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LETTER FROM THE EDITOR
Something in the Water The New England economy continued a long slow march back to recovery this year, while banks continued to deal with the repercussions of a low interest rate market that didn’t lift all boats. Christina P. O’Neill Editor, Banking New England
epending on where you lived or did business in New England, housing prices came back to, and in some cases exceeded, their pre-crash highs due to pent-up demand – or continued to languish. As this issue was being prepared for press, the national economy showed modest growth, but that was due mainly to companies building up their inventories, rather than a burst of new sales. Employment at the upper and lower ends of the economic spectrum grew, while the middle, which drives much of the economy, failed to either keep pace or make up for past losses. Today’s bankers and their customers are dealing with a new economic reality that will require a mix of fiscal prudence on the part of the banks, increased financial literacy
on the part of their customers, and a reset of expectations on the part of all. While bankers are still struggling to deal with the requirements of Dodd-Frank, many rules of which are still unwritten, the new Consumer Financial Protection Bureau appears to be setting up an agenda for 2014 to address nonbank players such as third-party debt collection agencies and payday lenders, whose sometimes muddy business practices have long splattered onto banks. We’ll be examining these efforts in the year ahead, and much more. It’s been an interesting first year for Banking New England. We thank our readers, advertisers, and the people who were willing to share their work lives with us to become part of the magazine. In the year ahead, as in the year past, we welcome input from all. BNE
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Capuano Talks Shutdown, Banking Regulations at Bank Summit
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National Debt Collection Reform Will Dun Banks for Third-Party Actions
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A Holistic Approach to Governance, Risk and Compliance
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BANKING NEW ENGLAND
BY LINDA GOODSPEED
BANKING NEW ENGLAND
espite its birth on the eve of one of the most turbulent decades in banking history, Centrix Bank continues its steady march to the $1 billion mark. Since opening its Bedford, N.H., office in June 1999, following the raising of $8 million in capital, Centrix has expanded to include five full-service branches, 135 employees and total assets of $909.1 million. In its 14 years of operation – which included the dotcom bust, the mortgage meltdown, the 2008 financial crisis and the subsequent Great Recession – Centrix has never had a losing quarter. At its current pace, Joseph B. Reilly, co-founder, president and CEO, expects the bank will cross the billion-dollar threshold next year. Centrix Bank is a fullservice commercial bank serving small businesses, professionals, nonprofits and municipalities in southern New Hampshire. Reilly, a 34-year banking veteran, including several
years at another community bank startup, decided to start Centrix in August 1998 when he filed for a bank charter from the state of New Hampshire. “I felt I could bring to the marketplace a return to simplicity and basic banking with regard to access, and not over complicate business banking,” Reilly said. “I was fortunate to attract an experienced core of bankers with relationships they brought over to the bank.” He says continuing to attract experienced talent has been one of the bank’s top challenges. Other challenges include the increased regulatory burden, and keeping a sharp eye on asset quality.
A Clear Mission
One big reason for the bank’s success has been its focus: It is a community commercial bank. Period. “We are very clear to say to folks that we do not offer residential mortgages,
car loans or consumer-based products,” Reilly said. “We have very limited offerings in that area to accommodate the banking needs of our business owners. We felt that landscape was well-banked and very homogenized. We thrive on customization and our ability to deal in the safe shades of gray.” New Hampshire, with no sales or income tax, has come through the Great Recession in better shape than many other regions. The state has a lower unemployment rate than the national average, and a thriving, diversified business climate that is ranked 8th nationwide for being “business friendly.” “Most of our business clients have revenues from half a million to $10 million, and borrowing needs from $100,000 to $5 million,” Reilly said. He says the bank has no particular concentration. “We do a lot of core services, legal, medical, health care, Continued on page 8
Centrix Bank Continued from page 6
engineering, production-related services, a smattering of retail, wholesale, commercial real estate. Our preference is full relationships. We’re not a transactionoriented bank.” He says the bank’s low nonperforming loan ratio is due to knowing the marketplace so well and being so singularly focused. However, Centrix may be one of the last startup banks. No new bank charters have been filed in New Hampshire in several years. There are many reasons for this, including the increased regulatory burdens. “It’s a very challenging climate,” Reilly said. “Every bank CEO I know struggles with making appropriate investments to deal with those additional requirements.” Despite the increasingly complex and challenging banking environment, Christiana Thornton, president of the
NH Bankers Association, says there have been no bank failures in the state during the economic downturn. “I think it really speaks to the high quality banking leaders we have in New Hampshire,” Thornton said. Reilly is among them. He is the former chair of the New Hampshire Bankers Association, and a former chair of the association’s legislative committee. He currently sits on the American Bankers Association’s community bankers’ council and banker advocacy and grassroots committee. Thornton said he has “been a strong voice for the New Hampshire community banking industry at the state and national level.” As for the future of Centrix, for now, it will stay the course. “We want to put our company in a position where we really have choices,” Reilly said. BNE
Centrix co-founder, president and CEO Joseph B. Reilly
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BANKING NEW ENGLAND
One Master Plan Can Save Time, Money BY STEPHEN R. KING Stephen R. King, JD, AMLP, is the director of the regulatory compliance group at Wolf & Company, where he guides clients through federal and state banking statutes from both an operational and legal perspective.
here’s no question that the financial services industry is besieged by regulations right now. The Dodd-Frank Act alone has already created a number of new regulations, and over the next few years, several more will roll out that will keep financial institutions busy. This is on top of other regulations and laws targeted at financial institutions that are scheduled to come online in the near future. Approaching this flurry of regulations by ramping up and creating individual plans to prepare for each new regulation unnecessarily exhausts resources, time and staff. There is a better, more efficient way to prepare your financial institution: Create one master plan to prepare for compliance that can be adapted and applied to any and all regulations, laws, and major changes to your financial institution. By bringing together all of the elements that follow, you can create a solid master plan that will serve as a steady and consistent guide to meet the challenges of coming into compliance with any new regulation. Following are the main areas that a master plan for compliance should address to be as effective and efficient as possible so your financial institution can continue to focus on and build business strategies.
Identify your requirements
It’s important that your financial institution fully understand its obligations under each new regulation. 10 BANKING NEW ENGLAND
Your master plan should have a clear process for identifying your requirements at the broader level of the financial institution overall as well as with new products and services. The plan should include clear steps to capture the analysis and reasoning behind your findings. This part of the plan should include: • The process and people needed to decide whether or not a new regulation or specific requirements applies to your financial institution overall as well as new products and services. • A system to analyze and document the reasoning and decisions as to why a regulation or any particular requirement does not apply. This documentation will be extremely useful if your institution is audited by regulators and you can show sound and solid reason for believing the regulation does not apply. • A routine periodic reevaluation of whether or not the regulation applies to your institution. Over the year, things may change in the institution that could cause the regulation to become applicable and
you will need reevaluate. • A process to include the C-suite management team in the analysis of the applicability of new regulations to allow them to be up to date on the regulatory burden and risk management issues as they make decisions on new products and services. Continued on page 12
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Clear lines of communication are critical to effectively implement the master plan and successfully adapt it to a new regulation, law, or any significant changes to the institution.
