Transactions| June 2012

June 2012

Senator

Pat Toomey

Former Community Banker Marketing SOCIAL MEDIA OPTIONS Page 10

Member Profile JONESTOWN BANK & TRUST CO. Page 12

Technology ELECTRONIC WALLETS Page 34

UPCOMING EDUCATION EVENTS

Plan your training for this year with our variety of educational seminars and conferences.

Registration is easy and just a click away at pacb.org.

AUGUST • 2012

SEPTEMBER • 2012 (CONT)

OCTOBER • 2012 (CONT)

SEPTEMBER • 2012

ALM Seminar September 27, 2012 DoubleTree Monroeville - Monroeville, PA

Marketing Conference October 17-18, 2012 Hilton Garden Inn - Hershey, PA

OCTOBER • 2012

NOVEMBER • 2012

135th Annual Convention August 17-20, 2012 Vail Marriott Resort & Spa - Vail, CO

Compliance Seminar September 18, 2012 PACB Headquarters - Harrisburg, PA Audit Seminar September 20, 2012 PACB Headquarters - Harrisburg, PA 2 | Transactions | www.pacb.org

Compliance Seminar September 26, 2012 DoubleTree Monroeville - Monroeville, PA

ALM Seminar October 3, 2012 PACB Headquarters - Harrisburg, PA

Tech Conference October 10, 2012 PACB Headquarters - Harrisburg, PA

Directors College November 1, 2012 Doubletree Monroeville - Monroeville, PA

www.pacb.org | Transactions | 3

Contents June 2012

FEATURE ARTICLES 10 Why is Social Media Important for Your Community Bank?

In today’s society, all businesses need to have a strong social media presence - community banks are no exception. An overview of some of the best social media options for you and your bank.

12 Bank on a Smile. The Re-Branding of Jonestown Bank & Trust Co. The steps that JBT has taken in order to further establish themselves in a “big bank” world. Proving the statistics wrong, JBT is growing and they attribute it to an idea they had back in 2007.

18 The Six Principles of Financial Transactions A guide to helping you assess a complete customer relationship. Purpose, people, performance, payment, prospects, and the practical application of these principles.

22 Community Banker Turned United States Senator: A Discussion With Senator Pat Toomey As a former community banker, Senator Toomey knows the struggles of the industry. A look at the views of one of Pennsylvania’s United States Senators.

32 Automobile Dealership Financing: A Costly Trap for the Unwary GMAC made a $4 million dollar mistake. How did this happen and how can automobile dealerships ensure that they do not make the same error?

34 Previews of Coming Attractions: Electronic Wallets Are credit cards on their way out? Companies like Google and Apple seem to think so. Why simply carrying your cell phone with you could replace your wallet.

38 The Great Debate: Automated vs. Manual Penetration Testing Your bank’s options in keeping up with the regulatory requirements to assess your network security.

ADVERTISERS 09 17 17 33 36 41 41

S.R. Snodgrass Bachleda Advertising Stradley Ronon Shazam Shumaker Williams, P.C. AAS Debt Recovery ParenteBeard 4 | Transactions | www.pacb.org

ON THE COVER

Senator Pat Toomey sits down with PACB’s President/CEO Nick DiFrancesco to discuss the state of the economy, community banking, family life, and more.

www.pacb.org | Transactions | 5

Find ! k n Fra START HAVING SOME FUN WITH PACB’S MONTHLY PUBLICATION! Find Frank offers a way to get rewarded for reading Transactions’ important articles every month. Somewhere on these following pages, a Frank A. Pinto bobble head is hidden. Want to play?

Here’s what you do: 1. Find Frank 2. Have a bank representative post on the PACB Facebook wall the exact location (page number & exact location) www.facebook.com/PACommunityBanks 3. Make sure your entry has a contact name & email 4. Submit!

THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS

Pennsylvania’s Community Banks. For people and their neighborhoods.

is published monthly by the Pennsylvania Association of Community Bankers 2405 North Front Street, P.O. Box 5319, Harrisburg, PA 17110-5319 BUSINESS HOURS: 8:30 a.m. - 5:00 p.m. M-F Telephone: (717) 231-7447 www.pacb.org

PACB STAFF: Dominic D. DiFrancesco, nick@pacb.org - President/CEO Saundra J. Cunningham, saundra@pacb.org - VP–Education Services Shirley A. Regan, sar@pacb.org - Comptroller/Office Manager Patricia Kuharic, patty@pacb.org - Administrative Assistant Eric A. Kovac, eric@pacb.org - Publications Manager Natalie S. Bombatch, natalie@pacb.org - Publications Manager Kaylin E. Kirk, kaylin@pacb.org - Publications Intern

2011-2012 PACB LEADERSHIP EXECUTIVE COMMITTEE Chairperson - Chuck Leyh President/CEO, Enterprise Bank Chairperson Elect - Ronald B. Geib President/CEO, Harleysville Savings Bank Vice Chairperson - Dennis D. Cirucci President/CEO, Alliance Bank Secretary/Treasurer - Andrew W. Hasley President/CEO, Allegheny Valley Bank President/CEO - Dominic D. DiFrancesco Pennsylvania Association of Community Bankers Immediate Past Chairperson - Richard L. Meares President/CEO, Fleetwood Bank Ex-Officio/General Counsel - Keith A. Clark, Esq. Chairman, Shumaker Williams, P.C.

STANDING COMMITTEES: CHAIRS & VICE CHAIRS EDUCATION Diane McElwee, Bally Savings Bank Kevin Schmidt, Neffs National Bank FINANCE & BUDGET Frank S. DePaolo, Sharon Savings Bank FIRSTPAC George M. Evans, Indiana First Bank LEGAL Reginald Evans, Esq., Shumaker Williams, P.C. Angela L. Thomas, Esq., Latsha Davis Yohe & McKenna, P.C.

*PACB member banks only please.

CORRECTION: There was a typographical error in our May issue. On page 30, we have the name of one of the authors spelled wrong.

Her name is Jane G. Davis. Sorry, Jane!

6 | Transactions | www.pacb.org

LEGISLATIVE Timothy Zimmerman, Standard Bank Frank Godino, First Star Bank MEMBERSHIP Ted Peters, Bryn Mawr Trust Company Andrew W. Hasley, Allegheny Valley Bank STRATEGIC PLANNING David Hunsicker, New Tripoli Bank

PACB CHAIRMAN CHUCK LEYH

A WORD FROM PACB’S CHAIRMAN Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed luctus tincidunt arcu. Fusce sit amet quam quam. Nam ipsum libero, dignissim eu tincidunt ac, consequat ut ante. Nullam ut arcu ac odio porttitor congue. Maecenas ac urna enim. Mauris ut erat libero. Fusce turpis tortor, lobortis sed suscipit eget, feugiat ut eros. Sed in ligula ac lacus tincidunt tempor ac et tellus. Cras neque arcu, rhoncus vel sagittis eget, pulvinar et nibh. Suspendisse potenti. Nullam bibendum ultrices metus.

Sed at metus dui. Vivamus posuere blandit tempor.

Cras nulla libero, viverra sit amet adipiscing eget, commodo eu mauris. Quisque ullamcorper convallis viverra. In hac habitasse platea dictumst. Morbi fermentum diam eu lorem volutpat non aliquet augue molestie.

Integer eget dolor neque, non lacinia tellus. Phasellus a mauris et tellus venenatis gravida quis quis metus.

Morbi semper iaculis tempus. Donec dui lorem, fringilla ut rutrum in, pharetra vitae est. Cras viverra eleifend nisl, vitae cursus nibh interdum id. Sed sodales vestibulum facilisis. Phasellus vitae diam sapien, et placerat mi. Integer euismod metus eget magna semper non lobortis dolor vehicula.

In a sapien dui. In massa nunc, molestie eget cursus sit amet, sagittis et risus. Etiam consequat arcu a dolor laoreet rutrum. Vivamus dolor lacus, pharetra eu lobortis sit amet, aliquet vel ipsum. In euismod sapien interdum ipsum elementum ultrices. Nullam eu lectus nunc, sed tincidunt enim. Phasellus commodo eros non justo feugiat at vestibulum nulla congue. Proin nec justo a turpis imperdiet luctus at quis enim. Fusce velit risus, tincidunt eu pretium non, semper dapibus nisl.

Aliquam vitae purus libero, sit amet cursus arcu. Donec sit amet nisi at lorem vulputate dictum. Praesent sapien mi, tempus ac ullamcorper id, placerat ut risus.

Donec justo lectus, sodales quis interdum eget, luctus in ligula. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Quisque in laoreet dui. Sed sem nisi, ultricies vel malesuada non, porta sit amet lorem. In dignissim rhoncus dignissim.

Vestibulum erat ligula, dapibus sed luctus a, ullamcorper in turpis. Proin egestas lectus nec purus placerat quis vehicula justo commodo. Nam eu lectus at sapien sodales vehicula in eget elit. Proin tempor tellus nec metus consectetur rutrum. Nulla ut purus ac tortor gravida aliquam vitae at lorem.

