Banking New England March/April 2016

MARCH/APRIL 2016

INSIDE: FIVE SIGNS OF FINANCIAL DISTRESS IN AN UNCERTAIN ECONOMY

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

DONALD TRUMP

BERNIE SANDERS

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

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

8

12

18

20 22 24 26

BANK PROFILE

Union Bank Eyes Expansion as it Celebrates 125 Years

14

DISPARATE IMPACTS

Supreme Court Decision Strengthens Investigations for Discrimination

CAUTIONARY CLUES

Five Signs of Financial Distress in an Uncertain Economy

FUSING FUNCTIONS

Banks’ Strategies and Objectives Shape Branch Design Models

FITTING THE PROFILE

Behavioral Traits of the High-Performance CEO

ADAPT OR DIE

The Golden Age of Banking is Here

FOCUS ON CLIENTS

Branch of the Future

INNOVATIVE MARKETING

Four Strategic Marketing Pillars for Profit-Minded Bank CEOs

28

PERSONNEL FILE

31

INDUSTRY NEWS

32

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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IN CASE YOU MISSED IT

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BANK PROFILE

Union Bank Eyes Expansion as it Celebrates 125 Years

BY LINDA GOODSPEED

4

BANKING NEW ENGLAND

I

f Union Bank of Vermont and New Hampshire is any indication, small-town banks are alive, well and thriving.

Union Bank, headquartered in Morrisville, Vermont (population: 5,800) is celebrating 125 years of serving small towns in the northernmost Green and White mountains.

“To a large degree, our niche is being the big bank antidote,” President David S. Silverman said.

Founded in 1891, Union Bank provides commercial, retail and municipal banking services and asset management services through its 17 branches and two loan offices that extend across the northern tier of Vermont (12 branches) and New Hampshire. Besides serving small towns, another distinguishing factor about Union is that none of its branches are more than a half hour away from a ski resort.

“We like to think of ourselves as a ski town bank,” Silverman said.

While skiing may be the common denominator, Union’s loan portfolio is surprisingly diverse – and large.

“We really like to make all the good loans we can,” Silverman said. “You can see that in our ratios. Our loans-to-assets ratio tends to be very high compared to our peers.”

As of year-end 2015, Union Bank had $629 million in total assets, $502 million in net loans and $560 million in total deposits. The bank’s half-billion-dollar loan portfolio is comprised of about two-thirds commercial and one-third residential. Commercial businesses range from travel and tourism (hotels, bed and breakfast, restaurants, shops) to maple sugaring, small manufacturing and retail.

The bank’s balance sheet may be more heavily weighted toward commercial, but its reputation is in residential lending. Union is one of Vermont’s best known residential mortgage lenders, and was recently named, for the third straight year, the USDA Rural Development Vermont lender of the year. The USDA program assists approved lenders in providing low and moderate-income households the opportunity to own their own CONTINUED ON PAGE 6

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BANK PROFILE

CONTINUED FROM PAGE 4

homes. Over the last three years, Union Bank has loaned more than $12 million through the program to help 89 families purchase homes.

“We’re very proud of that achievement,” Silverman said. “That means we are helping people other banks and credit unions are not helping.”

Despite its large residential mortgage portfolio, Silverman said Union came through the mortgage meltdown “just fine.” This was partly due to geography – Vermont had one of the lowest foreclosure rates of any state in the country – and partly due to the bank’s proactive customer and service model.

“We spend a lot of time trying to keep people in their homes, trying to work with them,” he said.

The strategy has paid off. Currently, he said the bank has no foreclosed properties on its books. Loan demand has also increased, enabling the bank to grow loans even faster than assets.

“The economy is better than it has been in the last five years,” Silverman said. “We also have a very active group of lenders.

They’re actually going out, calling on customers, developing business. We’re gaining a reputation as a bank that can get things done.”

Silverman, who has spent his entire banking career at Union, grew up in Vermont (since age 8), graduated from Johnson State College in Johnson, Vermont, and joined Union as a management trainee in 1986. He has worked in several different positions at the bank, and was named president in 2011 and president and CEO of Union Bankshares Inc., the bank’s parent company, in 2012.

In the coming years, Union is aiming to expand its branch network.

“We’re looking for underserved areas throughout Vermont and New Hampshire,” Silverman said. “There’s not that many opportunities, but we’re keeping our eyes open.”

Like other bankers, Silverman says regulatory compliance and the increased regulatory burden remains one of the industry’s biggest challenges. But he also said he promised himself that instead of complaining about the problem, Union Bank was going to make regulatory compliance a “core competence.”

“We’re going to excel at it so we can grow and prosper,” he said. “We don’t need to join forces with other banks. We know

we can operate in the current regulatory environment at a highly profitable level – because we’re [already] doing it. Does that mean if we have the opportunity to get a little bigger through a merger or acquisition that made sense would we consider it? Sure. But I don’t see us having to join forces with a larger competitor to serve our customers at a high level.”

He said the bank is working on several different projects to maintain its high level of service to customers, including enhanced electronic delivery systems.

And then, of course, the bank has a big birthday coming up.

Union will turn 125 on July 27, 2016, probably with a big barbecue at its main headquarters in Morrisville, and lots of year-long celebratory events and activities throughout its branch network – all with a charitable component, because that’s what small towns do: Neighbors help each other. BNE

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PROTECTINGIMPACTS DISPARATE VULNERABLE CLIENTS

Supreme Court Decision Strengthens Investigations for Discrimination Dennis C. Vacco, Brian J. Bocketti and Jillian E. Deck are partners and Stacey L. Moar is associate attorney with Lippes Mathias Wexler Friedman LLP, with offices in Buffalo and Albany.

BY DENNIS C. VACCO, BRIAN J. BOCKETTI, JILLIAN E. DECK AND STACEY L. MOAR

F

or two years, New York Attorney General Eric Schneiderman’s Civil Rights Bureau has been targeting banks and other residential mortgage lenders for violations of the Federal Fair Housing Act (FHA) and New York Human Rights Law. The AG recently entered into settlement agreements with two Upstate New York banks for such violations.

On June 25, 2015, the U.S. Supreme Court issued a decision which has far reaching implications regarding AG investigations of residential lending institutions. In the case of Texas Department of Housing and Community Affairs v.

The Inclusive Communities Project, Inc., the Texas Department of Housing and Community Affairs asked the Supreme Court to decide whether the statutory language of the FHA permits plaintiffs to sue under a disparate impact theory of liability.

The Supreme Court had twice previously been presented and agreed to decide that issue, but the cases settled prior to oral argument.

As a bit of background, the FHA is a federal law which prohibits discrimination against certain individuals seeking to rent, buy, or secure financing for any housing. The FHA specifically prohibits discrimination because of race, color, national origin, religion, sex, disability and the presence of 8

BANKING NEW ENGLAND

children. New York State Executive Law § 296(a) prohibits the same conduct. The standard for determining whether a company or individual has discriminated against an individual in violation of either statute is governed by case law interpreting the FHA. The issue the Supreme Court was asked to decide in the Inclusive Communities case was whether a plaintiff can sue for unintended discriminatory effects. A “disparate impact” theory of liability permits a plaintiff to prove discrimination and seek certain damages where a neutral rule, policy or practice has a greater impact on a protected class of individuals – for example, African Americans. This is distinct from intentional discrimination because liability under a disparate impact theory can be found regardless of the intent of the party/business/individual when promulgating the rule, policy or practice complained about.

Disparate impact cases involve policies that facially appear to treat everyone equally, yet when applied, have an uneven and harsher impact on a protected class or classes of people. For example, a company adopts a rule that its HR department will not interview individuals who have a six-month CONTINUED ON PAGE 10

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DISPARATE IMPACTS

work gap on their résumé. While the rule is facially neutral and treats all individuals the same, it may be illegal if it has a disparate impact on women, minorities or older workers who have been out of the workforce for longer periods of time due to varying reasons.

In its decision, a divided Supreme Court ruled that individuals complaining of discrimination under the FHA could

CONTINUED FROM PAGE 8

proceed under a disparate impact theory.

The two sections of the Fair Housing Act that the court relied upon in making its determination are sections 42 U.S.C. §3604(a) and 42 U. S. C. §3605(a). They read as follows: It shall be unlawful “to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny,

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BANKING NEW ENGLAND

a dwelling to any person because of race, color, religion, sex, familial status or national origin.” 42 U.S.C. §3604(a).

