Banking New England Jan/Feb 2017

JANUARY/FEBRUARY 2017

INSIDE: TAKE ADVANTAGE OF THE SLOW MONTHS TO ‘SHARPEN UP’ YOUR REGULATORY ACTION PLAN

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

Opens Doors to De Novos

Overhead, Compliance Costs Remain Obstacles to Entry

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

CONTENTS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

04

06

08

10

14

EARLY ADOPTER

First Republic Bank Buys Student Loan Paydown Platform Gradifi

12 FDIC OPEN DOORS TO DENOVOS

MISSING THE MARKET

Mutually Beneficial Value Exists Between Financial Institutions and the Un(der)banked

BOSTON FED & FHHLB

News and Announcements from Boston Federal Banks

BANK PROFILE

Coastway Community Bank

Opens Doors to De Novos

WINTER WORK

Take Advantage of the Slow Months to ‘Sharpen Up’ Your Regulatory Action Plan

16

INDUSTRY NEWS

18

PERSONNEL FILE

20

COMMUNITY GOOD WORKS

Overhead, Compliance Costs Remain Obstacles to Entry

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

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EARLY ADOPTER

First Republic Bank Buys Student Loan Paydown Platform Gradifi

BY LAURA ALIX

Laura Alix is a staff writer for The Warren Group, publisher of Banking New England.

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BANKING NEW ENGLAND

F

irst Republic Bank liked Gradifi’s student loan paydown platform so much, it bought the company in early December for an undisclosed amount in an all-cash deal.

Boston-based Gradifi is perhaps best known for its SLP Plan, or Student Loan Paydown Plan, a technology and service platform that employers can use to make contributions to their employees’ student loans. Gradifi client PwC was the first company to offer student loan paydown contributions as a perk to its employees, particularly Millennials. Natixis Global Asset Management and Penguin Random House are among those that have followed suit, and Gradifi said in a statement that this benefit is increasing in popularity as Millennials enter the work force en masse.

Gradifi and the San Francisco-based First Republic Bank initially became acquainted when the bank launched the Gradifi paydown benefit for its own employees last August, Gradifi CEO Tim DeMello said. Over time, First Republic CEO James Herbert became increasingly interested in Gradifi’s business model. Two other suitors had approached Gradifi, but DeMello said it quickly

became clear that First Republic would make the best match for his firm.

“What we really wanted was to be an independent brand, a wholly-owned subsidiary with a very strong financial backer who had a great service culture. Our employers who use our platform really want good service for their employees, and First Republic, if you look at net promoter scores, they’re up there with Apple and Amazon,” DeMello said. “We first met on this about six weeks ago and closed on Friday. It happened very quickly.”

Though DeMello did not disclose the price at which First Republic bought Gradifi, he did break the deal down into three components: a buyout of all of Gradifi’s shareholders, as well as DeMello’s equity position; a buildout to fund expansion; and a five-year incentive package for DeMello and his team.

As a wholly-owned subsidiary of First Republic, Gradifi will retain its own brand and will be free to work with other banks, DeMello said. This summer, for instance, Gradifi partnered with Boston-based Radius Bank to offer a debit card with a student loan paydown reward.

Gradifi will also look to increase its staff, now 27, by about 30 to 40 percent over the next year to 18 months, and it will open offices in Los Angeles, San Francisco, Palo Alto and New York, DeMello said.

Where once the conversation about fintechs revolved largely around how these financially focused startups would disrupt traditional banking, banks and fintechs now are forming more symbiotic relationships. Fintechs are finding it easier to scale up their business by partnering with established banking institutions, while banks can more easily offer new and innovative products and services in partnership with a smaller, nimble fintech.

For his part, DeMello said he’d always envisioned his firm as eventually partnering with a financial institution, and he’ll remain on board as the CEO post-acquisition.

“You don’t have many fintechs that end up as standalone independent publicly traded companies, and if you look at a large financial institution that’s focused on their business, when a new opportunity comes along, they want to participate in that,” he said. “I think you’ll find 80 to 90 percent of fintechs over the next three to five years will make their way into a parent. The key is finding the right one.” BNE

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MISSING THE MARKET

Mutually Beneficial Value Exists Between Financial Institutions and the Un(der)banked

BY KELLY WILSON, SUZETTE MASSIE AND MARGARET WEICHERT

T

Kelly Wilson

Suzette Massie

Margaret Weichert

6

Kelly Wilson is a principal in Ernst & Young LLP’s Financial Services advisory practice with more than 25 years of experience in payments strategy, marketing, customer experience, and digital enablement. She has held chief marketing officer and senior vice president leadership roles in financial services and health care organizations.

Suzette Massie is a principal in Ernst & Young LLP’s Financial Services advisory practice. She joined EY in 2015 as part of the Business Transformation team.

Over her 25 years of experience in banking and payments, she has held leadership roles as a consultant, at a payments company and as former senior executive at a large financial institution. Suzette brings clients a unique combination of consulting and industry experience.

Margaret Weichert is a principal in Ernst & Young LLP’s Financial Services advisory practice. She is an experienced global payments professional with more than 20 years of payments experience in industry and as a management consultant.

BANKING NEW ENGLAND

he number of people in the United States who have little or no formal relationship with a financial institution exceeds the population of France, and yet they have largely been ignored by banks.

According to the Federal Deposit Insurance Corporation (FDIC), 93 million people in the United States are either under- or unbanked, or as we refer to it here, un(der)banked. This means that 93 million Americans do not have a banking relationship or have only limited ties to banks (e.g., through non-relationship products, such as prepaid cards bought in stores).