Vivamus eleifend turpis sit amet lorem accumsan consectetur id sed purus. Nunc ultrices metus et diam eleifend non molestie nibh euismod. Praesent ornare, diam a consectetur sollicitudin, arcu velit rutrum velit, nec blandit ante mi sed felis. Proin quis elit ut lacus porta tempor quis eu est. Maecenas id justo lacus. Vivamus pulvinar enim sed mi eleifend commodo. Etiam eleifend pharetra libero vitae tempor. Sed auctor purus in eros lobortis pulvinar. Donec vel urna eu libero sagittis hendrerit nec quis sem. Sed a tellus odio, sit amet eleifend lorem.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.

Sed luctus tincidunt arcu. Fusce sit amet quam quam.

Nam ipsum libero, dignissim eu tincidunt ac, consequat ut ante. Nullam ut arcu ac odio porttitor congue.

Maecenas ac urna enim. Mauris ut erat libero. Fusce turpis tortor, lobortis sed suscipit eget, feugiat ut eros.

Sed in ligula ac lacus tincidunt tempor ac et tellus.

www.pacb.org | Transactions | 7

PRESIDENT/CEO NICK DIFRANCESCO

FROM THE PRESIDENT & CEO’S DESK Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed luctus tincidunt arcu. Fusce sit amet quam quam. Nam ipsum libero, dignissim eu tincidunt ac, consequat ut ante. Nullam ut arcu ac odio porttitor congue. Maecenas ac urna enim. Mauris ut erat libero.

Fusce turpis tortor, lobortis sed suscipit eget, feugiat ut eros. Sed in ligula ac lacus tincidunt tempor ac et tellus. Cras neque arcu, rhoncus vel sagittis eget, pulvinar et nibh. Suspendisse potenti. Nullam bibendum ultrices metus.

Sed at metus dui. Vivamus posuere blandit tempor.

Cras nulla libero, viverra sit amet adipiscing eget, commodo eu mauris. Quisque ullamcorper convallis viverra. In hac habitasse platea dictumst. Morbi fermentum diam eu lorem volutpat non aliquet augue molestie. Integer eget dolor neque, non lacinia tellus.

Phasellus a mauris et tellus venenatis gravida quis quis metus. Morbi semper iaculis tempus. Donec dui lorem, fringilla ut rutrum in, pharetra vitae est. Cras viverra eleifend nisl, vitae cursus nibh interdum id.

Sed sodales vestibulum facilisis. Phasellus vitae diam sapien, et placerat mi. Integer euismod metus eget magna semper non lobortis dolor vehicula.

In a sapien dui. In massa nunc, molestie eget cursus sit amet, sagittis et risus. Etiam consequat arcu a dolor laoreet rutrum. Vivamus dolor lacus, pharetra eu lobortis sit amet, aliquet vel ipsum. In euismod sapien interdum ipsum elementum ultrices. Nullam eu lectus nunc, sed tincidunt enim. Phasellus commodo eros non justo feugiat at vestibulum nulla congue.

Proin nec justo a turpis imperdiet luctus at quis enim.

Fusce velit risus, tincidunt eu pretium non, semper dapibus nisl.

Aliquam vitae purus libero, sit amet cursus arcu.

Donec sit amet nisi at lorem vulputate dictum. Praesent sapien mi, tempus ac ullamcorper id, placerat ut risus. Donec justo lectus, sodales quis interdum eget, luctus in ligula. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Quisque in laoreet dui. Sed sem nisi, ultricies vel malesuada non, porta sit amet lorem. In dignissim rhoncus dignissim. Vestibulum erat ligula, dapibus sed luctus a, ullamcorper in turpis. Proin egestas lectus nec purus placerat quis vehicula justo commodo. Nam eu lectus at sapien sodales vehicula in eget elit. Proin tempor tellus nec metus consectetur rutrum. Nulla ut purus ac tortor gravida aliquam vitae at lorem.

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Vivamus eleifend turpis sit amet lorem accumsan consectetur id sed purus. Nunc ultrices metus et diam eleifend non molestie nibh euismod. Praesent ornare, diam a consectetur sollicitudin, arcu velit rutrum velit, nec blandit ante mi sed felis.

Proin quis elit ut lacus porta tempor quis eu est.

Maecenas id justo lacus. Vivamus pulvinar enim sed mi eleifend commodo. Etiam eleifend pharetra libero vitae tempor. Sed auctor purus in eros lobortis pulvinar. Donec vel urna eu libero sagittis hendrerit nec quis sem. Sed a tellus odio, sit amet eleifend lorem.

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed luctus tincidunt arcu. Fusce sit amet quam quam. Nam ipsum libero, dignissim eu tincidunt ac, consequat ut ante. Nullam ut arcu ac odio porttitor congue. Maecenas ac urna enim. Mauris ut erat libero. Fusce turpis tortor, lobortis sed suscipit eget, feugiat ut eros. Sed in ligula ac lacus tincidunt tempor ac et tellus. Cras neque arcu, rhoncus vel sagittis eget, pulvinar et nibh. Suspendisse potenti. Nullam bibendum ultrices metus.

Sed at metus dui. Vivamus posuere blandit tempor. Cras nulla libero, viverra sit amet adipiscing eget, commodo eu mauris. Quisque ullamcorper convallis viverra. In hac habitasse platea dictumst.

Morbi fermentum diam eu lorem volutpat non aliquet augue molestie. Integer eget dolor neque, non lacinia tellus. Phasellus a mauris et tellus venenatis gravida quis quis metus. Morbi semper iaculis tempus. Donec dui lorem, fringilla ut rutrum in, pharetra vitae est. Cras viverra eleifend nisl, vitae cursus nibh interdum id. Sed sodales vestibulum facilisis.

Phasellus vitae diam sapien, et placerat mi. Integer euismod metus eget magna semper non lobortis dolor vehicula.

8 | Transactions | www.pacb.org

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WHY IS

SOCIAL MEDIA IMPORTANT FOR YOUR COMMUNITY BANK?

T

here is no question…the Internet is the fastest and most efficient way for a community bank to reach its customers. Because of this, having a strong social media presence should be at the top of your bank’s priority list. Ignoring social media is one of the biggest mistakes a business can make. Social media not only can help your bank communicate with current customers, they can help you build relationships with the rest of the community. Businesses now have a multitude of FREE social media outlets where they can share messages, events, ideas, and information with the community – all with instant feedback, giving you an excellent opportunity to gauge the reactions and determine the needs of both current and potential customers.

Obtaining a strong presence and large following on any social media platform should not just be about your bank.

Make sure that you are dividing the focus evenly between business and community. While it is completely acceptable (and encouraged) to promote your upcoming events and new programs through social media, you should also use it to promote one of your core values – giving back to and supporting the community. Posting about a local holiday fireworks show, little league game, town meeting, or any other community event will help to demonstrate your support and how much the community means to you, while solidifying just how much you mean to your community.

Maximizing your bank’s social media presence is by no means an easy task. It is not something that will happen overnight or maintain itself. It will take some time every single day to build and maintain strong online community support. Do not take this task lightly. Decide who will be 10 | Transactions | www.pacb.org

By: Eric Kovac in charge of your social media accounts and be sure that individual stays up-to-date with your community bank’s activities. Choose a person who is familiar with your business responsibilities and ideals. Remember that this person will be the voice of your community bank; what THEY say and post is what YOUR BANK says and posts for all to see.

Listed below are just five of the top social media platforms that are popular today. You’ll find information about each platform and how it can help your community bank succeed.

FACEBOOK Naturally, Facebook needs to top the list. There are currently more than 900 million members of the Facebook community, and this number is expected to reach 1 billion users this August. With that many users, most of whom are regular visitors to the site, there is no reason that your company should not have a presence on Facebook. A recent study conducted by comScore and cited by The Wall Street Journal shows that the average user spends nearly seven hours a month on the site, not including mobile usage.

Once your bank has created its Facebook Page, start creating a fan (or as Facebook refers to it, “Like”) following. As a company, you need to post to your page and interact with your clients regularly. Encourage your customers to visit your Facebook Page and “Like” your bank. This will ensure that they can keep abreast of current happenings and information. Though you may have many fans, do not be discouraged when a majority of those people do not interact with you on Facebook. While they may not be interacting, they are watching and reading – you are likely still getting your message across.

So now you have a strong presence on Facebook. What are the next steps to take to maximize your presence and drive business? 1) remember community first, business second.

2) don’t forget to drive traffic to your company website.

Include links to related pages on your website in most of your wall posts.

Facebook is easily the biggest way you can interact online with your customers and your local community. Don’t have a Facebook page for your community bank? What are you waiting for?!

LINKEDIN LinkedIn is more than just a personal resume website. It is a very powerful social media tool that can help your business grow. It allows you to connect with customers, employees, and colleagues on a professional level. On top of this, it also allows you to connect with their connections – what businesses like to refer to as generating leads.