“It shall be unlawful for any person or other entity whose business includes engaging in real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status or national origin.” §3605(a).

The court found that the words “or otherwise make unavailable” in the above statutory sections allow disparate impact theory of liability in FHA cases because those words address the consequences of a decision rather than simply the intent of the decision maker. The language used in the FHA is not the same as in other statutes (primary employment related) that permit disparate impact theories. In employment discrimination laws (e.g., Title VII) the language used is “have an adverse impact” or “have an adverse effect.”

This Supreme Court decision is significant for the banking industry because neutral lending rules or policies that may have a disparate impact on a protected class could subject a bank to liability under the FHA. For example, minimum mortgage amounts, trade area delineations, and decisions on inclusion or exclusion of census tracts from Community Reinvestment Act assessment areas could become the subject of litigation by advocacy groups, individuals or state regulators – including the Office of the New York State Attorney General.

Federally, the Department of Justice’s Civil Rights Division also prosecutes violations of the FHA. While the court’s finding regarding disparate impact theories is encouraging for many plaintiffs and civil rights groups, the court did place significant limitations on its applicability, including a robust causality requirement that must be well pleaded from the initial filing of the complaint. A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact. This means that the rule or policy complained of must cause the uneven and harsher impact on the protected individual or class of individuals complaining about the rule. BNE

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PROTECTING CLUES CAUTIONARY VULNERABLE CLIENTS

Five Signs of Financial Distress in an Uncertain Economy Lenders Evaluating Commercial Loan Opportunities, Beware of These Financial Red Flags Dan Doran is the founder and principal of Quantive Business Valuations, a certified valuation practice serving privately held businesses nationwide. Learn more at quantivevaluations.com.

BY DAN DORAN

Dan Doran

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BANKING NEW ENGLAND

I

t’s hard to read the headlines each morning without an endless stream of stories about the economy. Are we heading for a recession? What are the impacts of low oil prices? Will the Fed raise rates? And if they do, then what? These questions leave us wondering just how uncertain our economy may be. For bankers who must analyze the financial stability of a business loan applicant, it’s important to be able to identify red flags that the business may be in financial distress.

While macroeconomic issues typically concern Wall Street well before they concern Main Street, we’ve seen the pattern before: problems in the macro economy will eventually trickle down to Main Street.

Paradigms like the Altman Z-Score exist to predict financial distress, but they are difficult to apply to Main Street or lower middle-market companies.

Here are five signs of financial distress we see most often during the valuation process, particularly in an uncertain economy: 1. Accounts receivable: Trending in accounts receivable can be an early, telltale indicator that there is a problem with a company. When the company’s customers start to extend their terms, indicated by days sales outstanding creeping up, it’s often a sign that their customers are experiencing difficulties with cash flow. Problems at the customer level are likely to flow to the subject company.

2. Backlog/pipeline: For companies where backlog is a meaningful metric, it’s often an incredibly important one. While AR tells us about what has already happened, backlog is a portal to the future.

Smart companies keep track of both booked and quoted backlog. Looking for deviations from historical backlog and quote-to-win ratios gives us a glimpse

at the future. Downturns in the quote pipeline will eventually filter through to impact booked revenues.

3. Key management departures: In an owneroperated business, it’s unlikely that a shareholder is departing in the face of uncertainty. Key management is another story. Insiders know the business inside and out. Human nature suggests that top performers will not depart absent the economic incentive to do so. If a key VP suddenly departs (especially if the company is exhibiting other signs) it makes sense to delve into the departure. Chances are good that the insider knows something you don’t.

4. Declining gross margins: In most cases, we see historically consistent gross margins within a company. Companies compete to win business.

Management will often cut into margins to win business, particularly when the sales pipeline dries up. Competing on price is often seen as a better alternative to losing the sale, especially when management considers that making the sale at a lower margin equals contribution to overhead. While this can work on a one-off basis, consistently tightening margins often indicate a larger problem at hand.

5. Late filings: Many companies file later every year, but an unusually late filing can certainly beg further questions. The same goes for a “downgrade” in financial statement preparation. A downgrade from an audit to a prepared statement certainly makes us wonder what is driving the decision, be it the cost or a change in the financial condition of the company.

While the above is a starting point, it’s important for commercial lenders to start digging in on financial analysis early. Business owners often find themselves in the thick of the fight, ignoring the slow but inexorable changes coming in the economy. BNE

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COVER

WILL DONALD

‘TRUMP’ THE BANKS

OR WILL THEY GET

‘BERNED’?

By Steve Viuker

T

he race for the White House that has captivated some and disgusted others now appears to be narrowing down to Hillary Clinton versus Donald Trump, Ted Cruz or fill in the blank.

Clinton seems to be a lock for the Democrat party nomination and Trump will be trying to “Cruz” to his nomination with the GOP un-faithful.

But wait! “Bernie Sanders is not going away,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at Brookings and former reporter at The Wall Street Journal. “If if he isn’t president, he will still be in the Senate. It is not so much what he is saying, but why it is striking a chord. We are seeing the David Wessel continuing impact of the financial crisis. Many Americans believe Wall Street got bailed out and Main Street didn’t.”

“Yes. The scars of the 2008 crisis have not healed,” said Aaron Klein, director of the Financial Regulatory Reform Initiative at the Bipartisan Policy Center. “‘Income’ and ‘inequality’ are words used frequently, and whether people have had a fair chance to get ahead. Even one of the Koch Aaron Klein brothers had an op-ed agreeing with Sanders that the system is rigged [against] the average person.”

Explained Justin Schardin, associate director of the Bipartisan Policy Center, “Clinton’s plans call for continuity with the current administration. Her plan is to continue what has been implanted in Dodd-Frank. Trump has echoed the populist, anti-Wall Street sentiment. He believes that regulators are running the banks. Trump also has more experience with the financial industry than the other candidates. He comes at this from the view of a large borrower.”

What would a President Donald Trump do to Wall Street and to banks? According to Brian Caplen, editor of the London-based The Banker, the United States would become more isolationist.

In a column for The Banker, Caplen said bankers might be excited because Trump has talked about his concerns over the Dodd-Frank Act. “The risk for the banks is that as Mr Trump’s policies started to fail, the banks could become the scapegoat,” explained Caplen. “Attacking banks is an easy win for politicians of all suits and Trump has shown his skill in turning on critics and heaping abuse on his opponents. Blaming the banks for a failing economy is an approach as old as capitalism and too tempting to turn down.”

Recently, Politico Chief Economic Correspondent Ben White interviewed Mohamed A. El-Erian, chief economic advisor, Allianz, and chair of President Barack Obama’s Global CONTINUED ON PAGE 16

BANKING NEW ENGLAND

15

Matthew Dean Photography

PROTECTING VULNERABLE CLIENTSCONTINUED FROM PAGE 17 COVER

Development Council, at Nasdaq’s MarketSite in Times Square.

When asked about the comments from Trump, El-Erian said, “When you hit a period of low growth, the easiest target is foreigners. But I don’t see a major move towards protectionism.

We will see a greater emphasis not on free trade, but on fair trade.

This is a term that we will hear no matter who wins the election.”

El-Erian talked about the anti-EU sentiment in Great Britain and compared it to the United States. “Even if an antiestablishment movement doesn’t gain power, it can influence how a country is governed. We are seeing it in the United States and have been since the Tea Party. It is the result of growth that has lagged and income inequality that is getting worse.”

As for Hillary, Donald, Ted, Bernie and John (Kasich), “Banks don’t care which candidate wins,” said Nomi Prims, author of All the Presidents’ Bankers. “Trump, though he downplays ties, would not have become Trump without banking relationships at elite levels on the financing side for his deals. And Nomi Prins Hillary Clinton has never actually championed legislation that would fundamentally alter the structure of Wall Street, or how it imposes risk on the general economy.”

And there are those who have trouble with both Sanders and Clinton. Said Brenda Wenning of Wenning Investments: “The economic issues the two Democrats take on amount to a choice between socialism and near socialism. Ms. Clinton has promised to create ‘the economy of tomorrow,’ which is a Brenda Wenning pretty scary place. Bernie Sanders at least seems honest about his beliefs.”

“Being a socialist is cool if you’re a college student or professor.

It’s not cool if you’re in charge of the world’s largest economy.