Communicate the responsibilities
One of the most important elements of your master plan is how it communicates responsibilities to management, employees and vendors. Knowing who will be taking care of each area, and what needs to be communicated to your vendors long before the deadlines approach, creates a calmer and more effective transition to the new protocols and procedures. These responsibilities include defining who is responsible for writing the policies and procedures; who is responsible for creating the process and controls; and who is responsible for software and systems. It’s incumbent on the financial institution to make sure that vendors are also making the necessary changes to ensure that they, and the services they provide on your financial institution’s behalf, are in compliance. Your master plan should assign responsibilities to oversee areas such as: • The software-as-service vendors to make sure they are updating the software and integrating the necessary changes for compliance. • The vendors producing paper and electronic communications with customers or members to make sure things like the necessary disclosures are being included in all communications. • The third-party company that is servicing the loan that originated in your financial institution. • The closing attorneys who work on mortgages issued by your financial institution.
Detailing the action steps
To ensure that your financial institution adapts to new regulations as efficiently and effectively as possible, it’s important to assign leadership roles, create timetables and assess resources. By doing this, you are creating an action plan within your master plan for compliance. Some of the things to be considered in your action plan are: • Assigning a project manager to oversee the process of moving into compliance, assigning roles to staff, and coordinating the activities that will occur. • Creating timetables and deadlines that make the process of coming into compliance orderly and efficient. It’s most effective to lay out a timelines that work backward from 12 BANKING NEW ENGLAND
each deadline to build in time for your institution and your vendors to get things done on time • Anticipating and accounting for the resources it will take to implement the changes needed for the regulation and how this allocation of resources will work across business lines. To make this action plan effective, you must assign responsibility for the tasks; determine that resources needed to move into compliance are available; and create a task force to implement the plan.
Communication is key
Clear lines of communication are critical to effectively implement the master plan and successfully adapt it to a new regulation, law, or any significant changes to the institution. This means communicating up and down the management hierarchy, across business lines, and with the entire institution. There are a number of areas to consider when developing the communications section of your master plan. Communicating with the appropriate staff and managers about their responsibilities and roles is important, but it’s equally important to communicate upwards to senior management to keep them informed, involved and on track. They must know about the options related to the latest regulations so they can be part of the decision-making team on how to comply, or whether or not to pursue a business opportunity in relation to their risk appetite. They must be educated on the compliance process in order for you to secure their buy-in on the plan and steps. They should be made aware of the resources needed to execute the steps toward compliance to make them more willing to provide them to you and your team. Encouraging and facilitating communications across business lines is very important to eliminate silos and promote cooperation across the institution. For instance, the lending department should be communicating next steps to the IT department for systems needs, as well as with the audit department for testing needs. Retail (if the branch staff have lending responsibilities) should be communicating with HR about training. It’s essential to work with representatives across all business lines to periodically get their input to update the master plan and keep it current and relevant to each department. Communication also comes in the form of training in the new protocols to ensure that the steps to remaining in compliance are executed properly and become a matter of habit. Your team will need to be trained in new regulatory requirements, new processes and controls, and new software or relevant software updates.
Testing for efficiency
Creating and implementing a program for testing your compliance protocols is one of the most important elements to build into your master plan. There are some important steps you should follow to ensure your testing is a productive as possible.
Before the date that the new regulation takes effect, it’s highly recommended that you test the new protocols resulting from changes and decisions related to the new compliance procedures to make sure that they work before the deadline. After the regulation is in place, and your new protocols and changes are active, you must test again. There may be effects that the new protocols have on certain parts of the institution that may not have been anticipated that will come to light only after going live. After testing, you will need to make adjustments to fine-tune your protocols so they work as effectively as possible. Some of the areas you will most likely need to make adjustments are audit programs, monitoring programs and risk assessment – new risks may be created that will change the risk rating of an area.
Mastering your future
Once created and refined, your master plan will see your institution through the many regulations coming your way and allow for more time, resources and people power to be dedicated to business goals and growing the bottom line. BNE
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National Debt Collection Reform Will Dun Banks for Third-Party Actions Zero Litigation Model Proving More Popular, Cost Effective
BY BILL BARTMANN Bill Bartmann is CEO of CFS2, a debt-collection company in Tulsa, Oklahoma, and has helped to settle the debts of more than 4.5 million people without ever filing suit against a customer.
Number of collection lawsuits filed between 2008 and 2012
55 million Filed in 2013
ankers face unprecedented challenges in today’s regulatory environment, and phrases such as “safety and soundness” and “vicarious liability,” ratchet up the tension. The newest challenge is banks’ relationships with the buyers of charged-off credit card debts, resulting from actions by debt buyers that allegedly harm consumers. The community of third-party debt buyers who purchase the huge bulk of credit card charge-off loans from banks have created this toxic quagmire. They have acted irresponsibly and created enormous liability for banks who sold the debt. BILL BARTMANN Put simply, the debt buyers “robo-signed” tens of millions of collection lawsuits without proof of the facts; effectively a fraud on the court and a violation of consumer protection laws. The Office of the Comptroller of the Currency (OCC) has been clear that banks are responsible for the acts of their third-party contractors and believes that the acts of debt buyers have damaged the reputation of the bank that sold the debt. Based on a review of caseloads in state courts, debt buyers robo-signed as many as 55 million lawsuits between 2008 and 2012. They will have filed another 10 million such lawsuits in 2013. Numbers of this magnitude explain why the potential liability is an extraordinary sum. Debt litigation is lucrative for debt buyers, who have paid pennies on the dollar to buy the debt. An example: assume the debt is $2,500 and the debt buyer paid $250. If they spend an additional $650, their investment is still less than $1,000, but the resulting judgment after interest and costs could easily reach $5,000 to $7,500. Once a judgment is granted, many states allow wage garnishment until the entire balance – including interest – is paid.