That figure exceeds the national populations of Germany, the UK and France.

Banking a segment as big as an entire European country is clearly meaningful, and yet banks are in general ignoring those potential customers. In fact, innovators and fintechs are the primary players forging the way and making financial inclusion a possibility for the un(der)banked.

Who are the un(der)banked and why are they un(der)banked?

Across the board, the un(der)banked populations skew toward younger age groups. In fact, according to the FDIC, more than one-third of all Millennials are un(der) banked. In addition, blacks and Hispanics are disproportionately represented among the un(der)banked: While only 14 percent of the U.S. population is black, 54 percent of blacks are un(der)banked, and of the 12 percent of Americans who are Hispanic, 46 percent are un(der)banked.

The No. 1 self-reported reason for being un(der)banked is “not having enough money,” according to the FDIC. However, the un(der)banked spend billions on other nonbank financial services, and spend heavily on nonbank alternatives, such as check cashing services, title loans and other high-priced borrowing options.

Now is an attractive time to take another look at the un(der)banked market.

Today, a great deal of activity is being

focused on the un(der)banked. Given current advances in technology, analytics and mobile connectivity, the economics of addressing this large segment have changed.

Specifically, innovators and fintechs are adding more prepaid products, disrupting the payment delivery market with lowercost-to-serve business models, and creating new risk models for underwriting and issuing credit.

The Prepaid Alternative Specifically in the prepaid market, we have seen an explosion of activity. According to a recent Mercator study, the 2015 prepaid market was $168 billion and was growing faster than any other noncash method of payment in the U.S. The penetration rates among the un(der)banked bear out the popularity of prepaid products. In fact, the farther a population is from traditional banking relationships, the higher its use of prepaid cards: 22.3 percent of the unbanked use prepaid cards, compared to 13.1 percent of underbanked households and 5.3 percent of banked households.

However, it is important to note that prepaid payment solutions have drawbacks.

For consumers, prepaid cards can carry high fees and are susceptible to the same types of risk (i.e., loss or theft) and fraud as credit cards, only with less regulatory protection for the user than is provided by Regulation Z. And for the institutions offering the products, prepaid involves numerous operational challenges and regulatory concerns.

On balance, however, there is opportunity. And financial services companies seeking to capture a larger share of the un(der)banked market have the unique ability to use these tools as an on-ramp to their larger financial services product suites.

New Business, Risk Models Among those disrupting the payments delivery market with lower-cost-to-serve

business models, notable examples include Simple, Moven, Ally Bank and Capital One 360. These solutions use the lack of brick-andmortar locations to lower the cost to serve and offer attractive rates and benefits.

This is an important level of disintermediation for banks to consider, but it’s even more critical for banks to pay attention to the consumer expectations being set by those innovating in this space. Interacting with these companies is changing customers’ expectations about the ease of the application process, onboarding and daily interaction.

The innovators have raised the consumer experience bar, and financial institutions will need to consider how they interact with customers if they wish to compete with new fintech alternatives.

Technology and advanced analytics are also starting to transform as fintechs use new tools to assist in assessing customer risk.

Leading the new wave, companies such as Zest, Affirm and Zibby are using new technologies and innovative analytics tools, including machine learning, to better understand creditworthiness. Rather than relying only on a FICO® score, these innovative lenders claim to use social data and other nontraditional data to assess consumers with “thin” credit files. This is especially relevant for the un(der)banked, whose absence from the financial system typically results in thin files.

Despite the multiple opportunities, simply providing a solution is not enough to succeed. According to Harvard Business School Professor John T. Gourville, who has studied the psychology of new product adoption, innovators and those introducing new products often overweigh the value of a new product’s benefits by a factor of three and consumers overweigh the value of the status quo by a factor of three, meaning the cumulative hurdle rate is 9x when trying to get a consumer to change his or her behavior.

If this is right, then to attract the un(der) banked, offerings need to have benefits that the population believes are nine times better than the status quo. And that is a tall order: fewer than 10 of the 450 payment-related dot-coms launched before 2000 have survived, according to a 2015 study by McKinsey & Co. In the end, with one-third of U.S. households counted in the ranks of the un(der) banked, the question is not whether the market should be addressed – but how and where companies should participate.

BNE

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BOSTON FED & FHHLB

News and Announcements from Boston Federal Banks THE FOLLOWING MEMBER PARTNERS WORKED WITH THE FHLBB ON THE MOST RECENT ROUND OF APPROVED FUNDING: Massachusetts • Avidia Bank • Boston Private Bank & Trust Company • Cape Cod Five Cents Savings Bank • Citizens Bank • Enterprise Bank and Trust Company • HarborOne Bank • Institution for Savings • Lowell Five Cent Savings Bank • North Brookfield Savings Bank Vermont • Lake Sunapee Bank • National Bank of Middlebury • Passumpsic Savings Bank • People’s United Bank

Maine • Bangor Savings Bank • Bath Savings Institution • Camden National Bank • Eastern Bank • Gorham Savings Bank • Norway Savings Bank New Hampshire • Bangor Savings Bank • Eastern Bank • Enterprise Bank and Trust Company • Mascoma Savings Bank • Meredith Village Savings Bank Rhode Island • Citizens Bank

of Technology from 2001 to 2011; and Christina Hull Paxson, Ph.D., president of Brown University and professor of economics and public policy. Gottlieb is also chair of the board, and Clay is deputy chair.

Finally, Bruce Van Saun, chairman and CEO of Citizens Financial Group, will serve as the Federal Advisory Council for the First Federal Reserve District.