Sanders’ plan would create a huge disincentive for creating wealth and would not create anywhere near enough revenue to pay for his social programs,” she said.

Concluded Caplen: If, as expected, the next U.S. presidential election is a contest between Trump and Clinton, “the smart thing for the banks to do will be to drop their usual Republican allegiance and support the Democrats. Ms. Clinton has promised more regulation of banking and markets, but after six or seven long years of regulation, this is just business as usual. At least she would have a credible economic policy and would keep the U.S. open for business.” BNE

In Their Own Words

Hillary Clinton said that she would permit large banks to fail if there were another financial crisis. “Under Dodd-Frank, that is what will happen because we now have stress tests and I’m going to impose a risk fee on the big bank if they engage in risky behavior. Then under my plan and others that have been proposed, they may have to be broken up,” she said in an interview on CBS’s The Late Show on Oct. 27.

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BANKING NEW ENGLAND

Bernie Sanders pledged to dismantle the nation’s largest financial institutions in his first year in office. His proposal also included: enforcing stricter regulations on banks; capping “automated teller machine fees at $2 a transaction;” limiting credit card interest rates; allowing post offices to “engage in basic banking services; and overhauling “the Federal Reserve by eliminating the central bank’s ‘internal conflicts of interest’ and providing stricter oversight,” he said in a Jan. 5 Wall Street reform policy speech.

Ted Cruz said that he did not believe that the Glass-Steagall Act “drove” the 2008 financial crisis. Instead, he said, “The Fed’s policy destabilizing our money contributed powerfully both to the bubble and collapse.

What the Fed should be doing is, number one, keeping our money tied to a stable level of gold, and, number two, serving as a lender of last resort,” he said on Nov. 11.

Donald Trump said in April 2009 that he partially supported how the Obama administration was handling financial institutions in jeopardy. “I’m not saying I agree with everything [Obama’s] doing. I do agree with what they’re doing with the banks.

Whether they fund them or nationalize them, it doesn’t matter, but you have to keep the banks going.

John Nance Garner Long before Ted Cruz, Texas had John Nance Garner, vice president under Franklin D. Roosevelt. FDR frequently phoned Garner to solicit his opinions about proposals for legislation and organizing the new government. Although Garner offered relatively few legislative proposals, he did advocate government guarantees of banking deposits, an idea he promoted in Congress despite the objections of the president-elect. Eventually, the groundswell of congressional support for the plan won Roosevelt over, and he endorsed the Vandenberg Amendment to the Glass-Steagall Banking Act, creating the Federal Deposit Insurance Corp.

u John Nance Garner, then the Democratic nominee for vice president, and Franklin D. Roosevelt, then the Democratic nominee for president, at the back of Roosevelt’s private train at a campaign stop in Topeka, Kansas, on Sept. 14, 1932.

Photo courtesy of the Associated Press

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PROTECTING FUSING FUNCTIONS VULNERABLE CLIENTS

Banks’ Strategies and Objectives Shape Branch Design Models

Mark Charette is the 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.

Mark Charette

BY MARK CHARETTE

T

he two biggest doubts holding financial institutions back today are concerns about their model and their strategy. Not knowing whether the model or strategy is correct can render technology useless, branch staff superfluous and merchandising a huge waste of time and money. So what is the right model and strategy?

A branch model goes deeper than the relative positions of retail zones and equipment.

Deciding how model and strategy work together may resemble a chicken-and-egg problem, but logically, the model must be determined by your strategy and its objectives.

Strategy Drives Model, Technology Enables Strategy The successful branch model (driven by strategy) includes staffing that requires its own 18

BANKING NEW ENGLAND

special training. Banking technology should enable strategy, not the other way around (strategy shouldn’t enable technology). Financial institutions should mindfully build their platforms – deliberate layers of staff, technology and retail communications – so the branch model completely supports strategy: 1. If growing wallet share is the strategic goal (more products per customer/family), dialogue banking is the model to support this.

The dialogue model requires in-branch tellers using a new generation of highly efficient cash processing equipment.

2. If staff productivity or pure efficiency is the goal, the branch automation model is the best option. This model uses machines that enable customer transactions with minimum assistance from staff.

The cost of banking equipment can be

more than offset by increased wallet share or improved staff productivity. Two types of machine currently satisfy these two different strategies: • Cash recyclers enable the dialogue banking model • Advanced terminals/ITM video tellers enable the automated branch model Dialogue banking: Cash recyclers are revolutionizing branch interactions. Usually incorporated as part of a dialogue tower (“teller pod”) setup, they can also be installed at drive-thru windows and other branch stations. Staff operating recyclers in dialogue towers should be trained to function as a “universal banker.” These versatile employees can move from behind the dialogue tower to greet customers as they enter the branch, or roam the retail floor attending to visitors’ needs. They’re trained in all aspects of retail branch operations, cross-selling and sales in general.

The recycler enables this strategy; these remarkable machines can process banknotes of any combined denomination, log serial numbers, sort and count them at considerable speed. They detect counterfeit bills and have advanced error recovery capabilities.

This puts a whole new complexion on the teller transaction, elevating it from a non-communicative, money-counting exercise to an in-depth personal conversation. It builds relationships, which leads to cross-selling and higher brand loyalty.

Automated branch model: Advanced terminals are a great way to reduce operational expenses and extend the hours when a live person is available to talk with customers. They occupy less branch space than teller stations and, with fewer tellers based in video call centers, avoid overstaffing at times of low branch traffic. In the absence of teller stations (or dialogue towers), branches can accommodate more consultancy space, such as private booths and conference rooms.

Advanced terminals can be either a full interactive video model or assisted self-service model.

The interactive video model requires a remote teller transaction every time, as they’re not integrated into the branch core, and the teller must enter the transaction data on a second terminal. This is clearly not as efficient as it would be if it were connected to core data systems.

The assisted self-service model is integrated into core processes so the customer is free to use the terminal as an ATM or ITM. The focus is speed of transaction, with all data instantly recorded. A remote teller or branch staff member will only intervene in the event that a customer needs help.

A second connection to the larger ATM network means that both customers and noncustomers of the financial institution can use the machines. Without this connection only the financial institution’s customers can access funds.

Validate and Translate Strategy Branch transformation specialists are so valuable because they have the experience to navigate available options and select branch-appropriate equipment. Every branch is different, due to size, location, customer profile, or its node position relative to the hub or spokes in the branch network.

An expert consultant can look deeply into your operation, validate your strategy and translate it to each unique branch situation. Customer experience is also an important consideration, which brings us to the retail communications piece.

Retail Communications Retail communications covers the interior and exterior design considerations for retail branch environments, including branding, merchandising and any other means by which the financial institution conveys its products, services, mission, community ties and general value story.

This discipline is based on scientific studies of customer flow through branches (known as experience mapping) and intensive programming by designers. The modern branch is becoming smaller and revenue-per-square-foot has attained some significance as a metric; nothing is left to chance.

Merchandising Financial institutions employ multimedia displays, kiosks and dispensers to inform consumers of their complete range of services. These media are most effective when they send a consistent message across channels, via the branding theme, voice and general experience. This now includes the digital side of banking, with websites and banking apps playing a major role in the so-called omnichannel experience.

Merchandising in branches goes beyond simply positioning dispensers about the lobby. It’s a carefully constructed spatial exercise that takes into account exactly where customer interaction with potentially expanded retail experiences (known as “touchpoints”) should occur during the customer journey. The full range of a financial institution’s products and services must be advertised to its customers visually. It’s possible that different products will have more appeal to some customer segments than others, and this may influence where in the branch certain marketing material will be placed.

The branch architecture itself may even be designed to incorporate branding and marketing features, such as in the shape of the entranceway, built-in signage, or interactive walls. Retail communications may appear “on the surface” but its influence goes deep into the heart of the operation. BNE BANKING NEW ENGLAND

19

PROTECTING FITTING THE PROFILE VULNERABLE CLIENTS

Behavioral Traits of the High-Performance CEO Indentifying the Strongest Leader for Your Bank High performance has evolved over the past 25 years in banking, but never has the combination of financial performance measures of ROA, ROE, net interest margin and noninterest income been more critical. With the over-dependence on fee income largely obsolete thanks to increasing regulatory scrutiny on overdraft fees, banks are having to balance high performance among other streams of income.

Having defined a group of high performance banks over a five-year period, an impressive 56 percent of their executives (president or CEO) returned a personal profile survey for analysis.