Banks Held Responsible
Regulators have for many years warned that there is extensive liability for the actions of the third parties with whom the bank does 14 BANKING NEW ENGLAND
business. In 2008, the Federal Deposit Insurance Corporation (FDIC) cautioned plainly that banks were responsible to ensure third parties “operated in a manner consistent with federal and state laws, including those intended to protect consumers.” OCC Comptroller Thomas Curry was even more pointed in 2012, when he said the bank “does not wipe its hand of responsibility,” in reference to debt sales by banks, to debt buyers whom the bank knows has a history of harm to consumers through violation of consumer protection laws. In testimony before the Senate Banking Committee in mid-July of this year, the OCC described in detail its belief that the behavior of third party debt buyers has seriously damaged the reputation of banks. Further, the OCC said that a failure to have in place controls that ensure the debt buyer treats consumers fairly represents a “safety and soundness” concern. Banks have more to worry about than simply the OCC focus on the mounting number of robo-signed fraudulent lawsuits. The Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and a consortium of state attorneys general will be seeking compensation for consumers harmed. While the FTC is not a primary bank regulator, all four groups – OCC, CFPB, FTC and attorneys general – are cooperating and working closely together. No stone will be left unturned. Unfortunately, this regulatory climate exposes banks to a heavy toll to be paid, coming largely from the pockets of the bank’s shareholders. Some banks anticipated this early, and restricted their sales to debt-buying companies that had signed the Bank Protection Pledge. The signors of this pledge contractually agree: • Not to utilize litigation or threaten litigation against any of the accounts sold. • Not to pursue collection activity beyond the statute of limitations. • Not to charge interest on the charged-off obligation. • Not to attempt to contact any of the debtors more than twice in any 24-hour period. • Not to resell any of the purchased accounts. Today there are about 150 debt-buying companies who have signed the pledge. These
The bank “does not wipe its hand of responsibility.” — Thomas Curry, comptroller of the currency
“zero litigation” debt buyers operate from a radically different business philosophy. They know that threats and intimidation are counter-productive and are inefficient as a means to collect charged off credit card debt from consumers. Persuasion and
added value, such as free debt nwegotiation with the consumers’ other creditors, or free job placement services, are far more productive tools. This “zero litigation” model has proven to generate profits greater than the litigation business model. The model creates a win-win both for the bank and the debt buyer. Competition among the debt buyers ensures a competitive market pricing for the bank and thus the efficient conversion of non-performing assets to cash while eliminating any legal, economic or regulatory risk. Debt buyers benefit financially from the value they add and the patience they devote to the consumer. Consumers are treated fairly. Regulators are happy. Understandably, the term “safety and soundness” sends a chill down the spine. But it does not have to be that way. Banks can realize the benefits of selling charged-off credit card debt merely by avoiding debt buyers who use a litigation business model. BNE
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16 BANKING NEW ENGLAND
Eastern Bank Runs a
NEW GAME COUNTERINTUITIVE APPROACH TO LENDING KEEPS BANK VITAL THROUGH RECESSION
By Christina P. O’Neill
Eastern Bank’s story is one of going against the grain, and sometimes, establishing a new grain. Among many examples: None of its original corporators had a significant financial stake in the bank, but placed top priority on what they saw as their civic responsibility; it’s a mutual bank that has successfully acquired stock-owned banks as well as other mutuals; it has not concentrated on mortgage financing, the mainstay of most mutual banks; and it has become an active advocate for social issues – with which not all its customers/clients necessarily agree. Eastern Bank’s first antecedent began as a financial institution in 1818, at a time when the government wasn’t yet printing paper currency, and only shipping merchants or their affluent economic peers had access to banking services. The average household saved their coins in coffee cans or an equivalent. Along came the Lynn Institution for Savings, paying 5 percent interest a year – 2.5 percent in April and 2.5 percent in November – a rate that would be the envy of today’s bankers, says Richard E. Holbrook, chairman and CEO of Eastern Bank. Todays’ Eastern Bank is the product of a 1980 merger of two mutual banks, competitors five miles apart in the city of Lynn and the town of Salem, to create a $1.8-billion institution. Since then, Eastern Bank has become the nation’s largest and oldest mutual bank by asset size, with $8.7 billion in its portfolio, and one of the five largest full-service banks in Massachusetts. Particularly since the
financial crisis began in 2008, Eastern’s acquisitions of both mutual and stock-owned banks have expanded its market footprint from Massachusetts’ North Shore to a band extending from the Merrimac Valley to Cape Cod. Eastern’s diversified portfolio includes indirect auto lending, commercial and industrial loans, community development lending, to owner-operators as well as investors. Its relatively small exposure to mortgage lending, compared with most mutual banks, meant that the bank wasn’t affected adversely this past summer, when the mortgage refinancing boom ended. Its host communities have many different needs. In 2010, Eastern purchased the $1-billion Wainwright Bank & Trust, which specialized in commercial landing and community development – and most notably, social advocacy initiatives. Eastern’s acquisition of Community Bank in Brockton in 2012 brought it 16,000 new accounts, giving it a significant retail footprint in a region in which it had had none.
Buying when few others dared
When the mortgage crisis hit, Eastern was virtually unaffected because of its concentration on the commercial side, so it was in a prime position to do mergers and acquisitions while others shied away. “Even during the recession, we were doing transactions,” Holbrook says. In September 2008, the month Lehman Brothers failed, Eastern bought a $700-million, shareholder-owned bank in Reading, MassBank for Savings. The buy was seen as a good extension of Eastern’s franchise, Holbrook says. Reading’s balance sheet provided Eastern with liquidity and Eastern picked up Reading’s customer base. “This was a great play for us, and the price was right,” he says. The Wainwright acquisition also filled out Eastern’s retail bank franchise in Boston and the suburbs. But the best two attributes of the Wainwright acquisition were the bank’s solid community development lending capacity, with its Continued on next page BANKING NEW ENGLAND
Eastern Bank Runs a New Game Continued from page 17
specialties in historic and low income tax credit lending financing for nonprofit organizations. Eastern had about 1,000 nonprofit organization customers, and Wainwright added 700 more, making Eastern’s nonprofit base likely the largest in its market region. The second attribute was the social advocacy embraced by Wainwright’s previous owners, founders John Plukas and Robert Glassman, and its CEO Jan Miller. “I would have described us in the past as sort of silent supporters of social justice issues, but they were outspoken advocates,” Holbrook says. And so Eastern began to build and expand on its advocacy efforts.
Doing what’s right
Eastern already had connections with nonprofit organizations dealing with gender issues and their social and legal ramifications. Since the legalization of same-sex marriages in Massachusetts, same-sex couples had to deal with tax parity at the state level, but tax disparity at the federal level. “We were having to report health-care benefits for same-sex couples as taxable benefits,” Holbrook says. He and CEO Robert Rivers decided to allocate a stipend to same-sex married employees for the tax liability of their health care benefits, an average $2,500 payout for each case. Yes, it was an administrative expense, Holbrook notes, but a modest one; yes, it was a voluntary expenditure, but also a modest one in terms of dollar volume. But for Eastern Bank, it was the principle of the thing. “It was a social justice issue impacting some of our employees,” Holbrook says. And when Massachusetts Attorney General Martha Coakley and the gay-lesbian advocacy group GLADD decided to pursue a lawsuit claiming that the federal rules unfairly and unconstitutionally discriminated against a subset of lawfully married Massachusetts residents, Eastern Bank was asked if the company would be willing to sign on an amicus brief advocating for the strikedown of the Defense of Marriage Act. Eastern became the first company in the country to sign the brief. It was one of many causes Eastern has backed. Others are ending homelessness, immigration reform and transgender rights in the workplace. “An organization can grow and mature over time,” Holbrook says. “It’s true that not everyone will agree with everything that we advocate, but if you’re in our position, I think you have the responsibility to show a little courage and speak up for what you think is important. And again, if everyone doesn’t agree with you, well, they have other choices, we understand that. We don’t judge them by the fact that they don’t agree with us. We have people who don’t agree with us who still do business with us, because they get the service, they get the advice, they get the products and the pricing that they think is important to them. But I’m sure some of them would perhaps not agree with our social justice issues. That’s okay.” In 1999, Eastern’s management made the decision to donate 10 percent of its annual net income to charity. Most of the donations go through the Eastern Bank Charitable Foundation, now a $77-million endowment fund, but much also goes to direct charities as well. These combined efforts put $5 million a year back in local communities.