Use these leads to gain new customers. Look at what you have in common with your new connections and use those traits to your benefit. Show your connections that you want to get to know them on a first name basis. This will make

While you use Facebook and Twitter to discuss your upcoming events and promotions, you should use Tumblr to give your community a recap. Use your bank’s blog to give an insight of the happenings at community events you attend (whether it is sponsored by you or not; remember the community comes first). Write about how great the event was and how much you enjoyed spending time with members of the community. Feel free to share pictures from the event, as well.

The best part about Tumblr? While you can create blog posts from your office or home computer, you don’t need to. You can post to your blog from anywhere via your tablet or smartphone. So why wait until after you return to work to write about it? Give instant, live feedback to your community directly from the event!

GOOGLE+ Though a relatively new social network, Google+ has already broken the 100 million registered users barrier. The platform allows businesses to create pages and interact with people on many different levels. On Google+, you create “Circles” – groups of people broken down by category – containing clients, friends, coworkers, colleagues, prospective clients, and anything else you can imagine.

Ignoring social media is one of the

BIGGEST MISTAKES A BUSINESS CAN MAKE them realize that, to you, they are a person, not just a face in the crowd. A great way to increase business at your community bank is to make your potential customers feel welcome!

Another positive aspect of LinkedIn is the ability to ask your connections to write reviews of their experiences at your bank. This gives your local community a chance to read not only what you have to say about your bank, but what your customers have to say about your bank, too. What better way is there to say that you are an important part of your community than by having the community do it for you?

TWITTER Get personal w/ your community w/ micro-blogging.

What’s going on locally 2night? Where r u going 4 lunch?

Remember: 140 characters or less!

TUMBLR. Reporting to have in excess of 10 billion blog posts and 30 million blogs, Tumblr has made its presence known in the social media world. Think of Tumblr as a marriage of Facebook and Twitter. The blogging platform is incredibly userfriendly. The ease of setting up and customizing your account is amazing and you will be publishing your first blog post within minutes.

Once you create your Circles, you can pick which ones you want to share certain information with. Those that are in the Circle you share with can then +1 (endorse) and comment on your post.

While some critics would argue that Google+ will never be able to succeed in a Facebook-dominated world, it is still worth a look. It is a great tool for your community bank to personalize interaction and communication with each of your Circles.

As you can see, a social media presence is an absolute must for any company – especially community banks.

While it may seem intimidating and time-consuming at first, the investment will yield great results in due time. Be active, be patient, and watch social media take your community bank to the next level!

If you need assistance in establishing your online social media presence, please don’t hesitate to contact me at eric@pacb.org or 717-231-7447.

www.pacb.org | Transactions | 11

BANK ON A SMILE.

速

THE RE-BRANDING OF JONESTOWN BANK & TRUST CO. By: Natalie Bombatch

JBT logo prior to 1999

JBT logo 1999-2006

JBT logo since rebranding in 2007

A

Lebanon County community bank has found success in differentiating themselves from “big banks” following a rebranding campaign. Jonestown Bank & Trust Co., or JBT as customers know it, underwent some changes in 2007. Troy Peters helped to initiate those changes in his prior role with the marketing department and continues to facilitate them now as Chief Executive Officer.

Peters said, “My goal as CEO is for my team, from top to bottom, to work hard to help our customers feel and be well cared for, and to know that their bank choice matters. I intend to keep the bank on a positive growth track, and make sure our shareholders continue to enjoy the performance results they expect.” It was with these goals in mind that Peters initiated JBT’s rebranding campaign.

REBRANDING While the prior logo was credible in a “traditional bank” sense, it lacked the friendliness that the bank knew their customers enjoyed when banking with them. Peters commented, “We are steeped in the heritage, but at the same time, we’re not just resting on that laurel. We’re looking ahead to where we’re going to go. We know we have to be proactive.” They revisited the colors, fonts, advertising message tone, and more, to convey more of who they really were… and continue to be today.

In conjunction with the bank’s ad agency, Bachleda Advertising, Peters determined the look and feel of the new brand.

Instead of a wordy name, Peters opted for the simplicity of the initials JBT. He said, “Part of our brand is simplicity. I think it cuts through the noise when you’re simple. And I wanted something that wasn’t the typical ‘big, serious bank’ but rather more ‘soft and approachable.’”

In addition, JBT conducted market research to discover what both customers and non-customers thought of the bank. “We kept hearing over and over, ‘It’s a nice place. People know your name. They smile at you.’” Those ideas spurred the creation of the smile that is a big part of JBT’s new logo. After the logo was chosen, the tagline “Bank on a Smile®.” came to fruition. The new tagline has multiple meanings – customers can count on smiles from bank employees, and bank employees count on making customers smile.

JBT’s new brand helps to reinforce the bank’s mission – to help people improve their financial life. They know they need to perform to remain independent and they go about reaching financial results by staying true to that mission. Peters elaborated, “If that’s as simple as getting them an ATM card so they can access funds when the bank’s closed or as complex as helping them with business expansion financing or complete estate planning, wherever it falls for them, that’s what we’ll do. They’ll return business to us and that’s how we’ll stay successful.” He added, “We all live in this www.pacb.org | Transactions | 13

community; I don’t want to go to church Sunday morning and have somebody say, ‘Why did you give my grandma a third checking account that she doesn’t need?’ We want to do it the right way.”

Peters explained, “Ephrata has been welcoming despite being across county lines. It’s our biggest step out, to date, but we believe locales like Ephrata share the same appreciation of doing business with ‘first name friendliness,’ and like to know that we take the time to know customers and understand how to help them move forward.”

It is with this rebranding campaign that JBT was, and still is, able to reinforce its position versus “big banks” as the leading community bank option. They are focused on Overall, JBT has seen new business since the rebranding. serving customers through attentive personal service, the The bank now services more than 21,000 households, an inlatest financial tools, and increased lifestyle convenience. crease from 17,000 households in 2008. According to Peters, “Customers that I interact with know that they can reach there has been more than a 3 to 4 percent growth per year in me anytime here or on my cell phone if they have an issue. households served.

I may not be able to solve it right away, but they can at least reach a decision maker.

The bank will continue to You can’t really do that at seek opportunities in more a big bank,” explained Pe- WE ARE STEEPED IN THE HERITAGE, BUT AT communities while staying ters. It is the bank’s level of THE SAME TIME, WE’RE NOT JUST RESTING true to their fundamentals. service and genuine dedi“There’s a good reason we ON THAT LAUREL. WE’RE LOOKING AHEAD have opened just 10 branch cation to customers that has helped differentiate locations in 139 years – we TO WHERE WE’RE GOING TO GO. JBT from “big banks.” move smartly and cautiously to ensure we minimize EXPANDING risk while maximizing value to both customers and shareholders,” said Peters.

Although JBT’s formal name is Jonestown Bank & Trust Co., the use of simple initials gave the bank the opportunity to One of JBT’s strategic goals is to become the market leader in expand without being tied to a specific location. Peters said, business banking. Peters elaborated, “We have already put “Many people outside of Lebanon County haven’t heard of into place an extensive commercial calling program that foJonestown. We knew if we were going to be more portable cuses not only on our existing business relationships, but also with the brand, it had to be something that didn’t identify carefully selected, high-value, prospects.” Last year JBT exus strictly with one town. JBT is working well for us as we panded the team in their Commercial Services department by reach out to serve more communities.”

50%, including adding a credit analyst and a new commercial lender. And their work is paying off. Earlier this year JBT’s JBT opened two branches in the past two and a half years, one commercial department exceeded $100 million in loan outin Palmyra and one in Ephrata. For a 139-year-old bank that standings, which is a 235 percent growth from five years ago. had only one branch until 38 years ago, opening two branches in two years is quite a fast expansion. The bank’s newest CULTURE branch in Ephrata has been performing well since opening in 2011. They have added 258 new banking households in the The culture at JBT is evolving with the rebranding. Peters befirst eight months and look forward to steady deposit and loan lieves the rebranding campaign has changed the way their growth as more Lancaster County residents get to know JBT. employees see the bank. He said, “We don’t have a lot of 14 | Transactions | www.pacb.org

www.pacb.org | Transactions | 15

turnover among employees. We have a reputation of being stable, conservative, and traditional. But that can also lead to being set in your ways and doing things without wanting to change.” That hasn’t been the case with JBT; rebranding efforts have strengthened the bond between employees at the bank and again differentiated them from “big banks.”

That bond was tested in October of 2011 when Tropical Storm Lee came through Lebanon County. Peters said the area was hit hard, “The amount of employees that came out to help us rebuild was astonishing. Employees that had flooding problems at home either took care of them quickly or put them on hold to come help at the bank. You really find out who has your back during a time of crisis like that.”

The storm left the Cleona operations center under 14 inches of water. Employees banded together to carry files up from the lower level and pin them up on clotheslines to dry. They pumped out more than 300 thousand gallons of water from the building. “To put that into perspective, I swim at the YMCA in a pool that holds 150 thousand gallons. So we removed the equivalent of two full-sized pools full of water from the Cleona building,” explained Peters.

Peters added, “People went above and beyond, using their personal vehicles to transport things, and they never complained.