Recipients of FHLBB Affordable Housing Funds Announced Directors Named for 2017 The Federal Home Loan Bank of Boston recently announced a slate of affordable housing projects that will receive a cumulative $56.4 million in grants, loans and interest rate subsidies through the home loan bank’s Affordable Housing Program (AHP).

The Boston Fed’s 2017 board of directors welcomed new members Niraj Shah, co-founder of Wayfair, and Kathleen Walsh, president and CEO of Boston Medical Center. Shah and Walsh were named Class B directors to the 2017 board.

The Class A directors include Joseph L. Hooley, chairman and CEO of State Street Corp.; Peter Judkins, president and CEO of Franklin Savings Bank in Farmington, Maine; and Michael E. Tucker, Esq., the president, CEO and director of Greenfield Cooperative Bank and its parent company Greenfield Bancorp MHC. In addition to Walsh and Shah, Roger S. Berkowitz, president and CEO of Legal Sea Foods, was named a Class B director.

The Class C directors include Gary L. Gottlieb, CEO of Partners In Health; Phillip L. Clay, PhD, and chancellor of the Massachusetts Institute 8

BANKING NEW ENGLAND

The Federal Home Loan Bank of Boston recently announced a slate of affordable housing projects that will receive a cumulative $56.4 million in grants, loans and interest rate subsidies through the home loan bank’s Affordable Housing Program (AHP).

“We are pleased to serve as a vital link, through our members, to critical financing that connects local residents and families to decent, affordable housing,” Edward A. Hjerpe III, the bank’s president and CEO, said in a statement. “AHP financing increases access to housing and also contributes to the creation of new jobs and economic growth in our communities.”

AHP funds were awarded through member financial institutions to projects that will create or preserve affordable rental and ownership housing, the home loan bank said in a statement. In total, $29.5 million dollars were awarded as grants and subsidies and the balance as subsidized advances or loans. The funds are used to create or preserve affordable housing and help pay construction, acquisition, or rehabilitation costs. Member financial institutions work with local developers to apply for AHP funding, which is awarded through a competitive scoring process.

BNE

BANK PROFILEVULNERABLE CLIENTS PROTECTING

CONTINUED FROM PAGE 6

Coastway Looks Forward after Conversion, IPO

BY LINDA GOODSPEED

I

t may sound counterintuitive, but at the beginning of the Great Recession, and then again during the painfully slow economic recovery that followed, Coastway Community Bank twice had to alter its structure to accommodate its rapid growth.

Coastway, headquartered in Warwick, Rhode Island, spent the first 89 years of its existence as a credit union, first for the telephone workers union in Rhode Island, and later as Coastway Credit Union.

But by 2009, credit union regulations were strangling Coastway’s growth and the services it could offer its members. The organization, which had about $270 million in total assets at the time, found itself at a crossroads, explained William A. White, president and CEO. “We had developed certain areas of expertise,” White said. “We had started to define our self with good small business lending. But credit union regulations at the time restricted what we were doing. Business lending is not something you can get in and get out. If you are in, you’re in. If we were going to continue to be a credit union, we were going to have to abandon certain things. The choice was to stop doing what we were doing, or become a bank. We felt we could offer more to our members and our employees as a bank.”

Coastway’s members agreed, and in 2009 voted to convert to a mutual holding bank structure.

“The good news was our members overwhelmingly approved the conversion,” White said. “The bad news was we became a bank at the worst possible time” – less than a year after Lehman Brothers collapsed, touching off the worst recession in more than 75 years.

But with the shackles off – even in the midst of the Great Recession, in one of the hardest-hit states in the Northeast – Coastway took off.

“We made some good loans, suffered some losses like everybody else, but survived that period of time,” White said. “And just as we predicted to our members, we were able to grow and be more competitive.”

And grow Coastway did. Between 2009 and 2014, Coastway granted nearly $1 billion in mortgages. In fiscal year 2014, Coastway was the state’s top Small Business Administration lender, granting more loans for more money than any other bank in Rhode Island. Also in 2014, the Association of Fund Raising Professionals named Coastway Community Bank the outstanding philanthropic business of the year.

The bank was operating on all cylinders. But by this time, Coastway was once again hampered by its structure.

10 BANKING NEW ENGLAND

William A. White President & CEO

“We were growing so rapidly that it became an issue in itself,” White said. “Capital was getting skinny. We had a great team on both the mortgage and commercial side. We looked at that and said, ‘If we had more capital, we would be able to grow more and leverage what we’ve got.’”

The decision was made to go public, and once again, members overwhelmingly agreed. The public offering in January 2014 raised about $48 million, exceeding the bank’s expectations. Today, Coastway Community Bank has about $650 million in total assets and nine branches, all in Rhode Island. The bank provides a full complement of financial services to individuals and small businesses in Rhode Island.

Its loan portfolio of more than $500 million is about equally divided between commercial and residential loans, a mix White likes.

“It is working well for us,” he said.

As for the future, White, who has led the bank and its predecessor credit union since 1994, said Coastway was focused on absorbing its rapid-fire growth. Since converting to a bank, Coastway has opened two new branches, but White said no others are planned.

“We’re working hard to keep it simple,” he said. “We’re trying to be a better bank by doing what we do more efficiently.”

Part of that efficiency revolves around technology. Like the rest of the industry, Coastway is focused on adapting to the new tech scene.

The bank has a full mobile platform, including remote check deposit and other services, and will continue to add other features.

White admits Coastway’s success might make it a future target for acquisition, but says the bank and board are committed to remaining independent.

“We have no intention of doing anything different,” he said. “There are still excellent opportunities, especially in Rhode Island, for us to continue to do what we do – plenty of room for us to continue to grow and be a viable alternative to bigger banks.”