18 BANKING NEW ENGLAND
“Job creation takes entrepreneurs with dreams, courage, capital, and sometimes they always don’t have enough capital. If we can bridge that, we can find ways to assist them with the process that brings in new jobs.”
Know when to hold ’em, when to fold ’em
Richard Holbrook, a Worcester, Mass., native, earned his undergraduate degree at Yale, majoring in molecular biophysics and biochemistry, and his MBA at Harvard. He spent five years as an administrator in the Yale athletic department right after graduation there in 1973. He began his banking career in 1980 at Connecticut Bank and Trust as a commercial credit trainee. CBT was acquired in 1997 by Bank of New England, just before the banking crisis of the late 1980s and early 1990s. Holbrook has said in interviews that he prefers to work with finance people who weathered that crisis, though he notes wryly that many of them are retiring now. In a 2012 interview with The Boston Globe, he noted the wisdom of having doubts – “Without them, you’re kidding yourself,” he told writer Todd Wallack. His background includes a three-year stint as director and CFO of a small, Cambridge-based biotech firm, from 1993 to 1996, but most of it has been in banking. He joined Eastern in 1996 as its CFO. As vice chair of the Massachusetts Bankers Association, he is in line to become the organization’s chair this coming June. When he arrived at Eastern, the bank had 28 branches, each with its own branch manager and assistant branch manager. Today it has 99 branches and associated personnel, and he observes that many assistant branch managers probably aspire to move up. Job growth within the organization – as is job creation in the communities the bank serves – is the prime building block for community health, Holbrook says. Without job creation and the household incomes that result, cities and towns lack the opportunities to improve housing stock, education, and infrastructure. Of the Gateway Cities where the bank has a presence, the ones which have fared better than others have local leadership who understand those priorities and who are committed to job creation, education and safety initiatives. “At the center, from my point of view, is jobs, and the thing that a
Photos © 2013 Mike Ritter
bank can do to help is to finance those [small] businesses that have those jobs,” Holbrook says. “That takes entrepreneurs with dreams, courage, capital, and sometimes they always don’t have enough capital. If we can bridge that, we can find ways to assist them with the process that brings in new jobs.” The bank is active in 10 of Massachusetts’ 24 Gateway Cities. Eastern recently opened the first bank branch in Lawrence in 23 years, and the first new branch in Chelsea in a couple of decades. Holbrook sees this as not only good banking, but good citizenship. “These cities tend to get ignored by larger [banks] and the smaller players can’t necessarily provide resources, so we think there’s a good role for a bank of our size and breadth to make a difference in those communities,” he says. Eastern has been recognized for the fifth year in a row as the top Small Business Association lender in New England. The reinstatement of guarantee fees for SBA loans make them more attractive. While SBA loans constitute a fraction of the bank’s small-business loans, the additional product enables the bank to expand its lending universe to companies that would otherwise be more difficult to serve, and to serve them with a product that’s appropriate to their needs. Eastern has seen double-digit increases in commercial loan growth in the last few years, partly as a result of its SBA activity. Not that it’s been easy. Liquidity has been flowing into banks since the 2008 recession. “Putting those deposits to good utility has been difficult,” Holbrook says. “We have to find people who we can lend to, whether they’re consumers or whether they’re businesses, who can pay us back.”
Loyalty is as loyalty does
Long-term relationships are highly valued at Eastern, where employees are regarded as stakeholders. More than 10 percent of its employees have been with Eastern for 25 years or more, and 40 percent have served for more than 10 years. “We try to create a culture where they want to stay,” Holbrook says. “Employees who work with customers over a long time, have an opportunity to learn their story and [to be] better able to give advice.” The deposit base is also loyal, he notes. Customers range from governments, business, nonprofits, other banks, and individuals – some affluent, some not. The bank still offers free checking to people with lower balances, bucking a banking-industry trend of the last few years, and as a result, more than half of its deposits are DDA or NOW accounts; checking accounts have been the engine of the bank’s growth. The formula keeps costs low for customers and affords the bank to offer competitive loan rates, which contributes to loan growth. The recession had some impact on Eastern, Holbrook notes. “We had some investments that didn’t do well,” mostly investments in other banks. However, “We never lost money, we always made money, just returns [declined].” Three years after the worst financial crisis in a generation, Eastern set a record for earnings in 2011. And going forward, “We’re very pleased with where we’re heading,” Holbrook says. BNE Christina P. O’Neill is editor of Banking New England. She may be reached at email@example.com.
BANKING NEW ENGLAND
OCC Cautions Small Banks to be Alert for Money Laundering Improved BSA Programs Can Help Mitigate Risk
BY JOHN MEYER John Meyer is chief product officer at Banker’s Toolbox.
ank Secrecy Act compliance officers stand in a unique position to defend our communities by identifying potential tax evasion, drug trafficking and other criminal activity. BSA officers have the opportunity to work handin-hand with law enforcement JOHN MEYER to identify criminal activity and provide evidence used in the prosecution. Though this role is rewarding, it can also be very difficult to keep up with the weight of regulatory compliance. For BSA officers at community institutions, this important job is getting much 20 BANKING NEW ENGLAND
more difficult in the aftermath of the high-profile BSA/AML regulatory scrutiny aimed at the larger U.S. banks such as JPMorgan, Bank of America, Citigroup and HSBC over the past couple of years. Thomas J. Curry, comptroller of the currency, stated before the Senate Committee on Banking, Housing, & Urban Affairs in March 2013 that “as large banks improve their BSA/AML programs and jettison higher risk lines of business, we are concerned that money launderers will migrate to smaller institutions.” The June 2013 BSA/AML Developments and Trends Report to the American Association of Bank Directors echoed his concerns, adding that “regulators are thus cautioning these smaller institutions to understand and allocate the resources and personnel necessary
to effectively manage recent upticks in higher-risk activities.” The consensus is that increased money laundering risk is a growing threat for community financial institutions; however, there are ways for banks to improve BSA programs to mitigate the increasing risk.
