Control Insurance Costs

A PUB LICAT IO N O F TH E WA R RE N G R O U P

As Big Data Scales Down, Smaller Banks Can Scale Up

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

CONTENTS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

04

08

MAPPING SUCCESS

Attention to Detail in Branch Location and Design Yields Dividends

16

THE YEAR OF GOING GRANULAR

BANK PROFILE

Centreville Bank Aims for Expansion in 2016

The Year of

Going Granular

10

12

HELD ‘CAPTIVE’

Group Benefits Captives Offer Insurance Cost Mitigation Strategies

ANOTHER WAY TO SAVE

Managed Print Services Increase Efficiency, Reduce Cost

14

INDUSTRY NEWS

20

22

24

As Big Data Scales Down, Smaller Banks Can Scale Up

A NEW APPROACH

Why Banks Overpay for Real Estate – and What They Can Do About It

A CRISIS OF OUR OWN MAKING?

Solution to the Credit Analyst Shortage Could Be Easier Than We Think

INNOVATIVE MARKETING

Four Strategic Marketing Pillars for Profit-Minded Bank CEOs

26

PERSONNEL FILE

28

COMMUNITY GOOD WORKS

TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins EDITORIAL EDITORIAL DIRECTOR Cassidy Murphy ASSOCIATE EDITORS Joe Kourieh and Malea Ritz

www.thewarrengroup.com ©2016 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210

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30

SALES DIRECTOR OF BUSINESS MEDIA George Chateauneuf PUBLISHING GROUP SALES MANAGER Dave Janoff ADVERTISING ACCOUNT MANAGERS Claire Merritt,

Bob Holzhacker and

Michael Lydon ADVERTISING & SALES COORDINATOR Jennifer Burke CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini PUBLIC RELATIONS & SOCIAL MEDIA MANAGER Ian Murphy MARKETING COPYWRITER Mike Breed DESIGN PRODUCTION MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Tom Agostino

and Tyler Grazio

IN CASE YOU MISSED IT BANKING NEW ENGLAND

3

MAPPING SUCCESS

Attention to Detail in Branch Location and Design Yields Dividends

BY MARK CHARETTE

Mark Charette is CEO of Solidus Inc., a commercial design and construction firm specializing in the financial industry, with locations in Connecticut, Rhode Island, New York and New Hampshire.

He may be reached at mcharette@gosolidus.com.

4

BANKING NEW ENGLAND

B

ranch transformation and customer service are the new endgame, but deep below the chatter about “seamless physical and digital customer experiences” are the all-important decisions on where new branches will actually be located, and how they should be designed.

Financial institutions’ network growth strategies are now powered by site mapping software deployed by research companies who closely guard their data and work under strict confidentiality agreements with financial clients. High performing sites for new branches are selected by looking closely at geographic and other data, including competitor assets, branch proximities to depositor homes and workplaces, and proximity to other branches. They drill down into depositor segments (for the financial institution of interest as well as competitors) to determine specific customer profiles they can then match to potential sites.

Mike Goman of Accubranch, a New England site selection specialist, says, “Locational mistakes in the planning stage can cost a financial institution through failure to hit deposit goals. Hiring a site selection specialist whose locational intelligence isn’t resolute enough can result in oversights that prove disastrous. It’s not just about software, though; consultants who produce generic data without on-the-ground field investigation can also cost an institution dearly. It’s about degrees of information, be it from locational intelligence software or personal investigation into the physical location itself.”

Retailers in other industries have used location intelligence for decades, as they know location correlates tightly with performance. Banks and credit unions are now realizing its value, meaning heightened competitiveness for prime spots in the real estate market.

Once the site of the new branch is selected, the financial institution must then characterize it: the size of the branch, its shape, the technology integration, etc. It’s crucial to have a strong brand

prior to building a prototype branch. Brand strength in today’s financial industry is expressed via ubiquitous flexible components, a “kit-of-parts” platform that is easily replicated across all branch locations. This is one reason new branches often inspire a rebranding campaign; it’s an opportunity to replace outmoded branding concepts with more portable modules that scream “Consistency!” to all who see them.

The three chief types of branch architecture are traditional, transitional and contemporary. Brand strength directly influences this; logos, themes, colors and other sensibilities determine which of the three main architecture types will best compliment the financial institution’s earmark. This is branding power at its most fundamental.

Modern branch design factors are interdependent and dynamic. They affect each other organically. For this reason, branch design is an intensive, collaborative phase, known as “programming,” during which architects, interior designers, technology providers, branding professionals and other stakeholders work to eliminate waste and errors. Every square foot of the branch layout is calculated in this way for enhanced customer experience and maximum ROI. Numerous schematic drawings and artistic renderings will be required to capture intangibles, such as branch ambiance, prior to the start of physical construction.

Efficiency and productivity are the ultimate aim. Efficiency is the key to enhancing customer experience. Productivity is borne of efficiency and is the key to ROI. Anything design-related should enable these inductions from both a functional and aesthetic standpoint.

Functionality satisfies whatever requirements the financial institution initially feels are necessary, and aesthetics determines the environment created for positive customer experience. It’s the designer’s job CONTINUED ON PAGE 6

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MAPPING SUCCESS

CONTINUED FROM PAGE 4

to not just hear what their clients say, but also ask leading questions, based upon experience, that uncover finer points and oversights.

Schematic Diagrams

Between what the client provides and what the designers elicit, the programming information is obtained. Initially it is very broad in focus, which allows design teams to generate all-inclusive schematic diagrams of the space. Schematics are detailed drawings for overall project design that may be 3-D renderings as well as floorplans. Some branches may require ceiling plans if important conceptual features such as soffits or lighting features need to be graphically conveyed to the client. The branding and merchandising may require several schematic diagrams of their own (vital to customer experience once again).

Functionality, aesthetic and budget dictate the direction a project will go. The finer details (equipment locations, shaped millwork, etc.) are worked out in project development. This can occur by both design and necessity, depending how organized the client’s inceptive vision is.

A schematic in its earliest phases allows for a branch with “everything but the kitchen sink” with regard to features and functions. The design decks are refined via subsequent client meetings, gradually becoming leaner as unnecessary or unwanted elements are dropped.

Bank and credit union branches contain numerous moving parts.

“Cut sheets” are developed to determine exact space usage factors,

such as the clearance needed to service equipment as poor design in this regard will result in long-term problems for staff and technicians trying to maintain and service equipment. It’s equally important that technology integrations not only fit properly into their spot in the branch, but are easily accessed for servicing. If these calculations aren’t made, then it can cause long-term problems for hapless employees.

Dialogue tower design is also important; small, egg-shaped pods can give a contemporary spacious feel, but one must consider everything, from the size of individual staff, to the type and degree of approach from customers, to the amount of available space for branch materials and equipment, such as drawers for checks and forms, pens, calculators, check processors, keyboards, etc. The depth of detail that branch design professionals can affect depends on their experience.

Seasoned programmers understand how aesthetics will dictate whether you have square or rounded corners on dialogue towers, and how this compliments your branded retail environment. They’ll know how to position lighting and merchandising racks for maximum impact. They will advise on the use of flat screen TVs, some of which can be rotated on brackets to project messaging through exterior windows during evening hours.

Once the physical and intangible are assembled and the prototype branch is built, it’s time to focus on strategy; retail communications, branding, operational efficiency and staffing models. BNE

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BANKING NEW ENGLAND

PROTECTING BANK PROFILEVULNERABLE CLIENTS

Photos courtesy of Centreville Bank

Centreville Bank Aims for Expansion in 2016

BY LINDA GOODSPEED

I Thomas Lamb

Pamela Stenberg

8

BANKING NEW ENGLAND

n less than a year at the helm of Rhode Island’s Centreville Bank, Thomas J. Lamb Jr. has already brought in a new leadership team and is working to expand the bank’s commercial loan portfolio and its footprint.