To be able to find the good in that situation, I’d say first that we were able to dispose of a lot of unneeded items, and most importantly, we really pulled together to help each other out.”

It was especially amazing that despite all of the issues, aside from closing bank offices for one day, everything was seamless for their customers. Employees made sure to continue providing exceptional service during a time of crisis.

It’s not just during emergencies that the culture at JBT brings employees together; the bank is proud of the way

16 | Transactions | www.pacb.org

they reinvest in the communities they serve. “While the term ‘community bank’ does imply we are designed to serve the community, it doesn’t just happen. I encourage our management and staff to ‘walk the walk’ of supporting the community,” said Peters. The bank actively participates with Habitat for Humanity and other participation-based, community-enhancing initiatives.

Early in June, the entire Branch Management team served the “free noon meal” to more than 150 people at Lebanon Christian Ministries, just as they have for each of the past three years. Peters explained, “I couldn’t have paid for a better team building experience than that.” The culture within JBT definitely extends to community service. In fact, in 2011 the bank logged more than 900 hours of community service between their Board and employees.

It is with a rebranding campaign that JBT has realized the strength that comes in making changes while remaining dedicated to serving their customers and the community.

Now their logo, tagline, and overall brand match the community’s view of them: friendly, approachable, and helpful. The campaign has allowed them to grow and expand.

Peters’ goal is to continue to develop and change based upon community needs in order to remain a successful bank.

Does your bank have a story to tell as one of our monthly member profiles? If so, don’t hesitate to reach out to me at natalie@pacb.org or 717-231-7447.

Creative. Marketing. More.

ARE YOU AS STICK YAS YOU THINK? Don’t take customer loyalty for granted. Keep them here and smiling with a better full-brand experience. In fact, we count our own community bank marketing relationships in decades, not just years. To see why you should stick with our creative strategies, contact mike@bachleda.com or like us at www.facebook.com/BachledaAdv.

Partnering with Pennsylvania banks since 1926 For more than 80 years, Stradley Ronon has helped Pennsylvania banks build their businesses. With combined experience of more than 60 years in banking law, our practice group leaders head a group of 35 attorneys representing over 50 banks – helping them manage their legal challenges, so they can focus on running their institutions. www.stradley.com/banking

Philadelphia Malvern Harrisburg Cherry Hill Wilmington Washington, D.C.

(From left) Stradley Ronon Banking & Financial Services partners Linda Ann Galante, Valentino F. DiGiorgio III and Christopher S. Connell.

www.pacb.org | Transactions | 17

THE

SIX PRINCIPLES OF FINANCIAL TRANSACTIONS

By: Cheryl Anderson Senior Compliance Analyst Harland Financial Solutions

T

oday, more than ever, financial institutions need to assess customer relationships in their entirety, which includes both deposit and lending relationships. Much ado is made of the “Cs” of credit.

• Character (integrity) • Capacity (sufficient cashflow to service the obligation) • Capital (net worth) • Collateral (assets to secure the debt) • Conditions (of the borrower and overall economy)

While the Cs are tried and true pillars for credit underwriting, they are not particularly adapted to other lines of business like deposit origination. Financial institutions need to 18 | Transactions | www.pacb.org

look beyond business as usual and look at relationships in more comprehensive ways.

This article will discuss the Six Principles of Financial Transactions: Purpose, People, Performance, Payment, Protection, and Prospects. The Principles can be used to assess a complete customer relationship consisting of one or more transactions across multiple lines of business. Financial institutions are finding greater profitability in multi-product relationships and are looking for more ways to increase that share of wallet. Let’s review how we may apply these principals to help financial institutions reach these goals.

PURPOSE Purpose is the foundation of any transaction. For a loan

this would be the intended use of the borrowed funds. For a deposit account, it would be the intended deposit or service relationship and understanding their needs to manage their funds.

While purpose is typically known, and often required under bank secrecy, it is frequently overlooked for its importance.

Purpose sets the ground rules for process and dictates compliance requirements. If the purpose for your transaction is a home purchase loan, you know that you will be heading down the happy path of HMDA reporting, Good Faith Estimates as required under RESPA, disclosures for Truth in Lending, applicable state or other disclosures, all in addition to following your own lending policy for a mortgage loan. Only when purpose is known do the requirements start the clock ticking and next steps become apparent.

Purpose gives you opportunities to cross-sell in order to expand the relationship further. Take that home purchase loan. If this is a first-time home buyer, the obligor may need additional funds for appliances or furniture. Now might be the time to consider additional loans, and if not, time to plant the seeds for a future discussion when the obligor is ready.

Purpose determines if you need to involve other depart-

of information are needed. Is the party type a corporation, partnership, limited liability company, association, or other legal entity? If it is a business loan, you will typically identify the industry, age of the business, and number of employees. With a legal party you will also need to identify and understand the people controlling the party, often referred to as owners, managers, or officers. This will provide vital information on how that business runs in addition to giving you more opportunities to expand upon those relationships.

People is the identification and determination of who is the responsible party for the transaction.

PERFORMANCE Performance is the identification and analysis of the current condition and historic financial performance of your people and parties. Depending upon the purpose you may look at credit reports, overdraft history, or spread financial statements over a number of years.

The most common measure of past performance is credit score. It is a current snapshot of performance characteristics including payment history, amounts owed, length of credit history, recent activity, and credit mix. If you have an existing relationship, that history should be reviewed as well.

The Principles can be used to assess a

COMPLETE CUSTOMER RELATIONSHIP ments for additional expertise. Front-line representatives may need to call on others for information or direction for mortgages, individual retirement accounts, small business administration loans or other highly specialized products.

Finally, purpose will determine the data and depth of review for the other five principles. Some transactions will have a more in-depth review of the principles than others. Gathering purpose can be as simple as “how can I help you?” with the answer you are given a regulatory roadmap and opportunities as to how you can help your customer.

PEOPLE People (or parties) is the identification and understanding of the people or legal parties engaged in the transaction or relationship. This starts with the collection of demographics like name, date of birth, social security / tax identification number, and address. Identity authentication and verification, fraud checks, customer information profile, red flag reports, and OFAC checks are all part of this principle. Depending upon the initial purpose, you may also collect education level, length of employment, and home ownership status, among other relevant data.

If your customer is a legal party or business, other types

Performance provides a clear indicator in starting, continuing, or expanding a relationship. It provides a comfort level that the relationship will be mutually beneficial even if market conditions deteriorate. Risk of default or serial overdraft should be identified in performance review.

To quote Shakespeare “what’s past is prologue“. Performance answers the question “where have you been and how have you handled your financial responsibilities?”

PAYMENT Payment considers the terms of the transaction. For certain savings or certificates of deposit, it could mean the interest or dividend payment for your customer or for a business customer the fee structure for commercial accounts.

More critically for loans, it means the ability to repay at the specified terms.

Characteristics reviewed for payment of consumer loans may include monthly income, current debt to income, proposed debt to income, and debt to income at maximum payment level. Mortgage lenders look at these front-end and back-end ratios to determine the level of your debt. Additional consideration needs to be given to how any balloon payment would be met. www.pacb.org | Transactions | 19

For business loans you would look at liquidity ratios to measure quality and adequacy of assets. Debt coverage ratios help to measure ability to service debt and leverage ratios provide guidance on debt vulnerability. Ratio assessment can vary greatly depending upon a particular industry. The use of industry or historical benchmarks, like the Risk Management Association Annual Statement Studies Financial Ratio Benchmarks Data, can be put to use for peer analysis, or measuring the probability of repayment.

Payment is a picture of investment and repayment.

PROTECTION

people, performance, payment, and protection will help determine if this will be mutually profitable, lasting relationship.

Prospects poses the question “can we have a successful relationship?”

PRACTICAL APPLICATION OF THE PRINCIPLES The principles are intended to guide any financial institution with relationship building. They will often blend with one another and can sometimes be interchanged with the Cs of Credit. For instance, people will pair with performance for a lender to review the Cs of Credit principle of character.

Protection identifies what can be relied upon to protect Some characteristics can be your financial institution associated with more than or your customer. For a deposit, this could easily THE BIGGEST BENEFIT OF THE PRINCIPLES one principle. For instance, review of current accounts mean an overdraft protecIS THEIR USE FOR MAINTENANCE AND TO awith your customer will be tion program, deposit indone with people, perforsurance, or security proREVIEW ONGOING RELATIONSHIPS. mance, and prospects. The cesses to keep their deposit principles are not intended safe from fraud. Ability to as hard and fast rules; they are intended to be used together quickly move funds for business customers through ACH, to help you with an overall picture of your relationship. wire transfers or sweep accounts to protect quickly changing market needs.