BNE

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STARTING FROM SCRATCH

Opens Doors to De Novos

Overhead, Compliance Costs Remain Obstacles to Entry

BY LAURA ALIX

Barriers To Entry The FDIC has opened its doors to new But don’t expect to see a flood of de novo banks in the years to de novo bank applications, but those in the come. For all the FDIC’s good will toward de novo applications, know aren’t expecting a flood of new bank the banking industry simply isn’t as profitable as it used to be.

“If somebody came to me and said they wanted to form a de applications like you might have seen in the novo, I would be very cautious,” said Richard Schaberg, head of good ol’ days. the financial institutions practice group in the United States at A little more than 1,000 new community Hogan Lovells. “I still think there are a lot of headwinds that make the business model of a de novo very difficult and that in banks were chartered between 2000 and turn makes it difficult for the regulators to find themselves with a 2008, and 634 of those institutions were provable application.” still operating and holding $214 billion Schaberg wouldn’t ignore a phone call from an interested individual, of course, but he does want people to be aware that in total loans and leases as of September it’s an uphill battle. Once upon a time, it was much easier to 2015, the agency said in research it establish a de novo in a community where major, national players published last summer. had gobbled up all the hometown banks. Customers today De novo formation virtually ground to a halt during the Great Recession, and between 2011 and mid-2016, the FDIC received just 10 applications for deposit insurance for de novo banks. Last year, the agency received eight applications for deposit insurance for de novo institutions, of which two were approved and six were still pending at the year’s end, the FDIC said.

Over the past year, the regulator has released guidance for organizers seeking deposit insurance for de novo institutions and held several outreach events for professionals who are curious about forming a de novo bank. The FDIC also scaled back the de novo period, during which a new institution is subject to greater regulatory scrutiny, from seven years to three.

“I think the biggest thing [the FDIC] did was acknowledge the fact that they were dragging the process on for an inordinate amount of time to get approval for de novos,” said Donald J. Musso, president and CEO of the New Jersey-based consulting firm FinPro. “And time is money. We were burning through at-risk startup capital unnecessarily.”

Musso’s consultancy worked on a recent deal to establish Primary Bank in New Hampshire, which formed in the summer of 2015. He also said he’s currently working on three other de novo applications and knows of three additional applications that have been filed or will be imminently.

While the FDIC had not announced those changes when Bill Stone and his associates began putting together their application for Primary Bank, he said he was pleasantly surprised by his meetings with regulators.

“I must say that they were very supportive and very cooperative in helping us through the application process,” Stone told Banker & Tradesman. “There were a couple of meetings with the FDIC and the New Hampshire banking department prior to submitting our application. We submitted that in late October of 2014 and we had approval in about a four month period of time.”

expect a much more robust platform of products and services, and that requires greater investment in a bank’s technological infrastructure. And that’s to say nothing of the cost of compliance, either.

Whereas 20 years ago you could form a de novo bank with somewhere around $6 million to $10 million in capital, today you need closer to $20 million or $30 million in capital, Musso said.

To establish Primary Bank, Stone and his colleagues raised $30 million in capital from 421 investors, after their initial seed capital of $3 million. He said that broad investor base, drawn largely from professionals and business leaders in Southern New Hampshire, was an intentional choice, underlining the grassroots ethos of Primary Bank.

The market and the business model are key, too. Stone said Primary Bank was formed largely in response to the cries of small business owners in Southern New Hampshire, who felt they lacked a hometown alternative to big banks. While Primary has a full suite of deposit products for both businesses and consumers, it lends only on the commercial side.

Scaling up with a plain vanilla banking model would be much more difficult, Schaberg said.

And while some areas of New England are blessed with an abundance of banks in a variety of shapes and sizes, that’s not the case everywhere. Musso points to Charleston, South Carolina, Long Island, New York, and even New York City as markets that could benefit from a new community bank.

“At the end of the day, nobody can really tell you today what the right number of banks is in the United States,” he said. “It differs from market to market.”

BNE

Laura Alix is a staff writer for The Warren Group, publisher of Banking New England.

BANKING NEW ENGLAND

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PROTECTING WINTER WORKVULNERABLE CLIENTS

CONTINUED FROM PAGE 10

Take Advantage of the Slow Months to ‘Sharpen Up’ Your Regulatory Action Plan

BY BENJAMIN GIUMARRA

Ben Giumarra is a risk management consultant with Spillane Consulting. He may be reached at BenGiumarra@ SCAPartnering.com.

Benjamin Giumarra

14 BANKING NEW ENGLAND

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ortgage lenders (depositories and nondepositories) implemented an impressive number of regulations since the financial meltdown. But that’s left most mortgage departments with an impressive number of lessthan-perfect processes, limiting their customer service capabilities, operational efficiency and, sometimes, even their ability to approve loans. This comes as no surprise, with business leaders forced to change processes quickly during this period based on interpretations of complex regulatory requirements.

So with things starting to quiet down in the mortgage business, it might seem like a good time to “sharpen up” – to revisit compliance decisions searching for improvements in customer service, efficiency and profitability.

And now that things have quieted down a little, even the best organizations probably have room to “sharpen up” current processes. With clearer regulatory guidance and a better understanding of the CFPB’s regulations, going through this exercise could uncover some surprising improvements in these areas.

So what’s your regulatory cleanup action plan?

First, look at your disclosures: Are there any that are outdated, that have been replaced by new versions, that don’t exactly make sense anymore? Examples might be with the separate disclosures for initial escrow, amount financed and homeowner’s insurance being replaced by the new TRID disclosures.