Founded in 1828 and headquartered in West Warwick, Centreville Bank has seven branches and assets of $1.02 billion.

Lamb, who first joined the bank as a consultant, was hired full time in 2014 as executive vice president and chief operating officer. In May 2015, he was named president, CEO and chairman, replacing Raymond Bolster, who led the bank for nine years.

Despite his short tenure, Lamb has moved quickly to put his stamp on the 188-year-old mutual savings institution, recruiting a new senior leadership team that includes five (out of seven) female senior vice presidents, including the bank’s CFO and treasurer.

“I don’t find it unusual at all from my perspective to have so many women leaders,” Lamb said of his team. “In my business career, I’ve had the good fortune to work with many excellent women executives.”

“One of our mantras is to hire the ‘right person for the right job,’” added Pamela Stenberg, senior vice president of human resources. “In financial services we see a lot of strong young women coming out of the business schools.”

The new leadership team coincides with an improving Rhode Island economy. For most of the Great Recession, the smallest state in the union led the country in job losses and unemployment. Despite its large residential mortgage portfolio, Centreville weathered the downturn relatively unscathed.

“The quality of our loan portfolio was such that we did not see significant losses, ” Lamb said. “It did impact the level of activity. In the last 18 to 24 months, we’re seeing an increase in loan growth.”

If loan growth was down during the recession, investments were up. The bank has an unusually high ($476 million) investment portfolio, $50 million higher than its loan portfolio. Lamb said this concentration in investments – primarily fixed income and some equities – began in the 1960s, and particularly benefited the bank’s bottom line during the Great Recession.

“With loan demand down, our concentration in investments served us well during the past few years,” he said. “We took in $300 million during that period.”

But now Lamb says it is time to reconfigure the bank’s balance sheet.

Centreville’s total loan portfolio of $427 million is small for a billion-dollar bank.

Commercial loans make up only about 10 percent of that total.

“We would like to grow the commercial side of the equation,” Lamb said, pointing to the state’s expanding education, medical technology and software industries as opportunities for growth.

To that end, over the last year Centreville has put together a small commercial lending team, and Lamb hopes to grow about 10 percent annually going forward.

“We’d like to see the mix between our loan to investment portfolio shift to 60-40 [percent],” he said. “It’s more like 50-50 right now, which is unusual for a community bank.”

Also in 2016, Lamb has set his sights on growing the bank’s footprint. Currently, Centreville has seven branches (Coventry, Cranston, East Greenwich, Narragansett, West Greenwich, West Warwick and Wickford), all within a few miles of each other in the center of a very small state.

“Most of the community banks we compete against have a statewide footprint, and we need to expand,” Lamb said.

But the expansion may not necessarily be more brick and mortar branches. In addition to geographical locations, Centreville is exploring different types of expansions, such as storefronts, ATM kiosks and loan production offices.

“We want to engage our customers in the proper places where that should occur,” Lamb said.

One tradition Centreville will not change is its community involvement. As a mutual bank, Centreville has a long history of financial support to local nonprofit organizations through its charitable foundation. In 2015, the bank gave back nearly $500,000 to local charities and nonprofits. It also encourages its 150 employees to volunteer in their communities.

“Volunteerism is part of our performance management program at all levels,” Stenberg said. “It’s a very enjoyable part of the work life at this bank.”

Although interest rates are finally on the move again, Lamb said the rise is so slight and anticipated, it should not affect the bank’s growth plans.

“What might influence us more is the volatility in the market and the stability the bank offers to an investor,” he said. “The bank still represents a fairly stable investment and decent return. It’s something we promote along with other products we have to offer.

We’re going to continue to grow our core relationships with families, checking, savings, home mortgages, auto loans, along with our commercial side and growing our small to midsize commercial loans.”

It’s a tall order, but one Centreville has been filling for nearly 200 years. BNE

“Most of the community banks we compete against have a statewide footprint, and we need to expand.” But the expansion may not necessarily be more brick and mortar branches.

— Thomas Lamb president and CEO, Centreville Bank

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9

HELD ‘CAPTIVE’ PROTECTING VULNERABLE CLIENTS

Group Benefits Captives Offer Insurance Cost Mitigation Strategies

BY MATT LANZA

Matt Lanza is executive vice president of H.J. Knight International, www. knightint.com, providing commercial insurance and risk management solutions.

Knight International is based in Braintree, Massachusetts, and serves a national client base.

W

ith origins that go back a century and a half, the financial strategy known as captives has gained popularity in recent years as businesses evaluate new ways to shave their bottom line – and those in the financial services industry should take notice and advantage of the group benefits version of this cost-saving option.

In a nutshell, a group benefits captive enables an employer to join a group of like-minded employers with similar goals – to contain costs and gain control of their employee health care plans. Joining a captive translates into becoming a partial owner of an insurance company and consequently receives the direct benefits of lower reinsurance rates, profits from underwriting premiums, control over plan design and the power of actionable loss data to better structure wellness and incentive initiatives.

There are several fundamental reasons for opting into a group benefits captive, chief among them to allow a business to break away from the never-ending cycle of increases in the fully insured and self-insured domain. Owning your data is another compelling reason for financial services businesses to consider a group benefits captive. Another motive is the inherent benefits to a self-insured program – tax savings on claims, reduced risk charges and the ability to select an administrator, network and plan design. Also, once 10 BANKING NEW ENGLAND

a business qualifies for a groups benefit captive, it is typically placed with like-risks and like-groups with similar goals, thereby creating the opportunity to work collectively to further reduce costs.

Candidates for a group benefits captive are ideally a fully insured plan or a self-insured plan whose senior management team is tired of continuous rate increases and has a strong commitment to learn how to utilize claim data and incorporate that information into cost containment and wellness strategies.

In addition, the business should be: • privately held; • financially stable; • not in a hyper-growth or acquisition mode; • have overall good loss ratios; • entrepreneurial and willing to consider creative and unique solutions; and • have 75 to 400 enrolled participants in its current medical plan.

There are four levels of coverage within the overall structure of a successful group benefits captive. The first is the employer’s self-insured/ deductible level. The second level is the group captive layer, which acts like a shock absorber and shares the defined risk between a captive member’s self-

insured/deductible level and the retention of the overall captive. The third is the catastrophic layer, which protects members from specific catastrophic loss; this coverage is purchased within the insurance market with a financially secure insurance carrier. The final level is the aggregate stop-loss insurance; this coverage protects the employer from frequency losses by capping the amount of claims each member can pay out of pocket in any given policy period. This enables each member to know up front what their worst-case scenario could be and protects their bottom line from unexpected claims that can often arise with true self-insured products. This coverage is also purchased within the marketplace with a financially secure insurance company.

Unlike traditional insurance, the captive will share 100 percent of any profits earned in the premiums paid in by the members to fund the captive reinsurance layer that are not used to pay claims.

These profits are distributed via dividends back to the members on a prorated share of premium paid.

It’s important to note that cost-reduction strategies associated with group benefits captives are not a quick-fix approach. They require an employer’s commitment over a number of years.

Specifically, it’s necessary to leverage the employer’s specific claims and utilization data to establish the strategic direction of the employer’s initiatives within the captive.

While a long-term strategy is needed, to begin, a company’s first-year goal might be implementing the group captive, adding a smoking cessation program and incorporating incentives for biometric screening. In the second year, a company might add a health savings account and data-driven disease management tools, and work to increase price transparency. A third year goal may be the addition of an incentive-based disease management program where employees are rewarded for more preventative measures and less hospital and pharmacy visits.