The biggest benefit of the principles is their use for maintenance and to review ongoing relationships. The princiProtection is more often that extra security taken to make ples can be used to assess, initiate, increase, and maintain sure a loan will be repaid in a worst case scenario. Collata mutually profitable relationship. There are numerous eral, and level of security interest perfection, is the most recognized form of protection. The age and value of the tools available on the market that will help with the application of one or more of the principles and tie them all collateral, with the down payment are taken into account. together. Bankers need to look to providers who underRecourse obligors (guarantors) can be another backup plan stand client relationships, financial management, lending for repayment. Each guarantor will need to be reviewed for each principle before deciding if this person or party is origination, deposit origination, risk management, compliance management, busiup to the task to add protection to the loans. Lastly, certain ness intelligence and how all forms of insurance are a form of protection to ensure repayment upon borrower death, unemployment, collateral this ties into the principles of financial transactions. damage, or foreclosure.

Protection is your backup plan for a worst case scenario.

PROSPECTS Prospects is an assessment about the future. What are the prospects for this customer, this business, this transaction, or this relationship? You will look at any existing relationship this customer has with your institution and estimate your combined relationship going forward.

For a student opening a first checking account for college, your prospects could be a lifetime relationship. If you are looking at a loan to a business party, you need to determine the prospects for that business including expansion, or even, the very survival of that business. What is the business environment that your obligor exists in? If this is the proverbial buggy whip manufacturer during the automobile revolution, prospects may not be so good.

Prospects, together with the other five principles of purpose, 20 | Transactions | www.pacb.org

Cheryl Anderson is a senior compliance analyst with the Harland Financial Solutions compliance legal department. She has more than 20 years of banking experience and has been with Harland Financial Solutions for 12 years. Cheryl is trained and experienced in procedure and documentation issues facing today’s banking industry. She is a certified regulatory compliance manager with the Institute of Certified Bankers and is well versed in Federal Regulatory issues, as well as compliance intricacies introduced by individual states. Her experience includes six years with FDIC in settlement of insured and non-insured deposits, coordination of bank closing sites, due diligence review, asset liquidation and collection.

VAIL, COLORADO:

EDUCATION & SO MUCH M O R E .

JOIN US FOR PACB’S 135TH ANNUAL CONVENTION. CONTACT SAUNDRA J. CUNNINGHAM AT 717-231-7447 OR SAUNDRA@PACB.ORG TO RESERVE YOUR SPOT!

www.pacb.org | Transactions | 21

COMMUNITY BANKER TURNED UNITED STATES SENATOR:

A DISCUSSION WITH SENATOR PAT TOOMEY

22 | Transactions | www.pacb.org

Community banks are uniquely positioned to build long-term relationships with their customers and to address their communities’ business needs. www.pacb.org | Transactions | 23

I have three young children, and I want them to enjoy the same opportunities I was fortunate to enjoy when I was growing up.

24 | Transactions | www.pacb.org

Absent serious changes, the result of our skyrocketing debt will be catastrophic. It will mean slower economic growth and fewer jobs as increased government spending results in decreased private spending and investment; higher taxes; lower quality of life; less security; and the possibility of a financial crisis as the value of the dollar collapses and inflation plagues our financial system. Just take a look at what is happening to our friends across the ocean in Europe, especially Greece.

If we don’t get our act together, we are in danger of AS A FORMER COMMUNITY BANKER, I KNOW following our European alFIRSTHAND HOW IMPORTANT THESE INSTITU- lies into financial ruin.

NICK DIFRANCESCO (ND): Thank you for agreeing to this interview. To be honest, I don’t even know where to begin. In your first 18 months of service in the senate, you’ve been challenged with a worldwide economic crisis and a very divided Congress. You distinguished yourself as a member of the Joint Select Committee on Deficit Reduction, but it seems that Washington was not ready to institute the changes necessary to preserve our future. What is at risk if we continue to “kick the can down the road”?

SENATOR PAT TOOMEY (PT): The risks are very TIONS ARE TO THE COMMUNITIES THEY SERVE. ND: What has to change in serious, to say the least.

Washington in order to get This is why I am extremely us back on track? concerned about our fiscal path and Washington’s inability to implement serious reforms. In my year and a half in the Senate, we have had PT: Unfortunately, many politicians will continue to take many opportunities to tackle our looming fiscal crisis, and the easy way out as long as they can. When the American people make their frustration heard at the ballot box, hopeunfortunately, Congress has opted to “kick the can down fully, Washington will start to listen. the road” time and again.

For example, it is absolutely astonishing to me that the majority party in the Senate has failed to introduce and pass a budget three years in a row. Every business owner – from small mom-and-pop shops to big corporations – knows that you can’t run a business without a budget. So why does the federal government think it can get by?

ND: Let’s talk banking. Our members are always impressed when they meet with you because you have a depth of knowledge of the financial services industry that can only be acquired through experience. As you know, community banks are disappearing in communities all across America at an alarming rate. While some may arwww.pacb.org | Transactions | 25

gue that there are too many charters, we would argue that there are too many communities that are on the verge of losing their local community bank. Too often these banks are healthy, but they simply can’t afford to comply with the volumes of regulations that have come about since the repeal of Glass-Steagall. Can you share your thoughts on how America can do a better job balancing the risks of Wall Street and the needs of Main Street?

PT: As a former community banker, I know firsthand how important these institutions are to the communities they serve. Community banks are uniquely positioned to build long-term relationships with their customers and to address their communities’ business needs. Unfortunately, community banks are disproportionately burdened by regulatory requirements because they don’t have the staff and resources necessary for compliance. Regulatory overreach costs communities access to capital, which slows economic growth and job creation.

I support full repeal of the Dodd-Frank Act, but recognize the challenges we face in achieving that goal. As a member of the Senate Banking Committee, I have been very attentive to the implementation of the Dodd-Frank Act, and have been especially focused on making sure that small banks will not be overburdened. Our economic recovery depends

as “systemically important,” signaling to the market that the government is willing to step in to avert another crisis. In addition, Dodd-Frank includes price controls by capping interchange fees and sets up the Consumer Financial Protection Bureau – an unaccountable agency that is dictating products and practices without regard to safety and soundness. The number of rules required by Dodd-Frank is staggering, dramatically increasing compliance costs and driving smaller players out of business. There are about 4,000 pages of proposed rules, 3,600 pages of final rules, and we are only about one quarter of the way through more than 400 rules.

Systemic risk is a function of size, leverage and interconnectedness. Rather than having government attempt the impossible task of micromanaging financial institutions, the better solution is to require significantly enhanced capital requirements correlated to an institution’s size, combined with a resolution mechanism akin to an expedited bankruptcy. If we have increased capital, smaller institutions and a better resolution mechanism, we could reduce systemic risk.

ND: Can I get you to share your thoughts on credit union business lending? Most community banks believe in a free market with healthy competition, but competing against an entity that does not pay taxes puts our nation’s community banks at a significant disadvantage. Is it time to reevaluate

Community banks are experienced

AT HANDLING BUSINESS LENDING on accessible and affordable credit from stable and healthy financial institutions, but we need to make sure regulation reflects a given institution’s size and relative risk.

ND: Given the events of the last month, including JPMorgan’s losses, is it a realistic expectation that we could insulate our economy from a future disaster at one of America’s systemically significant institutions?

Are you concerned with the concentration of financial assets in our nation’s largest banks? Was the repeal of Glass-Steagall a good thing for America?

PT: I don’t believe that the repeal of Glass-Steagall was the cause of the crisis in 2008. Rather, it was a lending crisis that was caused by the Federal Reserve’s decision to keep interest rates too low for too long combined with housing policies, such as the GSE’s affordable housing goals, that encouraged lenders to relax their underwriting standards.

Some of our largest institutions were also highly leveraged and didn’t have adequate capital to withstand the crisis.

Dodd-Frank attempts to solve the problems of the 2008 crisis by empowering the government to micromanage the financial services industry, which has negatively impacted our community banks in several ways. Dodd-Frank institutionalizes “too big to fail” by designating large institutions 26 | Transactions | www.pacb.org

the role credit unions play in our society? Is it time to reevaluate their tax status?

PT: While I appreciate the service credit unions provide to their customers, I have concerns about expanding their business lending capabilities. Raising the current business lending caps would impact relatively few credit unions, but would represent a significant shift away from credit unions’ traditional consumer-oriented mission. Community banks are experienced at handling business lending, which carries higher risks than consumer lending. In fact, a GAO study found that failed credit unions had more business loans as a percentage of assets than peer credit unions that did not fail.

ND: You serve on several significant committees including Banking, Budget, Commerce, Science, and Transportation. What is your vision for the future of America? How do we overcome our economic challenges, so that our children can take advantage of the opportunities this country provides to them?

PT: I have three young children, and I want them to enjoy the same opportunities I was fortunate to enjoy when I was growing up. I want them to inherit an America that is free, rife with opportunity, and secure. I want them to grow up knowing that our system of government rewards hard work

Growing up, my parents instilled in me the value of hard work. My mother worked part-time at our local parish and my father, a former marine, laid underground cable wires for the local electric company. When I was ten, I printed up business cards and went door to door asking my neighbors if they needed their lawns mowed. www.pacb.org | Transactions | 27

and entrepreneurship, and punishes recklessness – not the other way around.

the strength of this great nation lies with them, not with Washington. As long as we continue to believe in the future of America and the potential of our fellow citizens, we will be all right.