Personal Profile Factors

Geri Forehand of Forehand Strategy Group is a Certified Professional Consultant to management and a strategic partner with The Pacific Institute. For more information, please contact Geri Forehand at gforehand@ thepacificinstitute.com.

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BANKING NEW ENGLAND

BY G. R. FOREHAND

I

n his new book Average Is Over, Tyler Cowen makes the credible argument that the economic structure that created community banking is largely obsolete.

Today, the future focus is on technology, on entrepreneurship, and on the collaboration between the two.

How then is a CEO in today’s banking environment expected to marry the traditional business of banking with the leading-edge of the future economy? How does a CEO achieve high performance?

Before we look at the traits of a high performance CEO, however, we should define a high performance bank.

The personal profile system is a four-factor behavioral model that identifies and rates the intensity of four basic behaviors included in a sales and management environment. The model is published by Carlson Learning Co. and is based upon the work and writings of William Marston and John Geier.

The behaviors are defined as: Dominance: Dominant behavior is a high-risk, task-oriented, independent behavior that operates best under crisis. It is bottomline driven, results-oriented and characterized by intense, no-nonsense, let’s-get-it-done behavior.

It is often seen as not caring about human resources as long as the job gets accomplished, but in fact it is more often driven by high accountability expectations. It is motivated primarily by challenges and results.

This behavioral tendency seeks to meet its needs by controlling the environment through direct, forceful activity and often overcomes opposition in unfavorable or antagonistic situations.

Influence: Influential behavior is also a high-risk behavior, but it is relationship- or people-oriented and operates best under favorable conditions. It is highly focused on people and their interactions in doing business. This behavior seeks to meet its needs by persuading others to work with it to accomplish results. It is often seen as very sales- and marketing-driven behavior.

This behavior avoids conflict or tends to downplay any negativity. Optimism is both its most powerful and destructive tool. It tends to see people in rosecolored glasses. However, this behavior brings people together in times of conflict and is able to facilitate change and growth.

Steadiness: Steadiness behavior is also a relationship-oriented behavior, but it is much lower risk behavior.

This behavior tends to meet its needs by cooperating with others in a steady, consistent, process-oriented manner to carry out respective tasks.

It is characterized by loyalty, honesty, hard work, security and stability. This behavior is slow to change and prefers to work in well-defined, predictable situations. It also works best in a supportive and favorable culture.

Conflict is often avoided or denied in this behavioral trait.

Conscientiousness: This behavior was originally known as compliance or cautious behavior. This behavior is focused on quality and accuracy. It is often seen as perfectionist in nature. This tendency towards precision and accuracy exists even under unfavorable conditions.

It is low-risk behavior that works best when done independently, but it also likes to work cooperatively with others in a given task or project. This behavior is extremely detailed and analytical in nature.

Dominance and influence: 32.15 percent.

Steadiness and conscientiousness: 28.57 percent.

Influence and steadiness: 3.57 percent.

What does this mean for CEOs today? Clearly leaders of any kind will fall into the “dominance” category, as those behavioral traits are much of what make a leader viable in any industry.

High-Performing Scores The results of the personal profile survey are as follows: Dominance • High range: 60.71 percent • Average range: 7.14 percent • Low range: 32.15 percent

Steadiness • High: 32.15 percent • Average: 0 percent • Low: 67.15 percent

Influence • High: 32.15 percent • Average: 7.14 percent • Low: 60.71 percent

Conscientiousness • High: 57.14 percent • Average: 7.15 percent • Low: 35.71 percent

Improve Performance CustomerLab® Identifies product opportunity, target segment and geographic focus NextProductLab™ New Launches multi-platform cross-sales

Personal Profile Measures

The personal profile system ranks each of these behaviors in each individual on an intensity index ranging from 1 to 7. A segment score of 1 is the lowest possible score and a segment score of 7 is the highest possible score.

A segment score of 4 is considered average. A score of 5 or higher would be considered a high behavioral trait and a score of 3 or lower would be considered a low behavioral trait in this survey (see sidebar).

When looking at the primary and secondary behaviors together, the following patterns were noted: Dominance and conscientiousness: 35.71 percent

Conscientiousness was the second-most noted high-scoring behavioral trait.

So as a board looking for a CEO to lead your bank into the future, look for the holy grail of the high D/high C personality, one that will lead forcefully but also collaboratively and with detailed attention to numbers and analytics.

The future of your bank may depend on the behavioral traits exhibited by its executive leadership. BNE

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603.424.5664 • www.longgrouponline.com 22 Greeley Street • Suite 2 Medallion Center • Merrimack, NH 03054 BANKING NEW ENGLAND

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PROTECTING ADAPT OR DIEVULNERABLE CLIENTS

The Golden Age of Banking is Here Are You Ready to Compete?

Life Expecancy

Source: Max Roser (2016) - ‘Life Expectancy’. Published online at OurWorldInData.org. Retrieved from http://ourworldindata.org/data/population-growth-vital-statistics/life-expectancy/

Tom Long is principal of The Long Group LLC. The Long Group offers a suite of trademarked solutions for financial institutions to improve performance by driving revenue and controlling cost. Tom can be reached at 603-424-5664 or tomlong@ longgrouponline.com.

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BANKING NEW ENGLAND

BY TOM LONG

T

he need for growth is real.

Thin margins have become the new normal. The revenue impact of this margin collapse requires additional volume. Furthermore, community banks are faced with increasing costs of doing business. Contributing factors include escalating compliance costs, required investments in technology and year over year increases in salary and benefits expense. By necessity, a sustainable business model is one that is focused on revenue growth.

This certainly does not describe a golden age.

So, let’s examine the macroeconomic factors that will drive revenue growth on a sustained basis for every community bank.

For over 23 years The Long Group has been capturing the pulse of financial purchase behavior among both consumers and business.

Today, the collective voice contained in the database is hundreds and hundreds of thousand strong, offering unparalleled predictive value. Here is what we see and how each community bank will benefit from the evolving macroeconomic environment.

With an acute need to grow revenue to offset the impact of margin compression as well as the requirement to pay for an increasing expense burden, two sweeping changes will favorably impact demand to the benefit every community bank.

The first shift is demographic. The population of the United States is shaped by generations, with a new generation born once every 20 years. Generations are tracked through

time by trending births. The exhibit is utilized to illustrate more than a century of generations within the United States. As an orientation, Tom Brokaw famously introduced America to the term the Greatest Generation. This generation won World War II and built this great country. Few remain with us today. The generation that followed were named the Silent Generation, simply because they had no war stories to tell. Post-war prosperity ushered in the Baby Boomers, which was followed by Gen X and the Millennials. As children, Gen Z is currently shaping itself.

As community bankers, we, as an industry, are in the business of selling finished goods – loans – and sourcing raw material – deposits. To date our primary loan target audience has been Gen X and corresponding deposit audience has been the Silent Generation. What do these two segment have in common? They are both the two smallest generations of the last century, which has compromised every community bank’s ability to grow.

The generational shift, now underway, is ushering in a golden age of banking and the accompanying explosive growth in demand for both loans and deposits. To succeed, Millennials and Baby Boomers must fast become the focus of every community bank’s loan and deposit generation strategy. More importantly, this shift in focus will benefit each community bank with a rise in both loan and deposit demand over each year for the next 20 years. The need for additional revenue is clear. The opportunity to capture it is sustainable.

The second macroeconomic factor shaping demand is characterized by a behavioral shift.

This behavioral shift is perhaps best captured by life expectancy in the United States, which has expanded by nearly a decade in the last 55 years.

Consumers simply have more time, and they have used this time to defer marriage by six years over the last half century. This of course has a trickle-down effect – deferring marriage also means deferring homeownership. The average first-time homebuyer is now 33 years old.

Since the oldest Millennial is now 31 years of age, every community bank generally has 18 months to ready themselves for the pending and sustained tsunami of Millennial demand. Is your financial institution ready? BNE

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FOCUS ON CLIENTS

Branch of the Future Whatever Physical Form it Takes, Banking Is – and Always Will Be – About Customer Service Michael J. Purchia is managing director of Quincy, Massachusettsbased Paramount Financial Institutions Group. He can be reached at mpurchia@ paramountpartners.com.

Timothy J. Ryan is an architect and business consultant. He can be reached at timryan. rwa@att.net.