Group captives really aren’t that complicated – it’s like having all of the benefits of being self-insured, but with the proper reinsurance and structure in order to prevent unexpected catastrophic expense. A properly focused group benefits captive will offer your financial services business the control and cost containment that the traditional marketplace has not been able to provide in recent decades. BNE

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BANKING NEW ENGLAND

11

PROTECTING ANOTHER WAYVULNERABLE TO SAVE CLIENTS

Managed Print Services Increase Efficiency, Reduce Cost

BY RAY BELANGER

Ray Belanger is CEO of Bay Copy, a Rockland, Massachusetts firm specializing in managed print services for businesses. He can be reached at rbelanger@ baycopy.com.

12 BANKING NEW ENGLAND

A

t the risk of over-using the catch phrase, “this is not your grandfather’s bank” is an accurate description of recent changes within the banking industry. With the advent of online transactions and associated technology that allows for availability of round-the-clock communication, both internally and externally, gone are the so-called “bankers hours.”

While customer service remains at the core of contemporary banking, the need to increase efficiencies while keeping costs in line is another constant; one often overlooked method to achieve these goals is document generation.

Although print management may not seem like an area where significant cost cutting measures can be made, the officer who doesn’t factor it into the discussion is overlooking a sizeable potential for savings. In fact, a print management program can save a banking institution in excess of 15 percent in operational costs.

Not so long ago, copiers, printers and fax machines were the pinnacle of document generation, but that process has been refined through the innovation of managed print services (MPS). MPS has transformed the document generation industry, with an increasing number of companies that sell copiers now taking an updated view of their industry and how it best serves their customers.

With banks spending up to 3 percent of annual revenue on document output and IT departments allocating 15 percent of their time to printing and related actions, the need to track equipment usage, reduce costs and increase efficiencies is a must.

Essentially, MPS looks at per-page cost as the bottom line, as opposed to the final price point of office equipment. MPS is a consideration of all costs associated with leasing/owning/using printing and imaging equipment, including maintenance and ongoing support – an element that is of significant importance for banks with multiple locations or satellite offices. Print management software tracks the number of prints each piece of equipment generates and then produces reports that facilitate efficiency management.

MPS can be introduced in phases and is set in motion with an initial in-depth evaluation of the existing printer fleet, current costs, operational logjams and the amount of time an IT department spends troubleshooting. Following analysis, a “discovery meeting” is arranged with key stakeholders

to review a report that summarizes and documents all data and operational costs of the existing equipment fleet. This helps facilities take an objective look at all phases of document generation.

Streamlining printing and the flow of communication is typically the priority for banking institutions. MPS consolidates the number of devices used, reducing the cost of equipment, supplies, maintenance and required internal IT support.

The environmental aspect of managed print services cannot be overlooked; it is an effective way to reduce waste, recycle paper, ink and other resources. It is a “green” document solutions approach that is not only cost effective, but can also lower the carbon footprint of a banking institution. Moreover, an MPS system acts as an in-place tracking software program, enabling the provider to monitor clients’ systems remotely and alerting them to potential issues that could otherwise cause work stoppage.

Yet another critical component to MPS is security. Bankers are well aware of the imperative to ensure that information is secure and compliant.

A managed print service program provides the mandatory security that is essential to the banking industry: it can trace a document back to the device from which it was printed.

Employing an across-the-board print management system is less stressful for staff, particularly those whose work takes them to different branches. The frustration of dealing with equipment that may vary from office to office is eliminated making it easier for people to do their jobs. MPS is also a boon for marketing departments, allowing for the ability to output color collateral materials internally.

There is also a growing trend toward full document imaging. This move toward a paperless office is taking momentum, but the technology is still evolving; therefore facilities that go this route must be open to eventual changes.

Ultimately a managed print service program can: identify current and anticipated printing requirements; provide consolidation/standardization opportunities; initiate significant reduction in costs; increase security; reduce or eliminate internal IT printer support; create visibility to all related expenses and usage. It is a necessary step toward reducing expenses and perhaps more importantly in safeguarding the sensitive information inherent to the banking industry. BNE

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PROTECTING INDUSTRY NEWS VULNERABLE CLIENTS

SBA Recognizes Berkshire Bank for Most Guaranteed Loan Approvals in Vermont

Webster to Open 17 New Boston-Area Branches

The United States Small Business Administration recognized Berkshire Bank for having made the most guaranteed loans within Vermont during fiscal year Oct. 1, 2014, through Sept. 30, 2015.

The SBA in December hosted its Annual Meeting and Awards event at the Capitol Plaza in Montpelier, Vermont, showing an attendance of over 100 lenders from various financial institutions.

Berkshire Bank was acknowledged by the Vermont District office for having the most guaranteed loans within the state – 68 at the close of the fiscal year – as well as for supporting various SBA loan programs.

Vermont saw a great increase in SBA loans from fiscal year 2014 to 2015. Small business loans rose from 262 to 330, a 26 percent increase.

Vermont’s loan volume by dollars was the third-highest percentage in the nation, from $33.9 million to $53.5 million.

Berkshire Bank was also recognized as “Top SBA Lender” in the Capital and Central regions of New York and Western Massachusetts, as well as being awarded Lender of the Quarter award for the fourth quarter of fiscal year 2015 in Connecticut.

Waterbury, Connecticut-based Webster Financial Corp., the holding company for the $24 billion Webster Bank, will take over 18 of the leasehold interests being vacated by Citibank in the Boston area.

It is taking over seven branches in Boston, three in Cambridge, and one each in Quincy, Lexington, Newton, Burlington, Brookline, Needham and Wellesley. Citi said in September that it would be exiting its retail presence in Massachusetts, leaving behind 17 branches in the Greater Boston area.

Webster will open those branches under its own brand in January.

Webster will not acquire any loans or deposits from Citi.

The company did not disclose the terms of the deal, but said it would most likely be dilutive to earnings this year, would likely break even next year and would be accretive to earnings after that.

Webster will keep all of the equipment in the offices it is taking over and may also retain many of the bankers presently working there.

The bank will also mount an aggressive marketing campaign, including advertising in print, television, digital, social media and public transit.

Webster first broke into the Boston market in 2009 with an office in the Financial District that focused largely on commercial business.

Ledyard President and CEO Named Community Banker of the Year

Needham Bank Celebrates Millis Grand Opening

Ledyard National Bank President and CEO Kathryn G. Underwood was awarded the New Hampshire Bankers Association’s Community Banker of the Year Award for 2015.

The NHBA annually honors one New Hampshire bank employee who has gone above and beyond to improve the state of New Hampshire through their civic and community engagement.

Underwood was selected by a panel of leading state public officials.

The panel of judges noted Underwood’s commitment to bringing positive change to her community with the creation of the first ever Go Red for Women event in the Upper Valley to increase awareness that heart disease is the No.1 health risk for women, and also bringing a “Fit Friendly” initiative to encourage local businesses to help their employees live healthier lives.

Needham Bank marked the opening of its new branch in Millis, Massachusetts, located at 857 Main St., with a grand opening celebration and a ribbon-cutting ceremony in November.

The Millis community welcomed Needham Bank to town during the bank’s grand opening celebration. More than 300 people attended.

“Now that we’re officially open, we look forward to becoming further involved with all of the wonderful organizations and businesses that make Millis such a great place to live and work,” Mark Whalen, Needham Bank’s CEO, said in a statement.

“The grand opening was a great way to meet more people in the community. We were so pleased by the huge show of support from the town,” said David Scarcella, Needham Bank’s Millis branch manager. BNE

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COVER

The Year of

Going Granular As Big Data Scales Down, Smaller Banks Can Scale Up

By Christina P. O’Neill

D

ata analytics – also known as “big data” – was once accessible to only the largest banking institutions. But 2016 may be the tipping point in which lower costs and increased accessibility of data analytics will be increasingly adopted by small and midsized banks with assets in the hundreds of millions. These community institutions have had to spend heavily on regulatory compliance in recent years, but now, their budgets are freeing up to invest in other things, industry observers said.