But in order for that to happen, we have to get to work implementing fiscally responsible reforms today. That is why I have written my own budget both years I have been in ND: I find it somewhat ironic that a man who began the Senate, and that is why his career as a commuI proposed a compromise nity organizer and fast plan to tackle our debt tracked a political career IF YOU WORK HARD, IF YOU problem when I served on to the Presidency, now the super committee. In questions the validity of REFUSE TO GIVE UP, IF YOU KEEP my budget proposal this the American dream. As TRYING, YOU WILL SUCCEED. year, I called for balancing the son of a blue collar our budget in less than ten household, what is your years, including entitlemessage to the next genment reform and pro-growth tax reform. eration of American leaders?

I remain optimistic that we can and will rise above our current challenges. The people I meet all across Pennsylvania are the hardest working, most innovative and most industrious people in America. They remind me every day that 28 | Transactions | www.pacb.org

PT: Growing up, my parents instilled in me the value of hard work. My mother worked part-time at our local parish and my father, a former marine, laid underground cable wires for the local electric company. When I was ten, I printed up

Senator Pat Toomey was elected to the U.S. Senate from Pennsylvania on a platform of limited government, economic and job growth, and restoring fiscal responsibility.

Since joining the Senate in 2011, he has distinguished himself as a leader on economic, financial services and budgetary issues, striving to restore fiscal discipline to Washington and economic opportunity for all Americans. Among other things, Sen. Toomey introduced a 10-year balanced budget proposal that received more votes in the Senate than any other budget plan in 2011, and he has successfully helped cut federal red tape for local communities and job creators in Pennsylvania through his Had Enough? constituent services program.

business cards and went door to door asking my neighbors if they needed their lawns mowed.

The message I would like to share is the same message my parents taught me and the same message I try to pass on to my children. If you work hard, if you refuse to give up, if you keep trying, you will succeed.

The senator serves on the Budget; Banking; Commerce; and Joint Economic committees. He also is the ranking member on the Commerce Committee’s Consumer Protection, Product Safety and Insurance Subcommittee. He previously served on the Joint Select Committee on Deficit Reduction.

In September, Sen. Toomey will become the next chairman of the Senate Steering Committee.

ND: Finally, we often lose sight of the human side of our elected officials. What are the things outside of politics and policy that make life worth living? Are you able to spend quality time as a family?

Sen. Toomey previously served in Congress as a member of the House of Representatives from Pennsylvania’s Fifteenth Congressional District, where he championed economic growth and fiscal discipline. In fulfillment of his three-term pledge, he retired from the House in 2004.

PT: I might be a little biased, but I am lucky to have the greatest family in the world. I’m fortunate to be able to make it home nearly every weekend and on occasion, my wife brings the kids down to Washington. My two-year old loves the fountains on the Capitol grounds!

In addition to his public service, the senator has also served as president of the Club for Growth, owned and operated a small restaurant chain in the Lehigh Valley, and worked in the financial services industry.

ND: Thank you for taking the time to talk to us. We truly appreciate your dedication and service.

A graduate of Harvard University, he lives in Zionsville with his wife, Kris, and their three children. www.pacb.org | Transactions | 29

135TH ANNUAL CONVENTION VAIL MOUNTAIN RESORT & SPA 路 VAIL, CO AUGUST 17-20, 2012

CONTACT SAUNDRA CUNNINGHAM, AT (717) 231-7447 OR BY EMAIL AT SAUNDRA@PACB.ORG. 30 | Transactions | www.pacb.org

2012 SPONSORS & EXHIBITORS VAIL MOUNTAIN RESORT & SPA · VAIL, CO • AUGUST 17-20 • 135TH ANNUAL CONVENTION

SPONSORS DIAMOND

FHLBank Pittsburgh Jack Henry Banking

GENERAL SPONSORSHIPS (CONTINUED) Travelers Vantiv

GOLD

Griffin Financial Group, LLC Luse Gorman Pomerenk & Schick, P.C. PNC Capital Markets S.R. Snodgrass Stevens & Lee

SILVER

BFS Group BMO Capital Markets GKST Inc. Buchanan Ingersoll & Rooney, PC Elias, Matz, Tiernan & Herrick LLP Federated Investors, Inc. FTN Financial Kilpatrick Townsend & Stockton LLP ParenteBeard LLC PULSE Shumaker Williams, P.C. Stifel Nicolaus Weisel

BRONZE

Boenning and Scattergood, Inc. GTM Risk Management ICBA Services Network

GENERAL SPONSORSHIPS Atlantic Central Bankers Bank John M. Floyd & Associates Malin, Bergquist & Company, LLP Pentegra Retirement Services The Kafafian Group, Inc.

EXHIBITORS Accume Partners Allied Solutions Barone Murtha Shonberg & Associates Inc. Comptroller of the Currency Computer Services, Inc. GTM Risk Management Herbein + Company, Inc. Hergenroeder Rega Scotti Ewing & Kennedy, LLC ICBA ICBA Securities ICS Risk Advisors iHELP Jack Henry Banking John M. Floyd & Associates Mortgage Services III, LLC Northland Securities, Inc. Pentegra Retirement Services Schneider Downs & Co., Inc. Secure Banking Solutions SHAZAM, Inc. Shumaker Williams, P.C. Star Network/First Data Talaris Terrapin Financial Services, LLC Travelers Vantiv Woodcraft Industries

WHY SPONSOR

Are you looking for an opportunity to support the Pennsylvania “Community Banking” industry? Look no further….Sponsorship of the PACB 135th Annual Convention could be the best investment you make. Our Convention is a great juncture to network with community bank presidents/CEOs, senior management and directors from across Pennsylvania. Your 2012 marketing plan should definitely include a sponsorship at the PACB 135th Annual Convention! There are a variety of sponsorship opportunities available. We will work with you to provide a sponsorship that fits your budget.

WHY EXHIBIT

This “one-stop-shop” advantage provides Pennsylvania community banker presidents/CEOs, directors and senior management an opportunity to explore the latest in banking and technology. In today’s economic environment, our members are looking for ways to streamline operations and productivity while increasing profitability at the same time. This “one-stop-shop” venue provides every exhibitor the opportunity to meet with a large contingency of Pennsylvania community banking “decision makers” one-on-one.

QUESTIONS

If you have any questions, contact Saundra Cunningham, PACB VP-Education Services, at (717) 231-7447 or by email at saundra@pacb.org. www.pacb.org | Transactions | 31

AUTOMOBILE DEALERSHIP FINANCING:

A COSTLY TRAP FOR THE UNWARY

By: Martin B. Ellis, Esquire Shumaker Williams, P.C.

A

utomobile dealerships need inventory financing (commonly called “floor planning”), which may be obtained through captive financing arms of automobile manufacturers, or frequently from banks. Care must be taken in the preparation of such financing documents, as GMAC, Inc. recently found out the hard way.

After conducting a surprise floor plan audit of the dealership, GMAC discovered that the dealership had not made any payments to GMAC following the sale of 14 recently sold vehicles. GMAC immediately declared that the dealership was “out of trust.” The dealership responded by explaining that the required payments had not been made because sales of those 14 vehicles had occurred while its controller was on vacation, and she was the only person authorized to The United States Third checks on behalf of the FINANCING DOCUMENTS OF ANY KIND issue Circuit Court of Appeals redealership. The dealership cently affirmed a denial by SHOULD BE PRECISE IN THE WORDING requested that GMAC permit the dealership time to the United States District OF ALL OF THEIR PROVISIONS. Court for the Eastern District allow its controller to return of Pennsylvania of GMAC’s from vacation to make the motion for judgment as required payments. GMAC a matter of law, thus letting stand a $4 million jury verdict refused and demanded immediate payment, which the dealagainst GMAC by a Pennsylvania automobile dealership. ership failed to do.

Mente Chevrolet Oldsmobile, Inc. entered into a financing agreement with GMAC, under which GMAC provided floor planning to allow the dealership to purchase some of its vehicle inventory. That agreement provided that the dealership was responsible for paying GMAC for the purchased inventory “faithfully and promptly” upon the sale of a vehicle. This phrase, “faithfully and promptly,” was nowhere defined in the financing agreement.

32 | Transactions | www.pacb.org

GMAC then terminated the dealership’s lines of credit, notified General Motors and Chrysler of the termination, thus making it impossible for the dealership to purchase any other inventory, seized the dealership’s assets, and placed armed guards on the property. Fearing he would be arrested and jailed for the dealership’s unpaid debts, the dealership’s owner requested that GMAC release the dealership’s funds so payments to creditors could be made. GMAC agreed to release the funds,

but only if the dealership’s owner signed a forbearance agreement admitting to defaulting on the finance agreement and waiving any right to sue GMAC for any wrongdoing.

After GMAC and the dealership signed the forbearance agreement, the dealership paid its debts, and then promptly sued GMAC for breach of the financing agreement. At trial, GMAC made two arguments -- first, that the dealership had contractually waived its right to bring a claim of breach of contract when it signed the forbearance agreement; and second, that under the financing agreement, GMAC had the right to demand immediate payment when a vehicle was sold by the dealership.