Some disclosures were optional and we included them just to be safe. We might now feel

comfortable removing them. For example, many lenders still include the Anti-Steering disclosures (which are relatively hard to complete) despite have modified loan originator compensation plans to comply with new TILA rules and rendering the Anti-Steering disclosure irrelevant. Another example is providing a settlement service provider list for non-shoppable services – you are allowed to disclose that but there’s absolutely no requirement to do so. How about the “Non-Standard to Standard Refinance” worksheet that is included in many standard loan packages – I’m confident no one is doing enough of those loans to warrant including in the standard package, so just get rid of it!

Are there some disclosures that you can combine to reduce the file size (every page removed helps!) and simultaneously reduce the number of signatures? Could you add a signature page with a checkbox for every disclosure, eliminating the need for a borrower to sign each disclosure separately?

Overlooked Exemptions Second, look to maximize any applicable regulatory exemptions.

Here are some commonly overlooked exemptions: There are the Small Creditor exceptions for qualified mortgages (did you know this was recently expanded dramatically?). There is also the Small Servicer exemption from the CFPB’s revamped federal servicing regulations.

There are also many small or intermediate small institutions that comply with the CRA’s rigorous reporting requirements voluntarily, not taking

advantage of this exemption. The TILARESPA disclosure rules include a getout-of-jail-free card for many corrections that can be accomplished within 60 days of closing. How often is your mortgage department taking advantage of this? Those are just a few to get you started, but you can see where you might stumble upon important improvements in efficiency and customer service (and perhaps even approve a few more loans than before).

Third, you can check controls put in place, such as checklists and doublechecking.

Are the checklists in place practical and up-to-date? Are they personalized enough so that they make sense to users?

For example, having the processor complete the same checklist as the closer might not always make a ton of sense.

You might rethink how reviews are structured. For example, do you have a strong compliance person doing a 100 percent review on post-closing? Just a crazy idea, what if you had that person

do a 10 percent post-closing review and devote the remainder of the week to pre-closing reviews. It’s better to fix issues before they occur if possible. It’s also sometimes hard for someone reviewing a “cold” file, two months after closing, to get through a compliance review – the borrower, Realtor, closing attorney, are surely less likely to give you information at that point. The underwriter might very well have forgotten about that loan’s particular issues. Compare to if this review was occurring the day before closing, when it’s fresh on everyone’s minds.

Fourth, review last year’s denied loans to see if you’re being over-conservative in any way. (Of course you might find this cuts the other direction, and that you may need to be more conservative in some cases.)

Are you denying all non-Qualified Mortgage loans (aka “non-QM”)? Maybe you could revisit this policy – maybe you’d even find out that you’re a Small Creditor and can easily restructure the loan to meet QM requirements.

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Are you automatically denying higherpriced, or even high-cost mortgage loans? The higher-priced requirements really aren’t that difficult to comply with (but there are QM consequences to consider). Similarly, many lenders have long shied away from high-cost mortgages, but I wonder if some should consider them now. After all, many lenders avoided high-cost loans because of the onerous ability-to-repay requirements. But guess what? Those requirements now apply to all loans post-2014 and compliance with QM equates to compliance with the high-cost rule’s ability-to-repay requirements.

Conversely, you might be approving higher-priced loans not realizing how much this waters down the protection from the Qualified Mortgage rules. This might lead you to avoid higher-priced loans, or it might very well lead you away from a QM-only policy.

Take advantage of these slower months, because spring – and the spring market (not to mention HMDA) – is just around the corner – and we’ll all need to be ready.

BNE

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PROTECTING INDUSTRY NEWS VULNERABLE CLIENTS

FSB’s Savage Retires After 40 Years in Banking

With a career spanning 40 years in the banking industry, Jeffery B. Savage, CEO of Franklin Savings Bank, retired at the beginning of December.

He will remain an active member of the board of directors. Savage joined FSB in 1988 as vice president, CFO and treasurer. He received a number of promotions during his tenure eventually leading to his appointment as president and CEO in 2001.

His career in financial services began in 1976 as branch manager at Personal Finance Co., based in Chicago Heights, Illinois. During Savage’s career at FSB, assets grew from $167 million to $435 million, and loans rose from $126 million to $372 million.

The bank expanded its branch footprint with the addition of four full-service branch offices in Tilton (1999), Boscawen (2003), Laconia (2006) and Gilford (2007). The bank also established a business lending office in Bedford in 2012.

BankNewport Honored as 504 Lender of the Year

BankNewport received the Rhode Island 504 Lender of the Year award at an event sponsored by the Rhode Island SBA District Office and the Center for Women and Enterprise. BankNewport ranked No. 1 among all banks in Rhode Island in 16 BANKING NEW ENGLAND

the number of loans originated through the U.S. Small Business Administration’s 504 loan program during the federal fiscal year that ended Sept.

30, 2016. It is the seventh consecutive year that BankNewport ranked has No. 1 for the 504 loan program in Rhode Island. BankNewport originated 14 SBA 504 loans totaling over $10.5 million for small businesses. The SBA 504 program provides up to 90 percent financing for the purchase of longterm fixed assets, such as commercial real estate, buildings and equipment. BankNewport was also named one of the top lenders in Rhode Island under the SBA 7(a) loan program, with 36 loans totaling over $2 million during the 2016 fiscal year. The 7(a) loan program helps start-up and existing small businesses obtain financing for which they otherwise might not be eligible.