The critical role of big data is to link banks’ internal data, such as customer accounts, credit scoring, payment history and assets, to external data, such as interest rates, macroeconomics and customer preferences.

Community banks are cautious on this score. They’re not only budget-conscious but also extremely protective of customer data, and often are reluctant to share it with third parties. However, the increasing improvement in ease of use of today’s data analytics holds promise to lighten the workload and increase the effectiveness of their compliance departments, which may have only one or two staffers whose knowledge of software as a service is usually not in the specialized range.

A 2014 report from Everest Group Research, “Analytics in Banking,” predicted that adoption of third-party analytics business services by banks would quadruple by 2020.

Last September, Boston-based Aite Group published two reports regarding payment analytics. A Sept. 16 report, “Beyond ROI: Better Metrics for Evaluating Commercial Banking Technologies,” asserted that while 30 percent of decision-makers relied on ROI, which most effectively measures cash flows with significant upfront investment, traditional financial metrics may not be the best yardstick to measure results versus ongoing costs.

Instead, Aite Group recommended using annual deployment net earnings and annual deployment net earnings margin.

A Sept. 23 Aite Group report, “Payments Analytics: Gaining Insights and Creating Competitive Advantages,” recommends combining payment data with externally-obtained information to generate value-added services and meaningful competitive advantage.

A version of this practice had been utilized by researchers who used it to determine quality of life in Spain’s provinces using bank card data anonymized and provided by one of the country’s largest banks (see sidebar, page 18).

A Democratization of Analytics Big data can help banks improve their compliance with antimoney laundering and know-your-customer requirements, fraud protection, FATCA, FCPA and FINRA rules. It can also enable banks to price their products effectively and to move away from

mass marketing strategies that yield limited response rates, to smaller campaigns to fewer but more receptive customers.

Data analytics can also improve due diligence by presenting a better picture of performance and risk metrics, essential components of M&A decisions.

“I see a movement toward analytics used by businesses. In the past, you’d have to be a quant expert,” said Ed O’Brien, director of the banking channels practice at the research firm Mercator Advisory Group. Today’s big data is more accessible. Business users with some analytic background can now use many powerful tools to create a “what if ” scenario without taking months to write code, he said. “It’s a democratization of analytics.”

Third-party core systems providers such as Fiserv, Fico and Jack Henry can help banks work with savings account and mobile-banking information; smaller institutions are more likely to partner with them now than was done even five years ago, O’Brien said – despite the ongoing cautiousness about privacy protection.

Adoption of big data use by community banks is still more evolutionary than revolutionary, indicated L. Cary Whaley, vice president, payments and technology policy at the Independent Community Bankers Association. Generally, because of their tight margins, community banks won’t take the lead in these methods.

“They see certain trends in the industry and [some] move fast to get there,” he said. “Half are fast followers, and half are wait and see. What we’re seeing in adoption right now, fast followers are looking at ways to use more analytics; the rest are waiting and seeing.”

The ease-of-use attraction of cloud- and software-based analytics is offset by banks’ caution about putting any vital data in a cloud environment. Those community banks that do use data are sharing product lines within their own institutions; very few are sharing it with a third-party provider, Whaley said. A small group shares data with affiliates in the realm of fraud prevention.

Data Analytics in the Field Commerce Bank, based in Boston and Worcester, says some credit card vendors provide analytics to help issuing banks gather information on customer spending habits. Danielle Johnson, market research analyst at Commerce, said the bank uses analytics to determine which products are the most profitable and popular, but also uses analytics to assess risk, particularly fraud risk. Data storage is far less expensive than it used to be, making it easier to expand the applications for analytics, she said.

In a 2013 report, “How Advanced Analytics Are Redefining CONTINUED ON PAGE 18

BANKING NEW ENGLAND

17

PROTECTING VULNERABLE CLIENTSCONTINUED FROM PAGE 17 COVER Banking,” McKinsey director Toos Daruvala cited a large bank that brought in third-party data from external sources, increasing its predictive accuracy from the 40 percent to 45 percent range to the 70 percent range. Another bank purchased payment data from a local telephone company to more effectively determine who was a good credit risk. A third bank drew from social media to determine which products its customers would be most likely to buy.

Mercator’s O’Brien cited the use of customer checking account, automatic deposit and ACH information to map whether a customer has a new job or might be eligible for a higher-return money market fund. Customers might have had trusted advisors in previous generations, but now Millennials, in particular, are increasingly left to their own devices. This gives community banks the opportunity to follow the growth in their lives, and grow along with them.

Who Wants to Know?

O’Brien said that while customers are interested in receiving good offers and discounts on rates and loans, and better returns on savings accounts, they want to know that their information is not shared with outside parties.

Banks want to reach out to those whom they believe might be inclined to engage with them. “There’s nothing worse than being approached when you don’t want to [be],” he said. “Hopefully, they

only get reached out to when they want to and results are relevant to them.”

Banks can profile neighborhoods in terms of average income or investable assets, sending emails to residents in ZIP code-plusfour digits, targeting decisively without crossing over privacy lines, O’Brien said.

ICBA’s Whaley says the privacy issue is foremost for community banks. They take information in an aggregate form and use it to develop patterns and shapes, such as in the case of fraud analytics.

“You’re really not interested in the fact that a customer goes to [a particular] country,” he said. “The fact that they might have gone overseas may be significant, but only if it corresponds to a fraud trend.”

He cited the current priorities for community banks, including cybersecurity, data security and regulatory compliance. Then there’s cost containment, implementing mobile technology and preventing fraud. The third tier is enterprise risk management and customer profitability.

While he predicts that data analytics will become more of a way of doing business, “community banks are incredibly protective of their customers’ data. Having third parties misuse it or have it vulnerable, is a serious concern of community banks. … What you don’t see is combining internal data with external data, but I do think it’s something that could happen.” BNE

Careful Hunters on Bank Activities’ Digital Trail A series of research papers lead-authored by Stanislav Sobolevsky, through the auspices of SENSEable City Lab at MIT, has provided the basis for researchers to measure significant properties of Spain’s cities.

Banco Bilbao Vizcaya Argentaria (BBVA), one of Spain’s largest banks, provided anonymized data – scrubbed of all personal identification markers – to SENSEable City Lab led by Prof. Carlo Ratti. Researchers sought to chart individuals’ economic behavior, measure the vitality of cities and economic context of the local neighborhoods, and fine-tune estimations of credit risk. Drawing on a large data set, they developed the capacity to narrow the findings down to individual small businesses – without compromising security conditions for the bank and its shareholders, or disclosing trade secrets.

The researchers considered various aggregated characteristics of people’s economic behavior in an urban context, such as overall spending activity, its categorical diversity, customer mobility and many others. Analysis of those quantities allowed multiple applications including a novel scale-independent classification of Spanish cities by their economic context, predicting economic performance of the urban areas as well as characterizing and explaining their attractiveness for the domestic and foreign tourists.

Research enforced, for example, the long-standing correlation between the presence of Spain’s high-speed train network and economic vitality. Conversely, research showed a high level of unemployment in the highestperforming cities (which were often those with a robust tourism economy), leading researchers to note that high- or over-performance of these cities may be accompanied by social problems.

Sobolevsky, associate professor of practice at the Center for Urban Science and Progress at New York University and research affiliate at the MIT SENSEable City Lab, noted that “in the era of data-driven solutions, banking data becomes an invaluable asset. Not only can it help banking business become smarter through internal application such as improved credit risk scoring, but can also help broadening its business being leveraged for external applications targeted at various urban and business stakeholders – planners, investors, touristic or entertainment industry and many others. And it also creates unprecedented research opportunity in understanding people behavior through its digital footprints – the research our group is pursuing at NYU and MIT.”