The dealership responded that (1) the forbearance agreement was unenforceable because GMAC had “unclean hands,” and (2) the parties’ prior course of dealings showed that the dealership was not required to make payments to GMAC immediately following the sale of a vehicle.

In the appellate court’s view, the fact that the financing agreement used the phrase, “faithfully and promptly,” to determine when the dealership owed payments to GMAC, but never defined the phrase, made the phrase “capable of being reasonably understood in more than one way.” Therefore, because the financing agreement did not definitively state that payment was due immediately upon the sale of a vehicle from inventory, GMAC had breached the financing agreement when it cancelled the lines of credit and seized the dealership’s assets. Moreover, the court upheld the jury’s deter-

mination that GMAC had “unclean hands” because, under Pennsylvania law, a request to enforce a contractual waiver is a request for specific performance of the contract, and that is an equitable remedy. As such, in order for GMAC to receive equitable relief from the court, GMAC must come to court with “clean hands,” which it did not do in this case.

This case illustrates two very important lessons for lenders. First, financing documents of any kind should be precise in the wording of all of their provisions. Standardized forms, unless carefully drawn, can be a lender’s undoing.

Second, if a lender is going to rely on a contractual waiver, whether used offensively or defensively, Pennsylvania law views this as an equitable, not a legal, remedy, and the lender better have clean hands when litigating the enforceability of such a waiver.

Martin Ellis is a member of Shumaker Williams’ Banking and Financial Services, Bankruptcy, and Litigation Departments.

For his entire 39-year career, he has specialized in virtually all aspects of bank representation, including retail, commercial, systems and operations, and litigation involving banks.

freedom of choice Choose an EFT Network Invested in You While some would like community financial institutions to have fewer choices and less control, SHAZAM believes that community financial institutions must remain in control of their own futures.

SHAZAM is owned and operated by community financial institutions. We understand who you are and what you believe in. We’re here for you, providing the cost-effective technology that makes you more effective.

You do have a choice in EFT networks. Choose the only EFT network invested in your success.

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www.pacb.org | Transactions | 33

T

his article is the first of a series investigating the birth and evolution of a trend that will affect all consumers, merchants, and credit/ debit card issuers. Folks, the days of carrying plastic credit cards around are numbered. In the near future, access to your money when making purchases will primarily be via your cellular smartphone, iPad, Kindle, or electronic tablet. TFS will soon be piloting these applications at a merchant location near you.

BACKGROUND The electronic wallet, also referred to as the e-wallet or digital wallet, allows users to conduct financial transactions more conveniently, efficiently, and (arguably) safely.

E-wallets apply to both eCommerce (on-line purchases) and Point-of-Sale (POS) applications.

For consumers, the set up of individual e-wallets will be a simple process. The device (anticipated to primarily be the smartphone) will access an e-wallet application (“ewapp”). The password-protected ewapp is linked to the user’s credit/debit card(s), and eventually to other vital information including driver’s license, address, DOB, phone, health insurance card, health savings account

phones are equipped. The cost of these readers has not yet been established, but is not expected to be a major obstacle to most retailers, though obviously another expense in a continuing difficult climate. We anticipate that NFC chips will be available on most smartphones by 4th Quarter 2012.

The readers will follow in close succession. eCOMMERCE APPLICATIONS The barrier to e-wallets in eCommerce applications is the vast array of check out systems, many proprietary and some peculiar. Further, several entities touch the transaction. Web developers, internet payment gateways, card processors, shopping cart providers, and other third parties may play a role in routing the sales transaction. The challenge is creating a protocol that all may follow. The Electronic Commerce Modeling Language (ECML) has been developed to address this challenge. ECML specifies how on-line merchants structure their check out procedures. Microsoft and IBM are two major players developing the ECML protocol.

If ECML is adopted in the industry, major benefits will follow. Transaction abandonment (buyer loses patience in filling out on-line forms), now estimated at over 20% of all on-line purchase attempts, will decrease significantly.

Satisfaction levels will improve and acceptance of on-line

The major question is whether e-wallets

ARE MORE FRAUD RESISTANT (HSA) card, loyalty/gift card(s), and military/student ID cards. After establishing the password to create your user “credentials,” that same password will be required for ALL purchases via that device. Passwords can be updated at anytime, and mandatory password updates are expected to be a monthly requirement.

For merchants, the process is a bit more complicated, and the detailed process remains generally undefined, but evolving quickly.

POS APPLICATIONS While the device stores and accesses the buyer’s credentials, the store-front merchant will utilize near field communications (NFC) to complete sales. NFC is a short-range wireless technology connecting the buyer’s credentials to the merchant’s card processing equipment. NFC is being designed with the security of buyers’ information as the primary technology driver. It includes real-time fraud alerts, a major upgrade to the existing processing platforms.

While ewapp promises greater convenience, adoption of NFC by smartphone manufacturers has been relatively slow. Thus, retailers have elected to postpone the installation of NFC-based mobile payment readers until the smart-

purchases will progress. ECML will also greatly enhance accuracy and security levels, both major impediments to the growth of eCommerce.

SAFETY The major question is whether e-wallets are more fraud resistant than the current plastic system. The answer to this at first glance is invariably yes. Currently, credit card fraud is a major problem. Anyone can use a swipe card at the POS, and many merchants are hesitant to ask for identification. While card numbers are now truncated on merchant sales slips, card skimming and cloning, by electronic or manual means, penalizes merchants, procesors, and issuers dearly. Sophisticated hackers will still theoretically be capable of stealing mass card numbers, but NFC and ECML should make data interception more difficult for electronic pirates. Overall, thieves will not welcome this new technology.

THE RACE FOR DOMINANCE On the device end, two primary players are expected to dominate the race to support digital wallets, Apple and Google. Other players who could emerge include Visa, Amazon (Kindle), Verizon Wireless, and AT&T Wireless. www.pacb.org | Transactions | 35

Very few legitimate challengers to the iPad and iPhone The challenge facing these businesses is twofold. First, most exist. Apple’s advantage is their unique ability to merge have no clue that the digital wallet revolution has begun. and tightly integrate hardware and software. They are also They are trying to keep their operations profitable, which gifted with the ability to think forward. In May of 2010, demands most of their time in this economic environment.

Apple obtained a patent for the iWallet, based on NFC Secondly, the requirements to participate in accepting pay(again, near field commuments via existing technications). Apple’s patent nologies are at best vaguely outlines payment accepdefined. Will they need a FOLKS, THE DAYS OF CARRYING tance rules, and credit card separate reading device to PLASTIC CREDIT CARDS AROUND processors will post activaccept iWallet, Google Wality statements directly to a let, and PayWave transacARE NUMBERED. customer’s iTunes account. tions? How much will these Pretty powerful stuff, and readers cost? Are any inteApple likes to refer to iWalgration devices (i.e., allowlet as “The one that will rule the world”. There is no doubt ing one device for all digital wallets) available on the horithat Apple will be a major player in the evolution of the zon? These and many other questions will be thrust upon digital wallet. the Main Street Merchant in the near future. They will look to their community banker for answers, so be prepared. TFS Google took a huge risk with the August 2011 announce- will be there to help! ment of its intention to acquire Motorola’s troubled Mobility business. However, should this merger be approved, Google could emerge as a major force in the digital wallet war. Google would combine their popular Terrapin Financial Services, LLC is a Android software and the YouTube and Google Maps serPACB Associate Member. Contact Clint vices with Motorola’s hardware, giving them an AppleLucas (clint@terrapinfinancial.com) or like hardware/software combination. In late 2011, Google Joe Posey (joe@terrapinfinancial.com) introduced Google Wallet, described as “a smart, virtual (888) 588-5757. wallet that stores your payment cards, offers, and more on your phone and online”. The Google ewapp allows you to check out at POS locations by simply tapping your phone to a reader. Web purchases allow access to your “wallet” at Google Wallet’s website to complete transactions. Google has already announced partnerships with major merchants, including CVS, RadioShack, Sports Authority, Sunoco, and Walgreens.

Visa, the largest Credit Card Association (and brand) in the world, has also entered the race. Frustrated with the slow adoption of NFC, Visa introduced a mobile payment system with a “microSD (Secure Digital)” card adaptable to most smartphones. The microSD is a removable memory card inserted into one of the ports of the smartphone, depending on the device. The card works in tandem with Visa’s PayWave application, which would be downloaded on the device. Chase, Bank of America, U.S. Bank, and Wells Fargo, all major Visa card issuers, are now piloting this technology.

RAMIFICATIONS TO MERCHANTS Community banks’ loan portfolios are loaded with what we like to refer to as “Main Street Merchants.” These are the businesses with long-standing ties to their banks and to their communities, but without the financial resources to participate on the leading edge of technology. They are resilient and have learned to adapt to market forces, whether it be the infestation of big box stores, recessions, depressions, real estate roller coasters, or evolving technologies. They are TFS’ focus, and remain the focus of our community banking partners.