Bar Harbor Bankshares and Lake Sunapee Bank Group Complete Merger

Bar Harbor Bankshares, the holding company for Bar Harbor Bank & Trust, has completed its merger with Lake Sunapee Bank Group, the holding company for Lake Sunapee Bank. The company is now the only community bank headquartered in Northern New England with a market footprint in Maine, New Hampshire and Vermont.

“The merger creates value for shareholders, customers and employees by creating efficiencies and strategic growth opportunities, allowing the combined organization to draw on various customer service, product and technological strengths. The very compatible cultures of the two companies make the partnership a natural fit,” Curtis C. Simard, president and CEO of Bar Harbor Bankshares, said in a statement.

As a division of Bar Harbor Bank & Trust, Lake Sunapee Bank branches will continue to operate under the Lake Sunapee Bank name and William J. McIver, former chief operating officer of Lake Sunapee, will continue with the combined company as executive vice president – regional president, New Hampshire and Vermont markets. Lake Sunapee Bank’s subsidiaries, McCrillis & Eldredge Insurance and Charter Trust Co., will operate as subsidiaries of Bar Harbor Bank & Trust. Lake Sunapee directors Steven H. Dimick, Stephen W. Ensign and Stephen R. Theroux have been appointed to Bar Harbor’s board of directors.

Bar Harbor’s acquisition of Lake Sunapee grows the company to over $3 billion in assets, making it one of the largest community banks in Northern New England, with 49 branch locations across the three states of Maine, New Hampshire and Vermont.

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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.

Appointments Bristol County Savings Bank

• Country Bank

Taunton, Massachusettsbased Bristol County Savings Bank announced the appointment of Nancy Cabral to the position of branch manager of the south coast region. In this Nancy Cabral capacity, she will support the bank’s business development efforts in the New Bedford, Massachusetts market. Prior to joining Bristol County Savings Bank, Cabral held several positions at Santander and its predecessor banks for more than 30 years. Most recently, she served as vice president and branch manager at Santander’s Union Street location in New Bedford. Fluent in Portuguese, Cabral also held various management positions at Compass Bank.

• Dedham Institution for Savings

Dedham Institution for Savings

• HarborOne Bank

Massachusetts-based Dedham Institution for Savings appointed April Kemp as assistant vice president and information security officer. Kemp most recently held a position April Kemp in information security at Citizens Bank. Kemp’s prior experience includes work in finance, compliance and information security at TJX Companies as well as holding

Featured Banks • Berkshire Bank • Bristol County Savings Bank • Coastal Heritage Bank

• Franklin Savings Bank • Lowell Five Bank • Needham Bank • New Hampshire Mutual Bancorp • Northeast Bank • Reading Cooperative Bank • Seamen’s Bank

a position with Wolf & Co., a full-service accounting firm and financial auditor.

Franklin Savings Bank New Hampshire-based Franklin Bancorp elected three new corporators at Franklin Savings Bank’s annual meeting: Scott W. Davis, Kimberly R. Edwards and Kyle T. Matzke. Davis is the funeral director at William F. Smart Sr. Memorial Home in Tilton, New Hampshire.

Edwards is a CPA and the owner of Edwards & Assoc., CPA, based in Northfield, New Hampshire. Matzke is the former administrator/ owner of The Golden Crest, an assisted living facility located in Franklin, New Hampshire.

Needham Bank Bill Darcey, president and CEO of Provider Group Insurance, has been appointed to fill an open seat on Massachusetts-based Needham Bank’s board of directors. Darcey has Bill Darcey served on Needham Bank’s advisory council for many years. He joined Provider Group in 2001 and has over 20 years of experience providing risk management services to businesses and individuals throughout New England. His business career spans a variety of management and sales positions.

• South Shore Bank • The Village Bank • Webster Five Cents Savings Bank

Promotions

Berkshire Bank

Pittsfield, Massachusetts-based Berkshire Bank announced the promotion of Mike Ferry to senior vice president and commercial regional president of Berkshire County and Vermont. Ferry brings over 37 years of industry experience, 30 years of which have been spent with Berkshire Bank. Ferry has been with the bank since 2012, and his primary focus in the new position is commercial lending and ancillary products and services. Ferry also serves in as president of the Berkshire Bank Foundation.

Coastal Heritage Bank

Coastal Heritage Bank of Weymouth, Massachusetts, has promoted four employees to 18 BANKING NEW ENGLAND

vice president: Janet Allen, vice president of deposit operations; Jamie Faverty, vice president of human resources; Nancy Karstunen, vice president of loan servicing officer; and Jamie L. Sawtelle, vice president of underwriting.

Franklin Savings Bank

Lois Wisler

New Hampshire-based Franklin Savings Bank announced the promotions of Lois Wisler to assistant branch manager of the Gilford, New Hampshire office and Jon Jones to commercial loan portfolio

Promotions manager based at the main office. Wisler will provide operational support to the business development officer and regional market manager and retail staff at the bank’s Gilford office. Jones will be responsible for managing and servicing commercial customer relationships by acting as a liaison for the bank and commercial lending team.

Jon Jones Deborah J. Clapp was also promoted to assistant vice president and senior credit analyst and Dorothy J. Savery to corporate secretary and executive and human resources assistant. She is responsible for underwriting commercial loans to assist lenders with making sound credit decisions. Clapp has over 18 years of experience in banking, with over 13 of those years spent in credit analysis. Savery will assume the role of corporate secretary. She joined the bank in December 2005 and has a background in administration.

New Hampshire Mutual Bancorp

Amy Carbone

Amy Carbone has been promoted to customer experience officer for New Hampshire Mutual Bancorp. In her new role, she will oversee the development and maintenance of product materials, customer feedback analysis and social media for Meredith Village Savings Bank, Merrimack County Savings Bank and MillRiver Wealth Management.