Stop using onedimensional rules
For most BSA officers, the monitoring process begins with a canned core processor report of cash transactions over a certain dollar amount, exported into Microsoft Excel. Those with basic BSA/AML software in place can pull reports to detect more than just structuring. However, what both of these processes have in common is that the reports only Continued on page 21
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Money Laundering Continued from page 20
Apply monitoring thresholds that “As large banks improve their BSA/AML programs and make sense jettison higher risk lines of business, we are concerned Just because a customer shows up on large cash report doesn’t mean that the that money launderers will migrate to smaller institutions.” acustomer is doing something wrong, and — Thomas Curry, comptroller of the currency
filter activity based on one “rule” at a time, such as a transaction limit or type. Most of the activity filtered by a single report is not suspicious unless it is combined with the results of another report or additional variables, adding multiple dimensions. This methodology is the next generation of BSA monitoring because it helps catch more suspicious activity while reducing overall alerts.
Use statistics to understand norms and find outliers Banks need to know what is normal activity for their customers before they can know what is truly unusual or suspicious. Organizing customers using peer-related groups, like similar businesses or consumer
groups, because they can vary drastically. Then, within each segment, determine the standard deviations for the overall financial activity and individual transaction types for that group. Activity that lands more than two or three standard deviations away from the mean may be considered statistically significant, allowing banks to pinpoint and focus on truly suspicious activity. Making this an ongoing process, periodically updating the analysis to determine if risk factors have changed at the institution, will allow BSA officers to proactively modify thresholds for filtering suspicious behavior. Some institutions refresh this analysis annually, but pick an interval or instance that makes sense for your institution, especially if new risk is being introduced in the form of new products, mergers or market segments.
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Doing Things the Right Way
recurring false hits are a fact of life. But should they be? Today, more advanced automated systems allow for individual customer-level monitoring at thresholds that make sense for that customer’s business. Monitoring against individual parameters is superior to exempting, because if that customer starts performing extremely out of the ordinary, that behavior can still be caught. Setting and forgetting an exception or variation to one account, and then never revisiting, is dangerous, because the account’s activity may change over time. Make sure the system is built to send reminders when individual parameters need to be reviewed.
Measure efficiency by tracking hits versus SARS filed It is important to track the alerts that actually become SARs, because it allows the BSA program to become more efficient. If you are able to present these ratios and show they are reasonable, you will give yourself, and your regulators, greater confidence in your program.
Track alert production over time
This goes hand-in-hand with tracking the ratios. It is critical to be aware of and document how many alerts are monitored as part of the BSA program over time, so you can be aware of changing trends. Do not set and forget parameters; constantly improve them by working to reduce the amount of false hits to which the program is exposed. Look for ways to reduce false positives while still monitoring the true hits.
Document your changes
ters Cen oin C e vic -Ser Self
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22 BANKING NEW ENGLAND
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Keep a detailed audit trail, so you can track when and why you make changes to your program. This way the bank, and the regulators, will know what is working at the institution and what isn’t. Working in BSA is about to get more difficult. Community banks still have the ability to keep watch over our neighborhoods. It won’t be easy, and financial institutions will need to continually arm themselves with knowledge and better tools, but it can be done. BNE
CRIMINAL ENTERPRISES CHALLENGE ACCEPTED
A Holistic Approach to Governance, Risk and Compliance Six Challenges and How to Solve Them
BY RAMANATHAN SRIKUMAR Ramanathan Srikumar is senior vice president and head of industry solutions group, banking and capital markets at MphasiS.
overnance, risk, and compliance (GRC) is a continuous process embedded in organizational culture. An organization’s approach to GRC governs how management identifies and protects against relevant risks, monitors and evaluates internal controls, and improves operations based on these insights. Banks and financial institutions operate under a highly regulated environment today and are required to pursue a broad range of governance, risk and compliance initiatives across RAMANATHAN the organization. The current SRIKUMAR regulatory environment and the increased focus on accountability is putting more pressure on financial institutions to develop proactive ways to manage risk across the entire organization. However, this can be a daunting task, as these initiatives are often uncoordinated and managed within silos, leading to higher costs of implementation and exposing banks and financial institutions to an overall business risk. GRC is increasingly becoming a strategic focus area for financial institutions worldwide. Since 2007, banks have spent more than $30 billion as part of their GRC initiatives to reduce costs, improve their products and services and stay competitive. To minimize risk and ensure effective governance, risk and compliance, banks and financial institutions must overcome the six challenges identified below. Embracing change – New regulations mean new trainings, new processes and a new learning curve for the entire organization. After the financial meltdown of 2008, stringent regulations were put into place to prevent a similar debacle from happening again. Many new regulations were drafted and put into effect, changing the way organizations operate. However, most organizations did not have a framework in place to guide them through the changing regulatory environment and drive the adoption of new practices amongst employees, leading to chaos. The first step toward a successful GRC implementation is to overcome the organization’s natural resistance to change that is induced by new regulations. Developing a framework that takes implementation of global regulations into account can prepare the organizations to comply with new regulations more effectively.
Understanding the legal implications accurately – One of the biggest challenges for a bank or financial institution is to interpret the regulation accurately and understand its implications to avoid any penalties that may arise from not complying. Incorrect interpretations can be costly and lead to reputational damage. Understanding and addressing the issues of compliance requires monitoring the changing shape of regulations on a continuing basis, even as they develop in draft form to be prepared for when these new regulations come into effect. Being aware of global regulations – Unlike in the past, banks and financial institutions today must be aware of the regulatory changes taking place globally. For example, new regulation such as the Foreign Account Tax Control Act, can impact a U.S. bank with trading blocs in other parts of the world. This is especially true for one of the 29 Systemically Important Financial Institutions (SIFIs) that have global presence and operate worldwide. In another instance, having a deep understanding of Basel III recommendations, or the Dodd-Frank Wall Street Reform and Consumer Protection Act that governs the U.S. banks) can help organizations develop proactive ways to manage compliance requirements for regulations derived out of these acts, thereby enhancing security across the entire organization. Getting ready for technology – Being able to service the financial risk and regulation driven compliance requirements from an IT perspective is crucial. Organizations must conduct a thorough analysis to get the various departments reorganized for the new regulation. For example, developing a transformation roadmap and planning and budgeting ahead can ease some of the IT challenges associated with risk and compliance. Also, developing integrated GRC technology solutions can streamline individual compliance initiatives and significantly reduce the cost of compliance. Reporting data from multitude data sets – Similar to other industries, financial institutions are also struggling with the problem of data deluge. Data generated from disparate sources can yield contradictory results. Financial institutions must ensure that all the relevant data from various parts of the organization is available in a complete and comprehensive shape to support analytics, reporting and business rules and decision-making. Data integrity and ability to aggregate data from
Continued on page 30
BANKING NEW ENGLAND
CRIMINAL ENTERPRISES DIFFERENT VIEWS
Capuano Talks Shutdown, Banking Regulations at Bank Summit Panel Notes Community Banks are Vital to Local Businesses, Residents
BY LAURA ALIX Laura Alix is a staff writer for The Warren Group, publisher of Banking New England. She may be reached at email@example.com.