18 BANKING NEW ENGLAND

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APROTECTING NEW APPROACH VULNERABLE CLIENTS

Why Banks Overpay for Real Estate – And What They Can Do About It

BY RICHARD PILLA

Richard Pilla is principal and founding member of Quincy, Massachusetts-based Paramount Partners LLC. He can be reached at rpilla@ paramountpartners.com.

B

anks need to take a more professional approach when managing their branch networks in order to avoid overpaying when purchasing or leasing real estate.

Banks frequently overpay by 15 percent to 20 percent or more on average for real estate compared to other retailers for comparable space.

Over 10 or 20 years we’re talking a lot of money!

For a bank that leases seven locations of its 10-branch network, with annual rents averaging $100,000 (triple net) while the market average is $85,000, over a 10-year period that translates into more than $1.2 million (factoring in rent escalations). For this price, the bank could have built a new branch.

Landlords and developers have the mindset that they can charge banks more than other tenants. It is not uncommon for developers to have one rent schedule for retailers and a much higher schedule for banks. Why is this? Because they have been doing it for years and everyone has come to expect it. Bankers have put up very little, if any, resistance, primarily because they are not aware of market values or what other retailers pay. In addition, bankers typically fail to negotiate for free rent and tenant improvement dollars (TI), which most chain retailers ask for and usually receive.

20 BANKING NEW ENGLAND

Banks should not be paying higher rents – their credit is good, they are a “clean use” (meaning they do not generate much trash) and they do not attract a nuisance clientele. In addition, unlike some retailers such as restaurants and health clubs, banks do not require many parking spaces. Their faster turnover even contributes more parking spaces for customers of other tenants. Banks also tend to be closed in the evenings, weekends and holidays when most restaurants and retailers have higher customer traffic requiring even more parking. Lastly, because space leased to banks does not turn over nearly as frequently as other uses, landlords can avoid having to pay leasing and legal fees every five or 10 years, do not lose income between tenancies, and do not incur expenses such as demolition and TI contributions, which is typical whenever there is a change in tenancy.

Given these considerations, bankers definitely have room to maneuver when seeking new space.

Here are some common real estate mistakes that can be avoided when planning for branch expansion: Last-minute lease renewals. Most leases have a six- to 12-month lease renewal notice requirement. Failure to anticipate lease renewals and plan sufficiently in advance reduces a financial

institution’s options. The lead time to open a new branch is typically more than 12 months, or even longer. At minimum, two years prior to lease maturity, bankers should complete a comprehensive branch performance and trade area analysis in order to guide their decision to either renew or relocate.

Why a trade-area analysis? Shifts in market dynamics, infrastructure changes, daytime population shifts and increased competition have a direct impact on a branch’s loan and deposit performance. Better to understand the potential impact early in the process and leave sufficient time to change direction than to be forced to stay locked into an unprofitable branch for another several years.

Not treating properties as a portfolio. Trade areas and communities can change and sometimes even deteriorate over a period of time. Given the cost of opening a new facility, a poorly performing branch, due to poor location and site constraints, can have a huge negative impact on the bottom line. Banks need not lock themselves into a property if their leases provide sufficient flexibility.

Customer pressure. The failure of bank management to utilize objective criteria in evaluating properties that are presented by good customers oftentimes puts management in an awkward position and is likely to send them down a wrong path. By allowing themselves to be boxed into a corner, bankers run the risk of losing a good customer’s business.

Insufficient research. Key to opening a successful branch is having a sound strategy. Understanding what will drive the success of a branch is critical. Is traffic retail-oriented or business-oriented?

What are the target demographics? If retail-oriented, where are the primary outlets that generate the most traffic located in the trade area? What are consumers’ travel patterns? Understanding these and other factors will help to narrow the geographic search and reduce risk.

Poor site selection. Retail branch properties should have site characteristics comparable to those of the strongest retailers, such as McDonalds, Dunkin Donuts or CVS. The same property factors critical to those retailers – visibility, access, parking, signage, traffic patterns and retail synergy – are equally important to banks. In evaluating a location, consideration should be for both immediate and long-term success. If a customer cannot make a left turn in and out of a property, move on to another site.

Not understanding site value. Restaurants and other retailers know what they can pay for rent (or purchase) based on a percentage of sales; they do sales projections and then back into a rent number.

Also, rents should not exceed what comparable space leases/sells for. Using a financial pro forma that factors in market conditions and facility costs as a percentage of a branch’s projected net interest income will take the emotion out of the decision. Given the cost of building, equipping, furnishing, branding and staffing a retail bank branch, there can be little room for error.

Unnecessarily disclosing the bank’s identity. In most situations, there is no need to let the market know that your bank is looking to expand. Once a site has been identified, establish the price and terms first before letting the owner know that a bank is the interested party.

Poorly negotiating the deal. Real estate developers make their living understanding real estate transactions and market conditions and pride themselves on being shrewd negotiators. Bank management knows banking but often not retail real estate. It’s not a fair fight. So, level the playing field by retaining a professional who can get you the best deal possible.

Not getting professional advice. Most banks and other financial institutions are comfortable bringing in outside legal counsel and professional auditors for specialized financial transactions. However, for some reason there are bankers who believe they are sufficiently qualified to handle commercial real estate transactions. Wrong! This approach not only drives up acquisition costs, it can also extend the time it takes to actually open a branch, thus reducing profitability because of lost opportunities. In addition, the bank runs the risk of having its deal “shopped” and being “aced-out” by another tenant, or even worse, a competitor.

Own vs. lease. If a bank has the opportunity to purchase, more times than not, it should. However, leasing is not a bad alternative if there is a superior site in a desirable community that offers the greatest likelihood for success and is only available by lease. The argument that a bank wanting to control its destiny can only do so with a purchase is totally misguided. Depending on how a lease is negotiated, a bank can have as much or even more control of its destiny.

Failure to provide an exit strategy. Every business needs to have an exit strategy, today more than ever, primarily because of technology’s impact on how and where consumers make their purchases and do their banking. Since crystal balls are hard to come by, the next best thing is for banks to hedge their bets by having as much flexibility as possible. Excellent real estate will always be in demand, whether it be another financial institution or another commercial user of space. Therefore, the location, the site, the layout as well as the building’s design, should factor into its utility and applicability and marketability in the event the bank vacates the premises.

While real estate is not a financial institution’s core business, by default banks are, in fact, in the real estate business, whether they own or lease their facilities. Any business that requires bricks and mortar is in the real estate business and, when it overpays, takes a direct hit to the bottom line. Expanding one’s upfront due diligence will help to ensure that your bank selects the right market, the most strategic location and a site where your institution will enjoy both immediate and long-term success. BNE This article first appeared on the BAI Banking Strategies website.

It is reprinted here with permission.

BANKING NEW ENGLAND

21

A CRISIS OF OUR OWN MAKING?

Solution to the Credit Analyst Shortage Could Be Easier Than We Think

BY NEIL BERDIEV

Neil Berdiev is managing partner and co-founder of DNB Advisory LLC, a Bostonbased advisory firm. He is a career commercial banker gone entrepreneur, a credit guy with passion for business development. He may be reached at dnb@dnbAdvisory. com or at 617-233-1405.

O

ver the last decade the message from commercial banks across the country has been quite consistent – there is a shortage of experienced credit analysts, and the job of a credit analyst is a revolving door.

But there are some signs that the shortage may be artificial and self-inflicted. One of the primary indicators is a poorly-thought-out approach to the positioning of the role with recruits and employees. The career pathing of a credit analyst is an afterthought in many respects: from the career progression and talent pipeline, employee retention, how teams are designed and staffed, the creation of underwriting processes and workflow management. For a newly minted credit analyst, the goal is clear – get out of the role as quickly as possible.

Here are the key contributions to the credit analyst shortage.