BY MICHAEL PURCHIA AND TIMOTHY J. RYAN

Michael J. Purchia

I Timothy J. Ryan

f you have been in banking for a while and hear someone refer to the “Branch of the Future,” you might be thinking, “Please, not again!” A colleague recently suggested that someone ought to publish A History of the Branch of the Future to remind bankers of the many mistaken ideas and futile efforts that have been expended in pursuit of this elusive goal.

And yet, the question remains valid. We know there will continue to be branches for the foreseeable future, and we know that they will be different in many ways from past or current branches. Like it or not, we all need to make decisions today about our own Branches of the Future. For the rest of this article we’ll ease your pain just a bit and use BOTF. We know that customer use of branches is changing: • Since 1992, U.S. retail branch transaction volumes have declined more than 45 percent.

• Branch transactions are projected to decrease 2.5 percent annually over the next five years.

• Online and mobile transactions are projected to grow in excess of 10 percent annually during the same period.

Nevertheless, branches remain a crucial element in the distribution strategy of almost all banks:

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BANKING NEW ENGLAND

• Today, customers (including Millennials) value their visits to the branch even more for advice and high-value sales. While digital shopping influences 80 percent of new consumer checking decisions, 90 percent of checking accounts are opened in the branch.

• Location convenience remains a primary driver of customer behavior in selecting a financial institution. Just look at how few of your own new customers come to you from outside of your branch network footprint.

• Wells Fargo has been increasing its number of branches. “Maintaining a digitally supported physical presence is important, particularly for small businesses,” CEO John Stumpf said.

“It doesn’t mean we have to build 5,000- or 6,000-square-foot stores; many of the new branches are 1,000 square feet.”

In the face of these trends, it is reasonable to ask what your BOTF should look like and how it should operate to better serve customers – and do it more profitably – in the coming years. We asked this question to a handful of successful bankers and professionals who we know are innovative, yet still have their feet on the ground (see sidebar for their comments).

Summarizing what we heard from these individuals who are adapting to the new opportunities that branches provide, here

are four key takeaway points for use in thinking about your own BOTF decisions.

Understand the branch’s role in your overall strategy – and how it may change over time. One often hears that the BOTF will need to focus on sales and service. But properly understood, that’s all they have ever been about. A financial institution opens branches in order to make it more convenient to prospective customers.

And there is ample evidence that branch location remains a potent influencer of customer decision-making. To fulfill this “customer attraction” role, the branch must accommodate the routine needs of its customers – including teller transactions if they so desire. A reduction in demand for teller services will not reduce the need for branches. It will, however, affect the size and composition of the staff, and alter the nature of the environment most appropriate to the new mix of activities.

Focus on what really matters. A wellconceived and carefully implemented branch layout can improve staff efficiency and sales effectiveness. Customer perceptions and behaviors can be influenced by the branch environment. Your brand promise can be made tangible in the customer experience delivered at the branch. All of this requires careful planning and skillful execution.

Yet having the right number of branches, at the right sites, serving the right markets, plays a far greater role in your success than does any combination of decisions about carpet colors, merchandizing fixtures or a coffee bar. When making decisions about current and future branches, don’t let rigid ideas about branch size and cost dictate which locations can and can’t be profitable.

Your branch design approach should accommodate your overall location strategy – not the other way around.

Drive down per-branch capital costs. High construction costs for new branches, along with real estate acquisition and development costs, can tie up capital resources needed for other strategic initiatives, such as improved systems or enhanced digital channels. If your branch investment cannot be tailored to circumstances, promising market opportunities will be delayed or forfeited.

Conventional branch designs are based on assumptions which do not match

today’s realities – or tomorrow’s. Smaller branch formats, opened in lease space, require far less capital and come online quickly. Techniques borrowed from retail store design, such as increased use of prefabricated fixturing, can further reduce per-branch costs, increasing your ability to act strategically.

Get branch operating costs under control. Minimizing operating costs, especially personnel expenses, is critical to the viability of individual branches – particularly where activity levels and revenues have yet to fully mature. Therefore, new or remodeled branches should be designed to function efficiently at low staff

levels. Conventional branches operate poorly when the staff headcount drops, resulting in substandard customer experiences.

New branch formats excel by supporting flexible staff responses to minute-byminute variations in the volume and mix of customer traffic.

Community financial institutions can improve profitability and increase market share by opening new branches, or reconfiguring existing ones, to better serve the customers of today and the future. But to maximize your success, you must be willing to look past the spotty history of the BOTF, to embrace new approaches that meet clearly defined strategic goals. BNE

What Does the Branch of the Future Mean to You? We asked several local bankers for their thoughts on the topic: Joe Bartolotta, executive vice president at Eastern Bank, the nation’s oldest and largest mutual bank, said people “overlook the value of the branch, forgetting that its presence creates ‘top of mind’ awareness for your brand. In many respects, it’s a billboard. So it must be contemporary in appearance, along with convenient.”

Peter Muise, CEO of First Citizens Federal Credit Union, a $680 million, consistently profitable credit union based in Massachusetts, said, maybe tongue-in-check, “The Branch of the Future concept is a vast bank consultant conspiracy. We live in interesting times today, not in the future. While we use the latest technology in our branches, our branches are closer to the ‘Cheers’ model, where we make a point to know all our members’ names.

And we’re able to do it in very efficient smaller branch footprints.”

Art Loomis, president of Northeast Capital, a New York-based investment bank with a long track record of working with community and regional banks and credit unions, said money center and super regional banks are “generally abandoning exurban and rural markets to focus their capital and distribution channels on markets where they have critical mass and can capitalize on favorable demographics. We are seeing attractive opportunities to acquire closed branches, or branches with deposits, where community institutions can implement their more personal branch customer experience, while using new technologies to lower operating costs.”

Peter Dello Russo, the newly elected president of Bridgewater Savings Bank in Massachusetts, is considering downsizing larger branches. “Making branches easier for customers to access all of the bank’s services including trust, insurance and financial planning together with its core retail and commercial loan and deposits products” is critical, he said. “It’s not about creating a café environment but bringing value to our customers.”

Michael Rauh, CEO of Chelsea Groton Bank, a billion-dollar, high-performing Connecticutbased mutual savings bank, said “many branch models are identical to a 19th century model where branch staff sit across the counter or a desk from their customers. The reality today is that the Internet and mobile phones have dramatically changed the value proposition of the branch. Today, our staff is more advisory and less transactional. We are always on the lookout to see how the most successful retailers provide advice and guidance to their customers. If it makes sense for our bank and improves our customers’ branch experience, we’re all for it.”

BANKING NEW ENGLAND

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INNOVATIVE MARKETING

Four Strategic Marketing Pillars for Profit-Minded Bank CEOs Editor’s Note: This is the second of a three-part article; part one appeared in the previous issue of Banking New England and part three will appear in the next.

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.

Scott McClymonds

BY SCOTT MCCLYMONDS

T

he first article in this series described how to improve your bank’s profitability through improved strategic marketing. The four strategic marketing pillars introduced in that article are the key to gaining a competitive advantage, acquiring more customers and increasing market share.

Those four pillars are brand promise, analytics and automation, referrals and leadership, and I briefly made these remarks about them: • Brand promise: Identifies your value proposition, why you’re in business, and what your customers can expect from you.

• Analytics and automation: Provides insights into your customers, products, and markets that can give you a competitive advantage.

• Referral strategy: Acquire new customers inexpensively through recommendations from existing ones.

• Leadership: The best marketing strategies are consistently successful when your bank’s senior executives provide passionate support.

I asserted the pillars are hard to execute consistently, which is why many banks do not realize the strategic benefits and increased profitability available to them.

In contrast, this series will equip you to use them effectively to drive growth and profitability. Let’s help you do that by examining brand promise and analytics and automation.

Brand Promise The importance of your brand promise cannot be overstated. It is a statement that lets everyone in your bank know what you stand for, why you’re in business, and what your customers can expect from you. It becomes a strategic force when everyone on your team embraces it. The key is stating your values and principles in a memorable, understandable way.

Below are some tips to get you started thinking about your brand promise. They are not exhaustive, but will certainly get you on the right path.