Seamen’s Bank

Seamen’s Bank of Provincetown, Massachusetts, recently announced the promotions of several employees. Lori Meads has been named executive vice president and COO. Michael Silva and Mary Rose have been named senior vice presidents of the bank. Additionally, Amy Silva was named vice president of commercial lending and Marianne Clements was named vice president of human resources.

New Arrivals Country Bank

Country Bank of Ware, Massachusetts added three new branch managers to its retail banking division: Shantie Prashad, Cynthia Saucier and Helios Mako. Prashad is located at the Worcester office and is a 20-year veteran of the banking industry.

Most recently she was a branch manager for Santander Bank in Worcester. Cynthia Saucier is located at the Paxton office of Country Bank. Saucier began her career in banking 29 years ago, and most recently worked as manager of the e-banking department for Milford National Bank.

Mako is located at the Charlton office.

Helios has eight years of previous banking experience and most recently worked for SpencerBank in Holden as a branch manager.

HarborOne Bank

Brockton, Massachusetts-based HarborOne Bank announced that it has named Kervins Jean as assistant vice president and compliance Kervins Jean officer. Jean comes to HarborOne Bank from Santander Bank, where he spent over two years as a regulatory compliance analyst, focused on lending, retail and consumer and business banking. In his new role, Jean will provide compliance review across all of HarborOne bank’s business units, analyze customer satisfaction and monitor compliance with lending and deposit requirements and regulations.

Lowell Five Bank

Lowell Five Bank announced Robert Smith has joined as senior analyst. In his new role, Smith will be responsible for the various dayto-day analytical Robert Smith requirements and administrative functions of the credit/collections department. He joins Lowell Five after 12 years with Middlesex Savings Bank, where he most recently held the Ryan Berube position of credit analyst.

Smith brings his experience in commercial loan underwriting and his strong background in commercial and industrial analysis to the Lowell Five credit team. The bank also announced Ryan Berube joined as a senior analyst and credit officer. Berube comes to Lowell Five after five years at Georgetown Bank, where he most recently held the position of Portfolio Manager working in the North Shore, Boston Metro and Southern New Hampshire markets. He brings experience in commercial underwriting to the bank’s credit department.

Northeast Bank

Lewiston, Maine-based Northeast Bank announced that Jon Levirne has joined the bank’s loan acquisition and servicing group as senior vice president and business development. He comes to Northeast Bank with more than a decade of commercial

real estate lending experience, including a strong focus on debt and equity investments.

Levirne joins the bank from Edgewood Capital Advisors where he worked as managing director.

Reading Cooperative Bank

Reading Cooperative Bank added Michael Atkinson to its commercial lending team as a commercial loan portfolio manager.

Michael Atkinson In the new position, he will monitor the bank’s existing commercial account relationships, including performing financial and credit reviews and analysis.

Atkinson previously worked for the bank while attending Reading Memorial High School and Bentley College. Before moving back to his hometown of Reading, Massachusetts, he was a tax manager for PwC in Virginia.

Seamen’s Bank

Beth Curtin has joined Seamen’s Bank as vice president of commercial lending. Curtin has over 30 years of banking experience primarily working with small Beth Curtin businesses. She brings experience customizing mortgages and loans for small business owners and on SBA lending.

CONTINUED ON PAGE 21

BANKING NEW ENGLAND

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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.

Featured Banks

Androscoggin Bank

Androscoggin Bank’s MainStreet Foundation announced that Preble Street Teen Center has been named the 2016 recipient of its annual $25,000 for Kids grant. The award was presented at the MainStreet Foundation annual meeting held Nov. 17, 2016 at Cheverus High School in Portland, Maine.

BankNewport

Rhode Island-based BankNewport distributed a $5,000 grant to East Bay Food Pantry to help fund its Access Nutrition Initiative, offering high-quality, healthy foods and nutrition education.

• Androscoggin Bank • BankNewport

Bay State Savings Bank

• Bay State Savings Bank • Bristol County Savings Bank • Country Bank • Eastern Bank • Franklin Savings Bank • Mechanics Cooperative Bank • Reading Cooperative Bank • Seamen’s Bank • SpencerBANK • Webster Five

Bay State Savings Bank sponsored a neighborhoods photography program at Worcester’s Claremont Academy, the purpose of which was to instruct junior high school students in the art of digital photography, with a focus on Worcester, Massachusetts neighborhoods as the subjects.

Bristol County Savings Bank

Bristol County Savings Bank provided a $40,000 grant to the New Bedford Public Schools in Massachusetts for its Pathways to Diploma program.

20 BANKING NEW ENGLAND

Country Bank

Country Bank has announced a $1 million contribution toward the construction of Baystate Wing Hospital’s new emergency department in Palmer, Massachusetts.

Eastern Bank

Franklin Savings Bank

New Arrivals CONTINUED FROM PAGE 19 South Shore Bank

Eastern Bank, via the Eastern Bank Charitable Foundation, in early December donated $10,000 to St. Joseph’s Hospital in Nashua, New Hampshire, in support of a new mobile health clinic for the Greater Nashua Public Health region.

Franklin Savings Bank fulfilled the holiday wishes of 50 children in Franklin, New Hampshire this holiday season through Toys for Tots, an annual program coordinated by the Franklin Police Department.