24 BANKING NEW ENGLAND
Keynote speaker U.S. Rep. Michael Capuano indicted political zealots and a largely “checked out” American public were partially responsible for the current shutdown in Washington, and urged a return to compromise, at the senior management luncheon at The Bank Summit, hosted by The Warren Group, publisher of Banking New England. “The word compromise has become a dirty word,” Capuano told the crowd on Oct. 7 in Framingham, Mass. “You’ve got to talk to each other and try to find common ground. You’ve got to not hate each other for having different views.” Capuano pulled no punches during his remarks, fully aware that many in his audience would disagree with him on subjects like health care, the shutdown, the re-opening of national parks and increasing regulation of the banking industry. He even invited his audience and constituents to argue with him, but urged bankers to be more specific in their complaints and not simply gripe about regulatory burden. “The country has become obsessed with regulating minutiae. For a country that was once the home of free markets, we’re now the most regulated in the world,” one audience member said to Capuano. “First of all, this country has never had a free market,” Capuano replied, before asserting that regulations “have to be more detailed because your business has become more detailed.” “Details matter,” he said. Questioned on the subject of credit union taxation, Capuano echoed a popular refrain among the banking industry, saying that smaller, more traditional credit unions should retain their tax-exempt status, but the handful of larger credit unions that are essentially competing with banks ought to be taxed and regulated as banks are. But the government shutdown dominated the focus of Capuano’s remarks. He did not blame the Tea Party – which Capuano credited for organizing, electing its leaders and doing exactly what it set out to do: shut down the government – but rather the majority of Americans who did not bother to turn out and vote. “The American public is checked out,” he said. “It’s because you’re too lazy. It’s because you don’t care. It’s because you prefer to complain … More of you don’t participate than [do] participate.”
And Capuano said that although he didn’t agree with 100 percent of the Affordable Care Act, he had voted for it anyway because he believed it would do more good than harm. It would take time to work out the kinks, he said, but democracy is not meant to work overnight. “The system is rigged intentionally by the founders not to move too quickly,” he said. Replying to an audience member’s question about whether he would vote for a bill to re-open national parks during the shutdown, Capuano reiterated his support for social programs and said that voting for such a bill would be tantamount to capitulating to Republican demands. “The world won’t come to an end if somebody can’t get into a national park tomorrow,” he said. “But it will come to an end for some families if they can’t get affordable housing.”
Panel: Banks Vital Part of Community
Community banks are the cornerstone of any close-knit community – that was the consensus at a general session that kicked off the recent Bank Summit conference. Wolf & Co.’s Jerry Gagne moderated a panel that included small-town community bankers, a state representative, and a local businessman, who came together to discuss community banks’ many roles in the towns they serve, along with the challenges they face in the years ahead. Mass. State Rep. Carolyn Dykema kicked off the session by recalling a tale she heard at a recent senior citizens’ forum in one of her towns. An elderly woman had received a phone call from a man claiming to be her grandson. The caller claimed he was in Mexico and had gotten into trouble. He needed her to wire him some money, but it was important she not tell his parents, as he was not supposed to be in Mexico, Dykema said. It was an intrepid community banker who spotted the scam and was able to stop the fraud attempt in its tracks, Dykema said. It is local community banks, she added, who are making loans to small businesses, supporting philanthropic efforts in their hometowns, and generally acting as “friendly faces in an environment of online everything.” Paul Scully, president and chief executive
“The world won’t come to an end if somebody can’t get into a national park tomorrow … But it will come to an end for some families if they can’t get affordable housing.” U.S. Rep. Michael Capuano
officer of the Leicester, Mass.-based Country Bank for Savings, shared a story from early in his days at the bank, when a young woman approached him at a local event to tell him that the bank’s scholarship had enabled her to go on to college and build a better
life for herself and her family. Jim Loer, the treasurer at Walpole Woodworkers, discussed the difference between dealing with a megabank and dealing with a community bank as a businessman. The former, he said, feels a little bit like trying to talk to the giants in The Wizard of Oz. At a community bank, he said, you can get to know the executives approving your loan. And the panel discussed the challenges ahead for community banks: chiefly, maintaining that small-town feel while adopting the newest digital offerings. Scully said his bank has lately struggled with the question of whether it is a “big-little bank or a little-big bank,” while maintaining its presence on Main Street. And Janice Mazzallo, senior vice president of human resources at Holyoke-headquartered PeoplesBank, discussed her bank’s efforts to periodically reach out to their customers and gauge their satisfaction through surveys. She said the bank has also updated its core competencies for new hires, prioritizing a keen understanding of technology and social media. To much agreement, Loer added, “You can’t lose sight of that personal touch.” BNE
BANKING NEW ENGLAND
Career achievers in banks across New England are constantly on the move, with their professional journeys reflecting a combination of mobility and longstanding service. We acknowledge them, and welcome readers to submit news of their own staff.
Featured Banks • Bank Newport • Bay State Savings Bank • Berkshire Bank • Bristol County Savings Bank • Centrix Bank • Lake Sunapee Bank • Optima Bank & Trust • South Shore Bank • TD Bank • United Bank
Appointments and Elections Bay State Savings Bank Bay State Savings Bank has appointed Lucas J. Miller as vice president and compliance officer and William L. Martin as vice president of commercial lending at its Worcester headquarters. Miller is Lucas J. Miller a licensed attorney in Massachusetts and New York. Previously, he served as director of compliance and grants for the Neighborhood Assistance Corporation of America (NACA) in Boston and as compliance officer with William L. Martin Prime Financial Inc. in Southborough. Martin has more than 20 years of lending experience in the financial industry, most recently as vice president and commercial account manager at TD Bank in Worcester. He is a member of the Shrewsbury Small Business Referral Group; Worcester Board of Realtors: Commercial Alliance of Realtors Referral Group; and a co-founder of Commercial Business Referral Group with Shepherd and Goldstein, LLP.
Berkshire Bank Berkshire Hills Bancorp, parent of Mass.based Berkshire Bank, has appointed George Bacigalupo executive vice president of commercial banking, responsible for business banking, including George Bacigalupo the asset-based lending and leasing business lines. Bacigalupo joined Berkshire in 2011 as senior vice president and chief credit officer, and has more than 30 years of lending and commercial banking experience. Michael Carroll Berkshire Hills also appointed Michael Carroll to chief credit officer, where he will be responsible for the
26 BANKING NEW ENGLAND
company’s credit underwriting and approval processes. He has more than 25 years’ experience in commercial and credit roles in banking, serving New York’s Capital Region.