1. What makes you unique and special? a. Your values b. Why you are in business c. How and why you want to serve your customers

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BANKING NEW ENGLAND

2. How you will improve the lives of your customers? a. Faster and/or superior service b. Easier access c. Better quality d. Superior reliability e. More secure future 3. How do you want your customers to feel when they do business with you? a. Like you understand them and have products that meet their needs b. Like you care about them and they are important to you c. Like you have anticipated their needs and are delighted to serve them Use questions like these to focus your thoughts until you come up with what you want to deliver, how you want to deliver it, and who you want to deliver it to. Then build your bank around it. It will take time, but the effort is worth it to build a stronger, more differentiated brand.

Analytics and Automation Combined with a strong brand promise, analytics and automation can have an enormous impact on your bottom line. Turning analytics into a strategic function has allowed me to generate tens of millions of dollars for banks, and create a competitive advantage for them in the process.

The analytics gold mine is both tactical and strategic. Here’s a relatively simple example of its strategic use: About 10 percent of bank customers account for 90 percent of profitability. While these may not be the precise numbers for your bank, a minority of your customers create the majority of your profitability. Who are these customers, and what should you know about them?

Here are some basics you should know about your most profitable customers: • What makes them profitable?

• How solid are their relationships?

• What are their ages, income ranges, locations, educational backgrounds?

• What products do they have and how do they use them?

• Why did they choose our bank?

• What markets do their businesses serve and what products do they sell?

• How many are Baby Boomers who will soon be retiring?

• How many are Millennials starting families and buying their first homes?

• How many are business owners looking to grow from $1 million to $10 million in revenue?

• How many are looking to switch banks?

Knowing how to make this information actionable is critical, and that’s why it takes a strategic thinker rather than a technical expert to deliver the goods for your bank.

To start, look at the information from a big picture level and summarize your findings about your most profitable customers. Then you want to do at least three things: 1. Retain your best customers, gain referrals from them and help them benefit from more of your services.

2. Determine which remaining customers have the potential to become like your top ones and focus your marketing resources on them.

3. Evaluate whether or not to realign your bank and products around the profile of your best customers.

You can see both the strategic and tactical implications of your questions and analysis. The key is knowing the right questions to ask about the primary drivers of your business, brand promise, and overall strategy.

Good partners and systems can take the mystery out of your data and use it to transform your profitability.

At $16 billion Arvest Bank, we wanted to develop a low cost marketing strategy that would use our branch personnel more efficiently.

With a strategic technology partner, we implemented an advanced set of marketing analytics and automation tools that let us automatically send qualified leads daily to every branch in our four states. As a result, each year we were able to speak with over 300,000 customers, open over 30,000 new accounts, and generate an incremental $5 million in profits.

Similar results are available to small and medium sized banks at affordable pricing. Executives who might be concerned by either the cost or complexity of strategic marketing analytics and automation can now have the same tools as the big banks at cost effective pricing.

This article has focused on two of the four pillars of strategic marketing: brand promise and analytics and automation. Brand promise is the heart and soul of your bank, and needs to be a main element of your communications, training, hiring, operations and decisions. Creating a significant, authentic brand promise to energize your employees is the first pillar of profitable strategic marketing.

The second pillar is developing analytics and automation capabilities that let you build and execute scalable endeavors around key customer segments. Good systems are essential, but they must improve the ability of your employees to deliver on your brand promise.

In the final article of this series we will direct our strategic marketing focus on referrals and leadership. Until then, challenge your team to find ways to improve your brand promise and analytics and automation. BNE

BANKING NEW ENGLAND

27

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 • Androscoggin Bank • BankNewport • Berkshire Bank • Blue Hills Bank • Bristol County Savings Bank • Coastal Heritage Bank • Eastern Bank • Franklin Savings Bank • Lake Sunapee Bank • Ledyard National Bank • Meredith Village Savings Bank • MutualOne Bank • Optima Banker & Trust • New Hampshire Mutual Bancorp • Savings Bank of Walpole

Appointments and Elections Merrimack County Savings Bank

Eastern Bank

Philip B. Emma has assumed the role of president of Merrimack County Savings Bank. He was named executive vice president of New Hampshire Mutual Bancorp upon its formation in 2013 Philip B. Emma and president of MillRiver Wealth Management in April 2015 and will continue in those roles. Emma has 39 years of experience for public and private companies and financial institutions. Emma originally joined The Merrimack in 2000 as senior vice president, CFO and treasurer. In 2008, he was promoted to executive vice president and in 2010 added the responsibilities of COO.

Eastern Bank has appointed Mamadou Dembele to vice president and branch manager of the bank’s Seacoast office in Portsmouth, New Hampshire. Dembele, Mamadou Dembele who previously worked at Eastern’s retail office at 265 Franklin St. in Boston, has over 14 years of banking experience.

Meredith Village Savings Bank Richard E. Wyman has assumed the role of president of Meredith Village Savings Bank. He succeeds Samuel Laverack. Wyman has over 30 years of experience in senior leadership and has served as Richard E. Wyman an executive officer and CFO for several Maine-based banks, ranging from local community mutual banks to a publicly traded multibank holding company. He joined MVSB in August 2001 as CFO in 2001 and was promoted to executive vice president and CFO for NHMB in 2013. Wyman was executive vice president and CFO for MVSB prior to 2013.

Bristol County Savings Bank

• South Shore Bank • Webster Five Cents Savings Bank

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BANKING NEW ENGLAND

Bristol County Savings Bank has appointed former Pawtucket Red Sox Digital & Event Marketing Manager Jeff Bradley to the position of digital and event marketing manager. In this new capacity, Jeff Bradley Bradley is responsible for managing the bank’s website, social media presence, events and public relations.

Bradley is also currently a volunteer for the St. John the Evangelist School in Attleboro.

Androscoggin Bank Lacey Gammon and Dennis Lajoie have joined the board of directors of Androscoggin Bank in Maine. Gammon is a loan operations representative at the bank and previously Lacey Gammon served as a marketing assistant and administrator for its MainStreet Foundation. Lajoie is the vice president of economic development and housing at Community Concepts Inc., a regional organization Dennis Lajoie that provides a variety of housing, economic development and social services.

Blue Hills Bank Blue Hills Bank appointed Pamela C. Scott to its board of directors.

Scott is the founder, president and CEO of LVCC Inc., a business consulting firm, and has Pamela C. Scott more than 30 years of experience in the financial services industry including multiple roles in institutional asset and investment management at State Street Corp., U.S. Trust Co. of New York and Citibank.

Promotions Eastern Bank

Eastern Bank promoted Laura T. Brown to business banking officer of the bank’s Deer Street office in Portsmouth, New Hampshire. Brown in 2014 acted as branch manager of the Portsmouth office. Prior to that, she was the assistant branch manager in Salem, Massachusetts. Brown is also an ambassador for the Greater Dover Chamber Laura T. Brown of Commerce and serves as treasurer of Seacoast VeloKids, a nonprofit organization dedicated to promoting cycling among local youth and incorporating the activity into a healthy lifestyle.

New Hampshire Mutual Bancorp

Jason Hicks has assumed the role of CFO of New Hampshire Mutual Bancorp (NHMB). He is responsible for the development of financial policies, strategic plans, business goals, asset and liability management, current and contingent liquidity management and investment strategies for the holding company and its subsidiaries: Jason Hicks MVSB, Merrimack County Savings Bank (The Merrimack) and MillRiver Wealth Management.

He also leads the management of the investment portfolios and treasury functions for the banks and oversees the financial, tax and regulatory reporting processes for all four companies under the NHMB holding company structure.

Alison Whynot was promoted to vice president of facilities and Community Alison Whynot Reinvestment Act (CRA) officer. In this position, Whynot will continue to oversee facilities for all NHMB properties, including new construction.

NHMB consists of the sister subsidiaries of Merrimack County Savings Bank, Meredith Village Savings Bank and MillRiver Wealth Management. Whynot will also continue to serve as the CRA officer for both Meredith Village Savings Bank and Merrimack County Savings Julie Lacey Bank.

Julie Lacey was promoted to retail sales and development officer for NHMB subsidiary Merrimack County Savings Bank. She will oversee service and knowledge training for all Merrimack retail employees. Lacey joined the bank in 2011 as retail development, operations coordinator. She had over 16 years experience in branch operations, Kim Elfstrom management and sales with Citizen’s Bank.

Kim Elfstrom was recently promoted to vice president, commercial loan administration for NHMB subsidiary Meredith Village Savings Bank (MVSB). In this position, Elfstrom will continue to manage the commercial loan processing department and work with senior management to ensure compliance with bank loan policies, procedures and regulatory requirements. She is also responsible for various reporting needs for finance, senior management and the board of directors. Elfstrom joined MVSB in 1999 as a commercial loan processor.