Reading Cooperative Bank

Mechanics Cooperative Bank

South Shore Bank announced that Joseph Fasano has joined Cambridge Mortgage Group, a subsidiary of South Shore Bank, as a loan officer. He Joseph Fasano will be responsible for originating new residential mortgages. Fasano comes to Cambridge Mortgage Group with more than 15 years of mortgage lending experience, most recently with People’s Choice Mortgage. Marielle Marielle Hardiman Hardiman has also been named marketing officer at the bank’s South Weymouth, Massachusetts headquarters.

Hardiman brings 15 years of marketing experience to her new position at South Shore Bank, most recently with Specialty Commerce Corp. She began her career at South Shore Bank, serving in various marketing roles from 2001 to 2007.

The Village Bank

Franklin Savings Bank fulfilled the holiday wishes of 50 children in Franklin, New Hampshire this holiday season through Toys for Tots, an annual program coordinated by the Franklin Police Department.

Eastern Bank, via the Eastern Bank Charitable Foundation, in early December donated $10,000 to St. Joseph’s Hospital in Nashua, New Hampshire, in support of a new mobile health clinic for the Greater Nashua Public Health region.

SpencerBANK

Seamen’s Bank SpencerBANK donated toys to support the Spencer Toys for Kids campaign, helping to make the year more memorable for 24 children.

Webster Five

Cape Cod-based Seamen’s Bank recently announced a $12,000 pledge to the Community Development Partnership, which offers affordable housing, employment and economic opportunities and small business assistance.

Webster Five recently donated $12,500 to Harrington Healthcare as the first half of a two-year, $25,000 grant from The Webster Five Foundation as part of its Web of Caring to Make a Difference program.

Auburndale, Massachusetts-based The Village Bank announced that Marie Lodi has joined the Bank as senior vice president of human resources. Lodi brings Marie Lodi with her nearly 22 years of human resource experience with Cambridge Savings Bank, most recently as senior vice president, responsible for the strategic direction and overall performance of the human resources and talent management teams.

Webster Five Cents Savings Bank

Webster Five Cents Savings Bank has named Ryan O’Hearn as mortgage loan originator.

He has 11 years of experience working in Ryan O’Hearn mortgage, consumer and business lending. In his new role at Webster Five, he will actively cultivate business relationships with members of the community to ultimately obtain residential mortgage loans.

O’Hearn began his career at Citizen’s Bank where he spent eight years as branch manager.

He most recently worked at TD Bank for three years in the same role.

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PROTECTING VULNERABLE IN CASE YOU MISSED IT CLIENTS

Featured Banks

Charles River Bank Holds Annual Dinner

• Charles River Bank • East Boston Savings Bank • Merrimack County Savings Bank • Meredith Village Savings Bank

Meredith Village Savings Bank Supports Low Income Households

Charles River Bank recently held its annual dinner meeting at Lake Pearl Function Facility in Wrentham, Massachusetts. Chairman of the Board Robert J. Parrella welcomed Charles River Bank staff, directors, honorary directors and invited guests.

During the meeting, President and CEO Jack Hamilton announced that he was celebrating his 40th year in the banking industry as well as his 15th year with Charles River Bank. Hamilton also announced that the mortgage department originated more than $33 million in loans in 2016 and the commercial loan department originated more than $15.4 million in loans; the bank’s asset value has increased to over $230 million.

Parrella and Hamilton later presented fiveyear service awards to Assistant Vice President of Administration Charlene Hebert and Assistant Vice President and Controller Lisa Forman; a 10year service award to Assistant Vice President and Bellingham branch officer Michael Tuite; and 15-year service awards to Hamilton and Senior Vice President of Information Technology and Compliance Sue Rovedo. For the first time in the history of Charles River Bank, a 25-year service award was presented to Deposit Operations Support Specialist Laurie O’Rourke. Vice President and Commercial Lending Officer Peter Rizzo and Bellingham Assistant Branch Manager Tara Crivello were also named recipients of the President’s Award.

East Boston Savings Bank Celebrates 10 Years in Everett

East Boston Savings Bank celebrated 10 years within the Everett, Massachusetts community this past November. The anniversary celebration was held at the Everett branch location. Many local customers and businesses were in attendance to honor the bank’s

22 BANKING NEW ENGLAND

growth and success throughout the years. Everett City Councilor Wayne Matewsky attended the event and presented Richard J. Gavegnano, EBSB chairman, CEO and president, along with Zana Milicevic, assistant vice president and branch manager, and Adiel Lopez, assistant branch manager, with citations in appreciation for the years of dedicated service, support and generosity that EBSB has given to the community.

Linda Lorden, senior vice president of retail (left), and Philip Emma, president, Merrimack County Savings Bank, with two of the gift baskets.

Meredith Village Savings Bank recently purchased $27,500 in tax credits from Laconia Area Community Land Trust through the New Hampshire Community Development Finance Authority’s tax credit program.

The bank’s investment will support LACLT’s operating budget to continue its mission of assisting low and moderate income households achieve economic self-sufficiency through the development of permanently affordable housing opportunities and support programs.

Merrimack County Savings Bank Celebrates 150 Years

Merrimack County Savings Bank kicked off its 150th anniversary with the presentation of commemorative gifts to four new 2017 babies.

The year’s first baby boy and first baby girl born at Concord Hospital and St. Joseph’s Hospital in Nashua were each presented with a gift basket that included a $150 check from the bank.

“This is a great way to begin the celebration of our 150th anniversary! We hope our first gifts helps each child establish savings right from the beginning,” Philip Emma, president of Merrimack County Savings Bank, said in a statement.

The Merrimack will be hosting an array of celebrations throughout the year to honor the 150 year milestone. Historical photos of downtown Concord and of the bank’s main office on 89 North Main St. will be on display at all branch locations.

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