Elimination of Credit Training Programs

The most obvious explanation for the lack of experienced credit analysts is a gradual elimination of credit training programs and severe reduction 22 BANKING NEW ENGLAND

in training and development budgets. Commercial banks compensate for the lack of formal, structured credit training by signing up analysts for individual courses and informal, on-the-job training and coaching – and of course, the time-honored tradition of stealing more experienced analysts from competitors. For smaller banks, one-off classes and on the job training are the primary methods of training credit analysts. It’s been made to work, but the quality of the “final product” in the form of a well-trained credit professional varies widely, even on the same team. However, lack of training and development is only a part of the problem.

Recruiting Efforts and Messages Promote Turnover

For many years, the job of a credit analyst and subsequent steps has been positioned as a means to an end, with the end being the role of a relationship manager. Prospective applicants and certainly existing analysts know that moving onto the relationship and business development side offers considerably more money, sales incentive compensation, more growth opportunities internally, broader employment opportunities

with competitors, and greater independence and control over their workdays. What if, instead, credit analysts progressed to more complex deals and levels, specialty lending credit skills, portfolio management responsibilities (team specific and macro), coaching and training of junior analysts and various others developmental opportunities? There are so many ways to evolve as commercial banking professionals, yet it is not something for which opportunities have been created.

Lack of Career Paths

Lack of at least somewhat formal career paths within credit is an important factor that reduces the ability to retain and engage credit analysts. It typically takes several years of working as an analyst to truly understand credit and gain a certain level of expertise. If analysts spend a year or two in credit and then become relationships managers, this is insufficient to develop sustainable, long-term credit expertise. Once on the line, these less experienced credit professionals tend to forget everything they learned during their short credit tenures, which ends up being a waste of money and resources training them in the first place.

Promote or Else

In the absence of career tracks, banks are “forced” to promote analysts away from the credit team out of fear that they will be lost altogether, even when they are far from being ready for the next step or may not even deserve the promotion. As a result, employees are promoted who are not ready for and do not deserve that promotion.

Other colleagues take notice that one does not have to be a strong performer to move to the next step. This creates a culture of mediocre performance, which in turn may push strong performers away from the organization.

Lack of Periodic Assessment

There is significant resistance among managers to conducting periodic assessments to determine whether the team’s setup and alignment with lending teams (responsibilities, coverage, employee ratios and processes) are appropriate to compete in the current market place and meet clients’ needs. Opinions that “this structure served us well for many years” and resistance to change leave many commercial banks ill-equipped to face competition.

While the jury is still out on whether the shortage of credit analysts is self-inflicted and can be corrected relatively easily, the arguments above offer compelling points.

While it is not easy to change how we do business, the benefits of attracting, developing and retaining talent by far outweigh the risks and uncertainties. All it takes is the first step and the mindset of “how can we make it happen?” It can be done on any budget and timeline. All that’s needed is a well-thought-out strategy that can be implemented right away. Join the conversation! Lead the change! BNE

Tips to Improve Retention and Better Develop Credit Talent • Let analysts see the bigger picture of their contribution by giving them greater exposure to the entire deal lifecycle and to clients.

This will help them understand the value they offer and the importance of their roles.

• Credit analysis can be repetitive and monotonous, leading to quick burnout. Rotations and diverse assignments can improve a staff’s longevity and satisfaction with their work.

• Creating additional, but not excessive, layers within credit analysis groups allows upward mobility. However, career options also have to be accompanied by well-thought-out development plans and training opportunities.

• Advancement is no longer represented by climbing a corporate ladder upward. Lattice and sideways movements are quite common. Discussing, designing and communicating available career options will keep analysts engaged and challenged.

• Good team leaders are critical to retaining talent. Inadequate managerial skills are one of the top three reasons why employees leave. Furthermore, not everyone can effectively manage younger generations and everyone could use coaching and training in this area. Team leaders should be passionate about coaching and developing, and should not be promoted just because it is the next step for advancement.

• Messages from senior management about credit careers and recognition of credit’s important contribution to the lending teams are an essential reassurance of career options and progression.

• As credit analysts earn their stripes, allow them to be professionals; allow them to manage their days and hours with increasing independence, similar to relationship managers.

• A culture of note- and order-takers is off-putting to credit analysts and is a guaranteed way to chase away up-and-coming colleagues.

• Periodically review the department’s structure and setup.

Consider designing or redesigning career tracks to take into account your market and availability of workforce, training options, demographics, infrastructure and commuting options, personal situations, and aspirations of your team members.

BANKING NEW ENGLAND

23

INNOVATIVE MARKETING

Four Strategic Marketing Pillars for Profit-Minded Bank CEOs Editor’s Note: This is the first of a three-part article; parts two and three will appear in subsequent issues of Banking New England.

Brand Promise

BY SCOTT MCCLYMONDS

Leadership Scott McClymonds, founder of CEO Velocity consulting, has helped dozens of banks significantly improve profits and efficiency, grow key business units and transform employee performance. He is an expert at integrating leadership, marketing strategy and technology to develop competitive advantages. Subscribers to this magazine may reach Scott at scottm@ceovelocity. com, (479) 263-0774 or on LinkedIn at linkedin.com/in/ scottmcclymonds for a free one-hour strategic marketing consultation and assessment.

24 BANKING NEW ENGLAND

Strategic Marketing

Analytics & Automation

Referral Strategy

S

omeone recently asked me what “magic bullet” I had that would make his financial institution more successful. I told him my magic bullet goes by the initials “HW” – for “hard work.”

Despite not having a magic bullet for you, I do intend to share four powerful weapons that will increase your bank’s success dramatically if you use them strategically. It is rare that I see these weapons used to their fullest strategic potential, yet the banks whose leaders make them a priority prosper far beyond the norm.

These weapons are not earth-shattering. You will not be surprised or amazed when I mention them. In fact, you might feel like one of former NFL coach Vince Lombardi’s players when he told them, “Gentlemen, this is a football.”

Nevertheless, knowing a football exists is different from skillfully using it to throw touchdown passes. Similarly, knowing about the weapons I will discuss is not the same as using them to gain a sustainable competitive advantage, which is what I want to help you achieve.

As a final disclaimer I want to emphasize that using these weapons proficiently to gain a competitive advantage is dependent on leadership, as is everything else in your bank. That means using the four weapons successfully will require your strong leadership to score touchdowns consistently.

The Ultimate Purpose of Your Bank

Your bank has its own rich, unique history of how and why it was founded. Undoubtedly,

Assessing Your Bank’s Strategic Marketing Strength 1. What is your bank’s brand promise? How does it change the lives of your customers? How well do your employees know and execute upon it?

2. Does your analytics provide you with detailed, actionable insights on your customers preferences and behaviors?

Have you built automation into your marketing efforts?

3. Do you have a systematic referral strategy that consistently brings in new business?

4. How much time does your executive committee spend leading marketing and sales? How can they spend more time on these areas? you want to help your communities prosper, be instrumental in job creation and support charitable causes.

However, keeping things simple, let’s consider the words of the great Peter Drucker, who said, “The purpose of a business is to create and keep a customer.” Drucker knew that without customers, no business can survive. The purpose of a business is to get and keep prof itable customers.

Drucker also said, “Business has only two functions – marketing and innovation.” He knew the competent execution of these two functions is what draws customers to a business. Your bank needs innovative products, ideas and services; and marketing has the responsibility of helping you understand your customers as well as making them aware of your offerings. In this article we are going to leave our discussion of innovation to another day and focus our full attention on the four fundamental strategic pillars of a marketing strategy.

Marketing: Challenging, Neglected and Misunderstood

Despite the obvious importance of marketing based on what Drucker said, many banks market poorly or make it a low priority. Most bank marketers have not proven how their efforts generate profits, and executive teams often view marketing only as a tactical, low-level function.