Melissa French Reid was recently promoted to vice president of branch services and retail sales officer at MVSB. She will continue to oversee service and knowledge training for MVSB retail employees.

Reid joined MVSB in 2002 as a teller in the Meredith main office.

Bristol County Savings Bank

Bristol County Savings Bank (BCSB) promoted Kathleen Mulhern to vice president and senior marketing officer. In this new capacity, Mulhern is responsible for the management of the bank’s marketing department. Prior to her promotion, Mulhern held the position of vice president of marketing. She also serves as Kathleen Mulhern president of the board of directors at the Boys & Girls Club of Taunton, Massachusetts and is on the board of the Old Colony History Museum as marketing committee chair.

Franklin Savings Bank

New Hampshire’s Franklin Savings Bank announced the promotion of Taylor Laro to client experience program manager in the bank’s retail division. In her new role, Laro will be responsible for working with the bank’s business units to evaluate and improve current client experience, as well as ensure the client experience is at Taylor Laro the forefront of decisions that are made in the achievement of goals. Laro joined FSB in August 2015; prior, she was a residential real estate closing agent with Sessler Law Office in Franklin.

Ledyard National Bank

Vermont-based Ledyard National Bank promoted Alison Bruce to senior vice president.

Bruce celebrated her 16th anniversary with the bank this past year. Bruce is a compliance and BSA officer, information security officer, CRA officer, privacy officer and security officer at the bank. She is responsible for overseeing audit Alison Bruce and compliance functions for the organization, and leads cross-departmental risk and compliance committees. She develops compliance policies and procedures and presents to audit committee and the Ledyard board of directors.

Webster Five Cents Savings Bank

Webster Five Cents Savings Bank announced the promotion of Charles A. Pierce to mortgage sales manager. Pierce has worked as a mortgage loan originator for two years and will now have an elevated role overseeing the mortgage loan origination team. Pierce is an active member of the internal sales committee of the bank, involved Charles Pierce with the Webster Dudley Oxford Chamber of Commerce and a member of the Central Massachusetts Association of Realtors.

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BANKING NEW ENGLAND

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PROTECTINGFILE VULNERABLE CLIENTS PERSONNEL

New Arrivals BankNewport

Ryan P. Galitskie has been hired as vice president and branch sales manager at Rhode Island’s BankNewport.

He will be responsible for branch operations, Ryan P. Galitskie business development, and staff development, in addition to special projects related to the development of the Universal Banker Program within the bank.

Galitskie comes to BankNewport from Webster Bank of Warwick, Rhode Island.

Berkshire Bank

John McNally has joined Berkshire Bank as a senior loan officer to the residential lending banking team in Burlington, Massachusetts. McNally has 30 years of residential mortgage lending experience.

As a senior loan officer, he will work with Realtors, attorneys and wealth management firms as well as their clients to guide borrowers through the mortgage loan process.

Lake Sunapee Bank

Debbie Johnson joined New Hampshire’s Lake Sunapee Bank as vice president and commercial loan officer.

Johnson has more than 20 years of experience as Debbie Johnson a commercial lender, and will now work in the bank’s new Concord location. She also serves on the board of the Lake Sunapee Region Visiting Nurses Association, located in New London.

Ledyard National Bank

New Hampshire’s Ledyard National Bank announced Nicolaas Bekker has joined the bank as vice Nicolaas Bekker president and Norwich branch manager. He brings nearly 20 years of customer service experience to his position, first in the hospitality industry before transitioning to banking. Bekker began his banking career in Fairfield County, Connecticut, after moving to the U.S. in 2003.

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BANKING NEW ENGLAND

Coastal Heritage Bank

Kathryn “Cassie” Fruggiero has joined Coastal Heritage Bank as a branch manager for the bank’s Hingham, Massachusetts office.

Kathryn Fruggiero Fruggiero has over 10 years of experience in the banking industry with a background in customer service and branch management. She most recently worked at Santander Bank as assistant vice president and branch manager. Suzanne Batchelder has joined the bank as a branch manager for the Green Harbor office. Batchelder has nearly 10 years of experience in the banking industry with a background in branch management and customer service. She most recently worked at Citizens Bank as a vice president and branch manager.

president of NH CIBOR Cares, treasurer of Greater Manchester Habitat for Humanity, an advisory board member of Making Community Connections Charter School and is a member of the Queen City Rotary Club.

Savings Bank of Walpole

Savings Bank of Walpole has hired Martha Zabielski as a mortgage loan officer. Zabielski will be based at the bank’s North Meadow Plaza branch in Walpole, Massachusetts. Prior to joining SBW, Zabielski was the branch manager and mortgage/consumer loan officer at Claremont Savings Bank’s Charlestown location. She oversaw the prequalification and origination of loans, closed loans and worked with area Realtors, attorneys and their loans processors.

Zabielski previously worked at Connecticut River Bank for 18 years.

South Shore Bank

MutualOne Bank

Gregory Kennedy has joined MutualOne Bank as vice president of retail banking. He brings over 16 years of industry experience, most recently with Northway Bank of Gregory Kennedy Berlin, New Hampshire, where he was vice president and regional market manager.

Optima Bank & Trust

Optima Bank & Trust in Portsmouth, New Hampshire hired Jerry Bazata as senior vice president and senior commercial loan officer.

He will be based at the Jerry Bazata bank’s corporate offices at Two Harbour Place in Portsmouth. Bazata brings more than 30 years of experience in banking and financial services.

His career has included positions at community Adam Johnston banks as well as large national banks.

Optima also hired Adam Johnston as vice president and commercial loan officer, based at the bank’s Bedford branch.

Johnston brings 15 years of financial services experience to the position. He serves as

South Shore Bank has hired six local Citibank employees to staff its new Wollaston branch, which opened in February at 680 Hancock St. in Quincy. The new branch will be the bank’s third location in Quincy, and its 15th overall. The six new South Shore Bank employees formerly worked at the Citibank branch in North Quincy.

The new employees are: • Sidrit Veselaj, market area branch officer.

Veselaj joined Citibank as a senior banker in 2014.

• Michelle Moore, personal banking manager. Moore has served as assistant branch manager at Citibank since 2007.

• Edmond Chan, senior personal banking advisor. Chan joined Citibank as a personal banker in 2013.

• Briana Liu, personal banking advisor.

Liu worked as a teller at Citibank since 2015.

• Lihua Mei, personal banking advisor.

Mei worked as head teller at Citibank since 2015.

• Jin Zhou, personal banking advisor.

Zhou was a teller at Citibank. BNE

PROTECTING INDUSTRY NEWS VULNERABLE CLIENTS

HarborOne Plans Reorganization, Partial IPO With an eye toward growth, HarborOne Bank is reorganizing into a mutual holding company and offering a partial IPO. In a regulatory filing outlining the plan, the company said that “the holding company structure will create various business opportunities for [the bank] that are not currently available to it as a mutual cooperative bank.”

For instance, HarborOne could more easily acquire either mutual or stock institutions and it could make investments prohibited to banks without a holding company.

According to documents filed with the Securities and Exchange Commission, HarborOne will offer up to 49.9 percent of its common stock, or 11.7 million shares, for sale starting at $10 per share, and it anticipates it will raise between $83.6 million and $114.1 million, it said in the filing.

HarborOne said it intends to fund a charitable foundation with part of the proceeds and that it may use some of the proceeds retained by the holding company to repurchase its own stock or finance potential expansions or acquisitions, though it noted it does not currently have any such plans.

recently formed as the result of a merger among four specialty hospital groups: IVG Hospitals in New England, Premier Veterinary Group in Chicago, Wheat Ridge Animal Hospital in Denver and Veterinary Specialty Hospital in San Diego.

“Ethos Veterinary Health is an excellent client and we’re very happy to be able to offer our industry expertise as well as our capital markets capabilities to help them achieve their strategic and financial goals,” Jerry Sargent, head of middle market banking at Citizens Commercial Banking, said in a statement.

According to the statement, the merger has been many years in the making.

ABA: New Credit Card Accounts Up 16 Percent In Q3

Webster Bank Launches Boston Marketing Blitz Picking up the tab for a stranger’s parking ticket might be an unconventional approach to establishing your brand in a new market, but Webster Bank is hoping those random acts of kindness will help it start off on the right foot in a new market.