OceanPoint Financial Partners/ BankNewport Rhode Island-based OceanPoint Financial Partners, MHC has announced the appointments of Timothy P. Burns and Colin P. Kane to its board of trustees, as well as to the board of Timothy P. Burns directors of its subsidiary BankNewport. Burns is co-founder, CEO and president of BioProcess H2O and BioProcess Algae LLC, based in Portsmouth, Rhode Island. Prior to founding BioProcess in Colin P. Kane 2008, Burns spent 24 years in the environmental industry. He serves on the boards of directors of BioProcess H2O and BioProcess Algae. He also serves as vice chairman of the nonprofit board of the Algae Biomass Organization of Minneapolis, Minn., and on the President’s Leadership Council for Save the Bay. He is a trustee of St. George’s School in Middletown. Kane is a founding partner of Peregrine Group LLC, a real estate development and third-party advisory firm, founded in 2001, with offices in East Providence, Rhode Island and Boston, Mass. He is lead partner for project transactional activities, project planning, asset acquisition, leasing, financial analysis, permitting/due diligence, and debt/equity capitalization. Prior to founding Peregrine, Kane worked for Gilbane Properties. Previously he was a naval officer serving as flag lieutenant and division officer stationed aboard the guided missile destroyer USS Kidd. He serves on the board of directors of St. Andrews School and Justice Assistance, the Providence College President’s Council, and is admiral of the Rhode Island Commodores. He is also the formational chairman of the Interstate-195 Redevelopment Commission.
New Arrivals Bristol County Savings Bank
Taunton, Mass.-based Bristol County Savings Bank has named Vivian Banville and Rita Braga to the position of branch manager at two of the bank’s New Bedford offices. Prior to their most recent appointment, they both served as branch managers for Admirals Bank before the offices were purchased by Bristol County Savings Bank. Previously, Banville held Vivian Banville the position of assistant branch manager with Millennium Bank at its Fall River locations and Braga worked as a branch manager for Millennium Bank at its Fall River and New Bedford locations.
Lake Sunapee Bank
New Hampshire-based Lake Sunapee Bank has hired Meghan Wilkie as vice president and commercial loan officer. She holds an MBA from the University of New Hampshire and has more than 10 years of professional banking experience, most recently serving as vice president and commercial lender at TD Bank in Concord, N.H. She is currently a member Meghan Wilkie of the Granite State United Way Allocations Committee and the Leadership Greater Concord Program, which fosters civic awareness in the community.
Optima Bank & Trust
Catherine R. Dawson
Catherine R. Dawson has been named the assistant branch manager at Optima Bank & Trust’s new full-service branch at the Pease International Tradeport in Pease, N.H. She has more than 30 years of experience in retail banking and management. Robert Tucker has joined the bank as its senior network engineer. Tucker has more than 20 years of experience with information technology. Shelley-Ann A. Cullen has been hired as a commercial loan assistant at the bank’s Portsmouth headquarters. Cullen has 25 years of experience in the banking industry.
Shelley-Ann A. Cullen
South Shore Bank
James Luongo has joined South Shore Bank as manager of its branch at 295 Washington Street in Weymouth. He comes to South Shore Bank with 23 years of financial services experience, most recently as a branch manager at Citizens Bank. He previously worked for Bank of America’s Global Wealth Management servicing high net worth clients, and has extensive experience in Sales and Client Development for Wells Fargo and HSBC.
TD Bank has named Jennifer Riley Vega as manager of the bank’s 6 North St. location in Houlton, Maine. She is responsible for new business development, consumer and business lending, managing personnel and overseeing the day-to-day operations at the store serving customers throughout the area. Vega is new to the banking industry. She most recently served as a math and gifted and talented teacher at Houlton Southside School in RSU #29 in Houlton.
Promotions Centrix Bank
New Hampshire-based Centrix Bank has promoted Debora Dunbar to assistant vice president and internal controls officer of the bank’s risk management department. She oversees the productivity, efficiency and overall effectiveness of the bank’s consumer regulatory compliance efforts. Dunbar has been with Centrix Bank since August 2010 and has more Debora Dunbar than 35 years of experience in the banking industry, with over 15 years in supporting enterprise risk management initiatives. Jimmie Ray Denwiddie Jr. was promoted to assistant vice president and loan servicing officer. He joined the bank in 2007. Denwiddie will be responsible for managing all daily commercial and consumer loan servicingrelated functions along with providing Jimmie Ray leadership on key departmental projects for his Denwiddie Jr. department. Denwiddie has more than 10 years of experience in loan servicing within the banking industry
Candace A. Pereira
Candace A. Pereira has been promoted to commercial lending officer at Western Mass.based United Bank. She joined the bank in 2005, has over 10 years of banking experience, and served most recently as senior credit analyst following earlier positions with the bank as senior commercial loan associate and mortgage representative. BNE
SEND US YOUR PERSONNEL NEWS Does your financial institution have individuals who deserve recognition as they celebrate a career milestone? If you’d like to see them recognized in Banking New England, please send press releases and accompanying photos to: Christina P. O’Neill, custom publications editor, via email at firstname.lastname@example.org. NOTE: Photos should be in color, jpeg format, file size no smaller than 400 KB.
BANKING NEW ENGLAND
COMMUNITYGOOD GOODWORKS WORKS COMMUNITY
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. For submission information, see page 29.
Featured Banks • Bay State Savings Bank • Bristol County Savings Bank • Citizens Bank • Commerce Bank • Eastern Bank • First Colebrook Bank • Marlborough Savings Bank
Bay State Savings Bank
Jerry Sargent, president of Citizens Bank Massachusetts, and John Jacobs, chief creative optimist and co-founder of Life is Good, enjoy the festivities at the fourth annual Life is Good Festival in September in Canton, Mass. Citizens Bank was as the festival’s exclusive financial banking services sponsor, as well as the sole sponsor of the Good Citizenship Volunteer Program, which enabled more than 2,000 volunteers to bring the festival to life by helping out with the event’s production.
Diane Giampa, senior vice president of human resources and marketing, Bay State Savings Bank (left), and Janelle Wilson, executive director, Jeremiah’s Inn, with the donations collected at the Bank’s Franklin Street branch. Bay State Savings Bank conducted a successful month-long food drive to benefit Jeremiah’s Inn, a 30-bed social model residential recovery program for adult homeless men in Worcester, Mass. Jeremiah’s Inn also operates a food pantry that provides emergency assistance to local individuals and families in need. Collection boxes resided in all branch lobbies to receive food and sundry donations during the drive.
Bristol County Savings Bank
Staff from BCSB and the Buttonwood Park Zoological Society. Bristol County Savings Bank, through the Bristol County Savings Charitable Foundation, presented grants to 23 area organizations, totaling $185,000: Boys & Girls Club of Fall River ($10,000), Saint Vincent’s Home ($10,000); Southern Massachusetts SER-Jobs for Progress, Inc. ($2,500); the Boys & Girls Club of Taunton ($10,000); Community Care Services, a division of Justice Resource Institute, Inc. ($10,000); Executive Service Corps of New England ($10,000); Girl Scouts of Eastern Massachusetts ($2,500); the Katie Brown Educational Program, Inc. ($7,500); and Taunton Area School to Career, Inc. ($10,000); Abundant Hope Pregnancy Resource Center, Inc. ($2,000); Community VNA ($3,500); the Kennedy-Donovan Center, Inc. ($5,000); Markman Children’s Programs, Inc. ($1,000); Mass Audubon’s Oak Knoll Wildlife Sanctuary ($2,500); Newman YMCA ($5,000); and Old Colony Habitat for Humanity ($5,000); Our Sisters’ School, Inc. ($10,000), Dennison Memorial Community Center ($5,000); the Women’s Fund of Southeastern Massachusetts ($4,500); Buttonwood Park Zoological Society ($4,000); Girl Scouts of Eastern Massachusetts ($2,000); AHA! New Bedford ($2,000); and Catholic Social Services ($20,000 annually over the next three years). 28 BANKING NEW ENGLAND
to Project Homebound in Lancaster, N.H., and Helping Hands North Inc. in Colebrook, N.H.