Unfortunately, marketing staffs often lack the expertise, resources and sophistication to produce a good return on dollars spent. In defense of bank executives, why invest in something they don’t believe is measurable, and have no expectation the dollars invested will have a sufficient ROI? At the executive committee level, the CEO and executive team are generally excellent in banking fundamentals, but often do not have in-depth marketing experience. As a result, they often underestimate what marketing could do for them if they gave it sufficient support.

In light of the challenges faced by bank executives and marketers, as well as the myriad of complex marketing technologies available, I want to help you use marketing as

a high ROI strategic weapon that will dramatically increase your profitability and market position.

This won’t come from focusing primarily on product campaigns or sophisticated marketing technologies, but rather on developing your marketing strategy around the four fundamental pillars of strategic marketing.

The Four Critical Elements of Marketing Strategy

Given the opportunities most banks have to improve their marketing, focusing on the four pillars of marketing can set your bank apart from competitors, and provide the foundation for innovation in areas such as product development, distribution and customer service. These four strategic pillars cut across the physical and digital presence of your bank, and apply to all of your different business units, from retail to private banking, small business, commercial and all the rest.

These four pillars are easy to understand, but difficult to execute on a consistent basis. Their successful and consistent implementation requires hard work, commitment, discipline, and continuous measurement. Like I said, no magic bullets.

Tragically, most banks either omit them altogether or execute them sporadically, and deprive themselves of untold thousands or millions of dollars of additional profitability.

Sadly, some institutions even go out of business because they fail to build these into their strategy.

These four critical and interconnected pillars of strategic marketing are: 1. Brand promise 2. Marketing analytics and automation 3. Referrals 4. Leadership Your brand promise identifies your value proposition, why you’re in business and what your customers can expect from you. A strong and clear brand promise provides a powerful marketing message, meaningful differentiation and amplifies the impact of marketing analytics and automation.

Marketing analytics and automation helps prioritize marketing and sales personnel and investments. It provides insights into your customers, products and markets that can give you a competitive advantage. The presence of sound strategies and skillsets in this area lets banks develop an organized and effective referral strategy.

A referral strategy is a way to acquire new customers inexpensively through recommendations from existing satisfied ones. There is no better way to build your bank than having happy customers telling friends and family about the virtues of doing business with you.

Of course, strong leadership is needed to tie all of these together. The best marketing strategies are consistently successful only when your bank’s senior executives provide passionate support.

In the remaining two articles of this series we will more fully explore and explain these four strategic marketing pillars. BNE BANKING NEW ENGLAND

25

PROTECTINGFILE VULNERABLE CLIENTS PERSONNEL

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

Featured Banks • BankNewport • Dedham Savings Bank • Franklin Savings Bank • Kennebunk Savings Bank • Marlborough Savings Bank • Middlesex Savings Bank • Nantucket Bank • Newburyport Five Cents Savings Bank • North Middlesex Savings Bank

Appointments and Elections Franklin Savings Bank Ronald L. Magoon will succeed Jeffery B. Savage as president and CEO of Franklin Savings Bank following Savage’s retirement later this year.

The board of directors Ronald L. Magoon of the Southern New Hampshire-based bank unanimously approved Magoon as president and COO in December.

Savage will retain the title of CEO and will remain as a member of the board of directors for Franklin Savings Bank.

Magoon joined Franklin Savings Bank in 1988 as assistant treasurer and controller, advancing to executive vice president and COO before his appointment to president.

He earned his bachelor’s degree from the Whittemore School of Business and Economics from the University of New Hampshire in Durham, graduated magna cum laude with an MBA from Southern New Hampshire University of Manchester, obtained a graduate banking degree from the National School of Banking at Fairfield University and is a graduate of the ABA National Compliance School, class of 1987.

BankNewport John P. Sullivan has been appointed executive vice president, digital and technology strategy at Rhode Island-based BankNewport. He will be responsible for all John P. Sullivan information technology functions for the bank, including information security, digital services, e-products, technology methodologies and project management. Sullivan previously worked for the George D. Duarte Jr. Washington Trust Co. in Westerly, Rhode Island, where he served as chief information officer.

George D. Duarte Jr. was appointed vice president and business development officer 26 BANKING NEW ENGLAND

in the bank’s business banking group. He will be responsible for business development, commercial loan production, cross sales origination and cross team collaboration in the East Bay and Aquidneck Island market. Duarte comes to BankNewport from Bank of America in Cranston, Rhode Island, where he served as vice president of small business banking.

Renee C. Byers was appointed vice president and operations manager at BankNewport. She will be responsible for overseeing the bank’s loan and deposit services areas, including Renee C. Byers ACH, wire, overdraft, payment processing, escrow and HMDA reporting. With over 20 years in the banking industry, Byers comes to BankNewport from the Washington Trust Co. of Westerly, where she served as vice president of retail operations.

Aaron C. Guckian was appointed vice president, branch sales manager of BankNewport’s East Greenwich office. He will be responsible for branch operations, business Aaron C. Guckian development and staff development. He comes to BankNewport from the Washington Trust Co., where he served as sales coordinator. He was formerly special projects coordinator with Rhode Island Family Court in Providence and director of advance in the governor’s office of the state of Rhode Island.

Dedham Savings Bank Victoria Graves was elected vice president and chief information security officer of Dedham Savings Bank in Massachusetts. Graves has an extensive background in Victoria Graves information security, most recently as a manager of InfoSec, governance, risk and compliance at EMC², as well as over 10 years as IT assurance senior manager with Wolf & Co.

Promotions

New Arrivals

Marlborough Savings Bank

David McCabe

David J. Nicholson

BankNewport

Sean C. Coyle

Christopher P. DiBenedetto was promoted to Marlborough Savings Bank’s senior vice president and risk officer. David McCabe was promoted to senior vice president and commercial loan officer. David J. Nicholson was promoted to senior vice president and commercial loan officer. Sean C. Coyle was promoted to branch officer in Westborough.

Nantucket Bank

Nantucket Bank announced that Christy Potter has accepted the role of assistant vice president and customer experience officer at Nantucket Bank. She was formerly the branch manager at the bank’s Pleasant Street location.

Christy Potter

North Middlesex Savings Bank

Karen L. Thorne has been promoted to senior vice president and chief risk officer at North Middlesex Savings Bank in Massachusetts. Thorne joined NMSB in 2006 and was most recently vice president of credit administration.

Karen L. Thorne

Middlesex Savings Bank

Thomas F. Farley

Michael J. O’Riordan

Michael A. Missle

Natick, Massachusetts-based Middlesex Savings Bank has promoted four staff members: Thomas F. Farley to executive vice president and chief commercial banking officer; Michael J. O’Riordan to senior vice president and senior credit officer; Michael A. Missle to senior vice president; and Debra L. Zurka to senior vice president.

Farley succeeds Michael McAuliffe, the bank’s newly elected president, in his role of executive vice president and chief commercial banking officer. O’Riordan joined Middlesex Savings Bank in 2006 as senior vice president. Missle came to Middlesex after 10 years with Boston Private Bank and Trust, where he led the cash management group serving the New England, Southern California and San Francisco Bay area markets. Zurka joined the bank last year from Citizens Bank, where she served as portfolio management team leader for nearly seven years.

Paul A. Marchetti has been hired as senior vice president, director of risk management, compliance and senior credit officer for BankNewport. He will be responsible for all development, implementation and oversight for the credit, risk management and regulatory compliance functions for BankNewport and its mutual holding company, OceanPoint Financial Paul A. Marchetti Partners, MHC and affiliates.

Marchetti comes to BankNewport from Greylock Federal Credit Union in Pittsfield, Massachusetts, where he served as senior vice president and chief risk officer.