With its feet now firmly planted in 17 new locations across the Greater Boston area, Webster this week began a marketing push to raise its profile. The bank has been rolling its welcome truck across Boston hotspots from Copley Square to Faneuil Hall to the Greenway to the Common, handing out treats and free coffee and tea.

The bank is playing off its tagline “Surprisingly Good Service” and surprising Bostonians with random acts of kindness. Miree recalled, for instance, a Webster banker who saw a parking ticket on a car at Faneuil Hall, paid the ticket, and left a business card with the note “This one’s on me.” In another instance, he said, a team member chased down a bus for an elderly woman who had missed it.

The bank plans to blanket the market in the coming months with advertising across various media, appearances in subway stations and block parties in the spring and summer.

Citizens Finances $21M Vet Practice Group Merger Citizens Bank recently financed the merger of four veterinary practices into one group based out of Woburn with a $21 million credit facility.

Ethos Veterinary Health provides specialty and emergency care for pets through a network of 13 hospitals across the United States. It

The American credit card market continued its expansion in the third quarter of 2015 as purchase volumes rose across all risk categories, according to the American Bankers Association’s latest Credit Card Market Monitor.

On a year-over-year basis, purchase volumes rose 6.1 percent for subprime accounts, 4.2 percent for prime accounts and 3.5 percent for super-prime accounts, the ABA said. Moreover, the number of new credit card accounts rose 16.5 percent year-over-year to total 78.9 million nationwide.

According to the ABA’s report, that hike in new credit card accounts also included a 30 percent year-over-year increase in subprime accounts, but the subprime segment remained one-third below levels seen in the first quarter of 2008. The number of open credit card accounts also increased to 320 million (up 5 percent from a year prior), driven by moderate gains across all three risk groups, the ABA said.

Credit card credit outstanding as a share of disposable income also increased slightly to 5.38 percent in the third quarter, while the effective finance charge yield was essentially flat. Both metrics remain near post-recession lows.

Revolver accounts increased 0.7 percent to 41.7 percent of all accounts – near post-recession lows. Transactors, or those who pay their balance in full each month, fell 0.1 percent to 29.4 percent of all accounts. BNE 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 • BankNewport • Berkshire Bank • Bristol County Savings Bank • Cambridge Savings Bank • Charles River Bank • Commerce Bank

BankNewport

BankNewport

BankNewport recently presented a $16,000 grant to purchase new equipment for the hospital’s Acute Rehabilitation Unit.

BankNewport announced it will sponsor a youth financial literacy program with Rogers High School in Newport, Rhode Island.

Berkshire Bank

Cambridge Savings Bank

Berkshire Bank announced its two charitable foundations awarded more than $1.8 million in grants last year to Massachusetts, New York, Connecticut and Vermont nonprofit organizations.

Bristol County Savings Bank

• Country Bank • Dedham Institution for Savings • Eastern Bank

Cambridge Savings Bank announced the winner, Meyer Billmers, of the 5,000 Reasons to Celebrate this Holiday Season Drawing, which provided participants with the chance to win $5,000.

• East Boston Savings Bank • Franklin Savings Bank

Charles River Bank

• Marlborough Savings Bank • MutualOne Bank • Northern Bank & Trust • Webster Five

Bristol County Savings Bank distributed a $10,000 grant to the Gifts To Give nonprofit and its Martin Luther King Day of Service and Learning event. Bank volunteers also helped clean and organize the center.

Cambridge Savings Bank Cambridge Savings Bank surprised community patrons with random acts of kindness and passed out nearly 2,000 coffees, lunches and sweet treats from local companies.

Charles River Bank donated $1,000 donated to Bellingham Senior Center.

Commerce Bank

Charles River Bank

Commerce Bank recently presented the United Way of Central Massachusetts with a check for $104,003 from the bank’s 2015 corporate fundraising campaign.

Charles River Bank donated $825 to the Bellingham Public Library.

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BANKING NEW ENGLAND

Country Bank

Dedham Institution for Savings

East Boston Savings Bank

Country Bank recently presented Abby’s House in Worcester, Massachusetts, with a check for $3,050.

The Dedham Institution for Savings contributed $2,000 for funding Walpole’s Committee for Alcohol and Drug Awareness 2016 Video and Poster Contest.

East Boston Savings Bank donated $500 to the Allston Brighton Soccer Association

Eastern Bank

Eastern Bank

Franklin Savings Bank

Eastern Bank honored Melvin H. King and Joyce King with the bank’s 2016 Community Advocacy Award for their lifelong dedication to community activism.

The Eastern Bank Charitable Foundation donated $10,000 to Children’s Hospital at Dartmouth-Hitchcock to support the renovation of the CHaD Inpatient Unit.

Franklin Savings Bank presented PermaCityLife with a $30,000 donation to support their efforts to revitalize Franklin’s historic downtown corridor.

Marlborough Savings Bank

MutualOne Bank

Northern Bank & Trust

The Marlborough Savings Charitable Foundation donated $25,000 to the YMCA of Central Massachusetts 150th Anniversary Capital Campaign.

MutualOne Bank awarded $5,000 to the Natick Service Council’s Healthy Eating, Chronic Disease Management and Food Rescue program.

The Northern Bank & Trust Charitable Foundation awarded $5,000 to the Boys & Girls Club of Greater Billerica.

Northern Bank & Trust

Northern Bank & Trust

Webster Five

The Northern Bank & Trust Charitable Foundation distributed two grants totaling $7,500 to two Greater Lowell nonprofit organizations.

Northern Bank & Trust Charitable Foundation granted $2,500 to the Roudenbush Community Center to assist low-income families in Westford and surrounding towns.

The Webster Five Foundation has announced that as part of its Web of Caring to Make a Difference program, it will donate $3,000 to Life-Skills Inc. BANKING NEW ENGLAND

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PROTECTING VULNERABLE IN CASE YOU MISSED IT CLIENTS

Featured Banks

Eastern Bank Honors Stop Handgun Violence Founder

Citizens Plans Corporate Campus In Rhode Island

• Citizens Bank • Eastern Bank • Farmington Bank • Ledyard National Bank • Meredith Village Savings Bank Eastern Bank honored John E. Rosenthal, founder of Stop Handgun Violence, with the 27th annual Wainwright Social Justice Award for his unwavering commitment to violence prevention.

The Social Justice Award recognizes nonprofits or individuals who have achieved outstanding success in addressing social justice issues. As part of the Social Justice Award, Rosenthal directed a $25,000 donation from the Eastern Bank Charitable Foundation to be split between Stop Handgun Violence and the Police Assisted Addiction and Recovery Initiative.

Meredith Savings Bank Finances Second Barley House Location

Pictured, from left: Gracie Cilley, vice president and commercial loan officer, MVSB; Brian Shea, owner of The Barley House; and Marcus Weeks, vice president of business development, MVSB.

The Barley House restaurant in downtown Concord, New Hampshire opened its second location on 43 Lafayette Road at the Lafayette Crossing Plaza in North Hampton, New Hampshire with financing from Meredith Village Savings Bank (MVSB).

Barley House owner Brian Shea worked closely with Gracie Cilley, vice president and commercial loan officer at MVSB, to purchase and remodel the North Hampton restaurant.

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BANKING NEW ENGLAND

Citizens Financial Group announced that it will build a corporate campus to bring together 3,200 of its employees in Johnston, Rhode Island.

Most will come from a Cranston location with a lease set to expire in 2018. Citizens is planning about 420,000 square feet of office and meeting space. The space is planned for a currently undeveloped parcel of land on the west side of Interstate 295 in Johnston.

Ledyard President Named 2015 Community Banker of the Year

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. Underwood was selected by a panel of leading public officials from the state of New Hampshire, who noted her initiatives to encourage a healthy lifestyle among her employees and the community.

“Being recognized for leadership in the community is the highest honor and to do so by educating and inspiring others through a cause that I am so passionate about makes it extremely significant to me,” Underwood said.

Farmington Bank Opens up Shop in New Fairfield Lending Center

Farmington Bank of Connecticut has opened its second new lending center in three months, this one in Fairfield. The new location at 1809 Black Rock Turnpike is staffed by three mortgage bankers: Gene Fabbri, assistant vice president and residential sales manager; Jeannie Devaney, residential loan specialist; and Diane Nelson, residential loan specialist. BNE

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