Marlborough Savings Bank
Marlborough Savings Bank made a special donation of $125,000 to the new UMass Memorial Cancer Center at Marlborough Hospital. The new UMass Memorial Cancer Center at Marlborough Hospital is 14,500 square feet, is attached to the north side of the existing hospital at 157 Union St., and houses medical oncology and radiation oncology services, along with a team of skilled cancer specialists. There is also a special meditative garden space which has been purposely designed to help relax patients and to aid in the healing process. BNE
Commerce Bank Senior Vice President Michael Roy, senior vice president, Commerce Bank, and Jill Dagilis, executive director, WCAC, with some of the collected donations. Employees at Commerce Bank’s main office in Worcester, Mass., recently donated 51 coats to the Worcester Community Action Council’s annual new coat drive, which collects new coats, hats, and mittens for over 325 children from low-income families.
Eastern Bank has honored John Cox and Jennifer True with the bank’s 2013 Community Advocacy Award, for their efforts in the area of workforce development training. Cox is president of Cape Cod Community College, and True is director of the school’s Workforce Education Resource Center (WERC). The WERC at Cape Cod Community College is the region’s premier training resource provider for local businesses and organizations on Cape Cod. It provides education and training for professionals to help them advance their careers and become more marketable to local businesses. WERC also helps local employers by creating customized training for their organizations. The 2013 Community Advocacy Award is decided by a select group of Eastern Bank executives.
First Colebrook Bank
First Colebrook Bank announced donations to local charities in honor of the service of Executive Councilor Ray Burton. “Upon hearing that Burton would not be seeking re-election, we felt compelled to do something to thank him for his service,” said John Pratt, executive vice president at First Colebrook Bank. “What better way to honor his commitment to the people of New Hampshire than to donate to charities that help the less fortunate.” Burton recently announced his retirement from a distinguished career. First Colebrook Bank will be donating
SEND US YOUR GOOD NEWS! Does your bank have news of its community support activities? Whether it’s a cash donation, a financial literacy initiative, a nonprofit organization volunteer day or another creative outreach, we’d like to recognize it in Banking New England. Please send press releases and accompanying photos to: Christina P. O’Neill, custom publications editor, via email at email@example.com.
BANKING NEW ENGLAND
IN CASE YOU MISSED IT
Featured Banks • BankNewport • Citizens Bank • Lake Sunapee Bank • Randolph National Bank • Washington Trust
BankNewport and Randolph Savings Bank have entered into a definitive agreement for the purchase and sale of two branch offices. Under the agreement, BankNewport will acquire two Rhode Island branch locations and assume the related deposit relationships from Randolph Savings Bank, a state-chartered bank headquartered in Stoughton, Mass. The branch locations being acquired are located in Coventry and Cranston, RI. As of Sept. 30, 2013, total deposits at these two locations totaled approximately $39.2 million. Employees of the two branches will become BankNewport employees. Randolph Savings Bank President and CEO Jim McDonough said the two branches to be transferred are located in areas in which Randolph Savings does not have a strong branch presence in an adjacent or nearby market. Sandra J. Pattie, president and CEO of BankNewport, said that the acquisition gives BankNewport entry into Providence County, described as the state’s most populous and highest growth market, and the addition of further scale in Kent County. Following the completion of this transaction, BankNewport will have total deposits of $1 billion and 15 branches in Providence, Kent, Washington, Bristol and Newport counties in Rhode Island. The transaction is expected to close in the first quarter of 2014.
The Royal Bank of Scotland will accelerate its sale of Citizens Bank so it can direct more focus on lending to British households and build up more capital. RBS has planned a partial initial public offering (IPO) for next year and has said it will sell off 20 to 25 percent of Citizens by the end of 2014. It intends to fully divest its U.S. subsidiary by the end of 2016. According to a recent report, RBS is rumored to name Morgan Stanley as the lead underwriter on the IPO. RBS has been under pressure from British regulators to sell off its non-core assets and bolster its capital levels. The bank has also announced its intentions to
A Holistic Approach Continued from page 23
different systems in a consistent manner is also a key challenge. Once GRC measures are implemented, it is important to review policies and best practices on a regular basis to ensure that polices are updated as
30 BANKING NEW ENGLAND
create an internal “bad bank” in order to fence off its riskiest assets and plans to remove between 55 and 70 percent of those assets over the next two years. RBS is 82 percent owned by British taxpayers and was saved from collapse in 2008 with a $68 billion government bailout. RBS has owned the Providenceheadquartered Citizens Bank since 1988. At $118 billion in assets, Citizens is the second largest bank in Massachusetts and has about 1,400 branches across 12 states. Analysts have placed Citizens’ value between $9 billion and $15 billion.
Lake Sunapee Bank/ Randolph National Bank
Lake Sunapee Bank of Newport, NH, complete its acquisition of Randolph National Bank in Vermont in late October, expanding on Sunapee Bank’s presence throughout the Central Vermont Region to a network of 37 banking locations throughout Vermont and New Hampshire. In addition to its banking locations, Lake Sunapee operates three offices of McCrillis & Eldredge Insurance, Co. and six Charter Trust Company offices. Randolph National Bank has a long history of serving its communities for over 130 years, with eight branches located in Randolph, Rochester, Royalton, South Royalton, Williamstown and Quechee, Vermont.
Rhode Island-based Washington Trust’s Commercial Real Estate Group recently provided financing to Foundry ALCO Members LLC for its $19.05 million acquisition of the five-building American Locomotive (ALCO) Complex at 68 Hemlock and 51 Valley streets in Providence. The brick ALCO buildings, originally constructed as a locomotive factory in 1901, are located on 11.8 acres in the Promenade District of downtown, Providence. The 200,000-square-foot commercial property was redeveloped into an office complex in 20062009 and is now 70 percent leased with a mix of tenants, including law firms, an engineering company, and the Rhode Island Economic Development Corporation. BNE
regulations evolve and the compliance teams can plan and track compliance to the new regulations. Ultimately, moving to a unified GRC framework with an integration of business side compliance and IT compliance is the key to a successful GRC implementation. BNE
BUILDING PERMITS | PROVIDED BY THE WARREN GROUP
BUILDING PERMIT DATABASE
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Learn more about how our new building permit database can help your business by calling 617-896-5392 or emailing firstname.lastname@example.org.