Newburyport Five Cents Savings Bank

John Burcke joined Newburyport Five Cents Savings Bank as vice president and commercial loan officer. Prior to joining Newburyport Five, Burcke was senior vice president, senior commercial lender for Optima Bank and Trust in Portsmouth, New Hampshire. Burcke attended Truman State University in Kirksville, Missouri.

He currently serves on the advancement John Burcke committee for Exeter Hospital.

Heath Wilson joined Newburyport Five Cents Savings Bank as vice president and commercial loan officer at the bank’s Portsmouth Yoken’s Common location. Prior to joining the bank’s team, Wilson was a relationship manager for Optima Bank and Trust.

Kennebunk Savings Bank

Alyson Graybill has joined the Kennebunk Savings Bank as vice president and retail market manager for the York, Maine branches.

Graybill will be responsible for lending in the York market and overseeing the two York Alyson Graybill William Dehais branch offices. With over 20 years of experience in the financial industry, most recently Graybill managed and developed branches in North Hampton, Portsmouth and at the Pease Tradeport office for a New Hampshire bank.

William Dehais has joined Kennebunk Savings Bank as senior vice president and chief credit officer. Dehais has over 20 years of experience in the financial industry, and was most recently with a statewide bank in Maine as director of residential mortgage and business banking credit administration.

Nantucket Bank

Jackie Sgro

Jackie Sgro has joined Nantucket Bank as vice president and branch manager. Formerly a vice president and banking center manager at Bank of America, Sgro will be Nantucket Bank’s Pleasant Street branch manager. Sgro has a long career as a senior level retail banking executive with a reputation for implementing programs that focus on customer service excellence. BNE BANKING NEW ENGLAND

27

PROTECTING GOOD VULNERABLE COMMUNITY WORKS CLIENTS

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

Androscoggin Bank Androscoggin Bank’s MainStreet Foundation announced that Longley Elementary School in Lewiston, Maine, was the 2015 recipient of its annual $25K for Kids grant.

Country Bank

Featured Banks • Androscoggin Bank • Bristol County Savings Bank • Country Bank • East Boston Savings Bank • Eastern Bank • Franklin Savings Bank • HarborOne Bank

Bristol County Savings Bank

The Ware, Massachusetts-based Country Bank Employee Charitable Giving Program presented The Springfield Rescue Mission with a check for $2,700 raised during the bank’s Casual Friday program.

East Boston Savings Bank

Bristol County Savings Bank, through its charitable foundation, recently presented a $75,000 grant to Bristol-Plymouth Regional Technical School in Taunton, Massachusetts, to support the construction of its Early Childhood Development Center. The grant will be awarded in three yearly installments of $25,000. The charitable foundation also awarded a $20,000 grant to the city of New Bedford as part of the bank’s role as overall sponsor of the current Holiday Happenings and City Celebrates.

Eastern Bank

• Needham Bank • South Shore Bank • Watertown Savings Bank • Webster Five Bank • Wellesley Bank

East Boston Savings Bank’s Annual Holiday Auction raised $60,000 through the sale of employee- and vendor-donated items, including tickets to sporting events, gift baskets and gift cards, electronics, toys and homemade arts and crafts.

Eastern Bank honored Gregg Croteau, executive director of United Teen Equality Center, with the bank’s 2015 Community Advocacy Award, recognizing him for his commitment to empowering teens and reducing gang-related violence in the Greater Boston community.

South Shore Bank

English for New Bostonians and its English Works Campaign recently held the “Raising Our Voices: Recognizing ESOL Leadership in Business and the Community” breakfast at Northeastern University to honor seven businesses and labor/management partnerships, including South Shore Bank, that have joined with government and nonprofit agencies to offer their immigrant workers the opportunity to learn English at work.

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Franklin Savings Bank

HarborOne Bank

Franklin Savings Bank sponsored 44 children in the Franklin, New Hampshire area and granted an additional 40 wishes for children in the Boscawen and New Hampton communities.

Needham Bank

HarborOne Bank donated $10,000 to community nonprofit organizations throughout Southeastern Massachusetts, and also led food donation drives at multiple branches as part of the bank’s Harvest for Hunger program.

Watertown Savings Bank

Needham Bank provided $40,000 in funding, spread among four school districts serving five Greater Boston communities, to enable them to continue full METCO participation during the 2015-2016 school year. METCO is the country’s oldest continuously operating voluntary desegregation program. It facilitates opportunities for inner city youth to attend suburban schools.

Webster Five Bank

Watertown Savings Bank donated $5,000 to five local food pantries in Arlington, Belmont, Lexington, Waltham and Watertown, Massachusetts, and $5,000 to the New England Center and Home for Veterans. The bank presented the donations at its Club 50 Holiday Parties in Waltham, on behalf of Club 50 members.

Wellesley Bank Webster Five Bank donated $2,500 to the Southeast Asian Coalition of Central Massachusetts to support Southeast Asian immigrants, refugees and low-income residents in the area.

The Wellesley Bank Charitable Foundation distributed donations totaling over $160,000 to 94 selected local nonprofit organizations in the following Massachusetts communities: Wellesley, Weston, Newton, Needham, Natick, Framingham, Waltham, Jamaica Plain, Roxbury and Boston.

BANKING NEW ENGLAND

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PROTECTING VULNERABLE IN CASE YOU MISSED IT CLIENTS

Featured Banks • Coastal Heritage Bank • ESB Bancorp • Hometown Community Bancorp • North Shore Bank • NUVO Bank & Trust Co. • Merchants Bank • Merrimac Savings Bank • Scituate Federal Savings Bank • UniBank

UniBank Celebrates Hopkinton Branch Opening UniBank recently celebrated the grand opening of its 12th branch, located in Hopkinton, Massachusetts.

The bank hosted a ribbon-cutting ceremony at 87 West Main St. and pledged to contribute $50,000 to organizations throughout the community. The Hopkinton Public Library, Serenity House, Hopkinton Education Foundation, Project Just Because and The Michael Carter Lisnow Respite Center were present to receive donations.

through Central Massachusetts and into Connecticut’s Quiet Corner.

The deal, which is expected to close in the first quarter of 2016, will create a multibank holding company with over $1.7 billion in assets, more than $180 million in equity capital and a 23-branch network across Central and Western Massachusetts and Northeast Connecticut.

The two subsidiary banks, Easthampton Savings Bank and Hometown Bank, will continue to operate under their current names. The parent holding company will change its name to Hometown Financial Group.

Coastal Heritage Bank, Scituate Federal Finalize Merger

North Shore Bank, Merrimac Savings Complete Merger

Coastal Heritage Bank in Weymouth and Scituate Federal Savings Bank finalized the merger first announced in June 2015.

The combined entity will have $500 million in assets and nine locations in East Bridgewater, Green Harbor, Hanover, Hingham, Marshfield, Norwell, Quincy, Scituate and Weymouth, Massachusetts. Coastal Heritage Bank, formerly known as S-Bank, will be the surviving bank.

In a statement, the bank said the merger should not result in any job losses or branch closings.

North Shore Bank and Merrimac Savings Bank completed their merger, announced last June.

The combined entity, operating as North Shore Bank, now has $750 million in assets, 12 full-service branches across Eastern Massachusetts and Southern New Hampshire, and more than 25,000 customers.

ESB Bancorp Builds Its Brand In Central Mass., Connecticut ESB Bancorp is rounding the corner on its merger with Oxford-based Hometown Community Bancorp, the latest step in its plan to become a community banking powerhouse 30 BANKING NEW ENGLAND

NUVO, Merchants Merger Gets Green Light from Mass. Division Of Banks The Massachusetts Division of Banks has approved the planned merger of the Springfield, Massachusetts-based NUVO Bank & Trust Co. and the South Burlington, Vermont-based Merchants Bank.

The companies received all required regulatory and shareholder approvals necessary to complete the merger, which closed on Dec. 4. BNE

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