36 | Transactions | www.pacb.org

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is a premier, client-focused law firm assisting individuals and businesses throughout Pennsylvania, Maryland and New Jersey with a wide range of services, including: • Financial Services, Banking and Mortgage Regulation • Securities and Capital Enhancement • Corporate and Business Services • Employee Benefits and Labor Law • Residential and Commercial Real Estate Settlements • Real Estate, Land Development and Financing • General Business Law and Business Formation • Trademark Registration and Protection • Litigation, Arbitration and Mediation • Estate Planning, Taxation and Asset Preservation • International Law and Contracts • Immigration • Liquor Licenses and Hospitality Services Law

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MAKE OUR SESSIONS WORK FOR YOU IN THESE CHALLENGING REGULATORY AND ECONOMIC TIMES, NOW MORE THAN EVER IT IS OF UTMOST IMPORTANCE FOR EVERY MEMBER OF YOUR TEAM TO STAY WELL-INFORMED OF CURRENT TOPICS IN OUR INDUSTRY. EXPERT PRESENTERS WILL COVER THE TOPICS LISTED BELOW IN AN AGENDA SPECIFICALLY CRAFTED TO MEET YOUR NEEDS AND IMPROVE YOUR BANK’S COMPETITIVE ADVANTAGE. WE HAVE CREATED FIVE DIFFERENT GROUPS OF CONCURRENT SESSIONS SO YOU CAN CHOOSE WHAT TOPICS BEST FIT YOUR NEEDS.

T O DO:

- Register f or P Annual C onven ACB’s 135 th t pacb.org/event- ion in Vail C o lorado at registration/?id =4227 - Sign up f or t h t hat best f it m e c oncur rent sessions impr ove our c om y bank’s needs t o pet it ive advant age

Concurrent Sessions 1 • 8:30 am - 9:30 am •

• • •

Emerging Trends in the Role and Responsibility of Outside Directors for Oversight of Governance and Operations Managing your Margin in a Low Rate Environment Capital Markets Environment-An Ever-Changing Landscape: Adapting to the “New Normal” for Community Banks What CEOs, Senior Management and Bank Directors Need to Know About the Growing Liabilities Banks Face From Repossessed Property

Concurrent Sessions 2 • 9:45 am - 10:45 am • • • •

Strategic Issues Facing Community Banks – Opportunities and Threats Finding Balance in the Perfect Storm Mitigating the Risk of Liability as a Bank Director Information Security for Bank Executives – Key Things to Know

Concurrent Sessions 3 • 11:00 AM - 12:00 Pm • • • •

Supplemental Benefit Plans for Top Executives and Directors The Five Best Investment Choices for Banks in this Market Information Technology Risk: Questions Audit Committees Should be Asking Shareholder Relations in a Challenging Regulatory Environment

Concurrent Sessions 4 • 2:15 Pm - 3:15 Pm • • • •

Minimizing Security Threats in Your Financial Institution Practical Collateral Monitoring and Risk Management When Will Rates Ever Rise?

Where to Next Shall the Dodd-Frank Act Behemoth move? How to Protect Your Community Bank in a Time of Massive Regulatory Burden

Concurrent Sessions 5 • 3:30 Pm - 4:30 Pm • • • •

Revenue & Compliance Innovation A Road map to Reaching Your Revenue Goals Top 10 IT Controls That Every Financial Organization Should Have Whatever Happened to High Performance?

WHERE?

PACB’s 135th Annual Convention Vail Mountain Resort & Spa • Vail, CO

WHEN?

August 17-20, 2012

QUESTIONS?

Contact Saundra J. Cunningham, PACB VP-Education Services, at 717.231.7447 or saundra@pacb.org.

www.pacb.org | Transactions | 37

THE GREAT DEBATE: AUTOMATED vs. MANUAL PENETRATION TESTING

By: Jeremy Burris, CISA, MCP, CCNA, L|PT CPTS, C|EH, CCIP, ECSA

T

he rules have changed. Today, regulators require most financial institutions to have regular network attack and penetration testing to ensure secure customer data. Do you know how to respond to the requirements and best assess your network security? In seeking proposals for attack and penetration testing, you will often find the scope of the testing to be broken down into one of two types: automated testing and manual testing. These different approaches may or may not test the seven layers of security. The seven layers include: Perimeter; Authentication; Package; Configuration; Monitoring; Physical; and Policy Layers. Each scope has its advantages and disadvantages, but which method is truly the best? Let us take a closer look.

AUTOMATED PENETRATION TESTING When you hire a company to perform an automated scan, the company “installs” a device that collects data over time on your network. The device is placed on the network or it externally scans your devices from the Internet. Once turned “on,” the device collects as much network information/data as it possibly can in order to determine potential vulnerabilities. After a pre-established period of time, the company’s staff come back to collect the device, and a few weeks later, you get a report that shows network weaknesses that were discovered during that timeframe. These scans, 38 | Transactions | www.pacb.org

once initiated, are completely automated and do not require a human to perform their tasks. A technician must only install the device and then return after the set period of time to collect the device and data. The technician requires minimal training, other than basic networking knowledge needed to install the device.

The advantages and disadvantages of automated penetration tests are listed below.

Advantages • Low cost (due to the lack of human interactions required) • Swift speed of reporting • Extended length of testing window • Ability to search for sensitive, pre-established data • Collection of large amounts of data from the network • Collection of data from entire subnets (sections) at one time Disadvantages • Can test only four of the seven layers of security (Perimeter, Authentication, Package, and Configuration Layers) • Reports are often pre-generated and are created by untrained technicians • Do not perform pivot attacks (compromising one machine and then launching attacks from that machine to other areas of the network) • Often times do not verify exploits (eliminate false positives)

MANUAL PENETRATION TESTING When hiring a company to perform a manual scan, the company sends a trained tester to your site (or the tester tests your Internet presence externally) to run various scans and attacks against the network in an attempt to compromise customer data or breach important systems. Manual testing tends to focus on an approach of not relying on one single tool to collect network data/information. It involves running multiple programs to gather and interpret the data and results in real-time, so the tester can adjust the attack plan as the engagement progresses. The advantages and disadvantages of manual penetration tests are listed below.

Advantages • Allow pivot attacks • Can test all seven layers of network security including the Monitoring, Physical, and Policy Layers (not covered by automated scans) • In-depth approach, in terms of the detail, for each host reviewed • Allow intelligent searching of sensitive data • Put a trained “brain” behind the testing to interpret the data • Can eliminate false positives Disadvantages • Longer length of testing • Often a more limited scope in terms of the number of systems tested • Usually more costly • Increased time in getting final deliverable So, which method is better? The answer comes down to what scope you are looking to cover.

YOUR SCOPE From an external-only perspective, meaning that you want to know what Internet-based attacks can be successful against your network, hiring a trained professional is typically worth the extra investment. After all, trained hackers are going to perform their attacks slowly and manually in order to get the results they want.

From an internal perspective, the size of your institution, the number of network nodes (or systems) that your institution wants tested, and the amount of time you are willing to subject your internal networks to an attack all factor into the decision. One institution may determine that it is best to perform a manual scan against the critical devices on its network since the cost would not be that much greater than an automated scan. Another institution with several network subnets full of servers and workstations that wants to have the most thorough testing of all seven layers of security would most likely want to have an integrated approach where both automated scans and manual scans are performed. The manual scans should be limited in scope to devices that house important customer and corporate data. The automated scans could then search for workstation or network device vulnerabilities

which would show susceptible hosts that may not house sensitive data but might be used for pivot-based attacks. Ideally, the manual tester would have access to the results from a previously performed automated scan or be allowed to perform his/her own automated scans. From there, the tester can interpret the data and find the best means for attack.

The only precautionary note that should be made is that by relying solely on an automated scan, all seven security layers and other types of social engineering activities are not being tested. No computerized, automated scan can try to trick an employee into giving your passwords, customer information, or other corporate and personal data to unauthorized individuals. Nor can an automated scan access the physical security of your server room or determine what a monitoring system deployed at your institution is able to detect. Most penetration testers would agree that testing of these three areas can often show significant weaknesses in a well-maintained network because of one poorly trained staff member or one system that is accessible due to weak physical security.

Now do you know how to respond to regulator’s requirements and best assess your network security? With your customer data at stake, you need to be prepared for an attack.

Jeremy Burris is a Senior IT Audit Manager in the Technology Services practice at S.R. Snodgrass, A.C. With more than 14 years of professional experience, Jeremy has 4 years of information systems experience working for a community bank as a Bank Network and Technology Administrator and more than 6 years of information systems audit and controls experience.

Jeremy graduated from Pennsylvania State University with a degree in the secondary education of mathematics. He holds Certified Information Systems Auditor (CISA), Microsoft Certified Professional (MCP), and Cisco Certified Network Associate (CCNA) certifications and is a Licensed Penetration Tester (L|PT), a Certified Penetration Testing Specialist (C|PTS), a Certified Ethical Hacker (C|EH), Certified Core Impact Professional (CCIP), and an E-Council Certified Systems Analyst (ECSA). Jeremy’s audit-related work has included IT Audits, Network Attack and Penetration Testing (Internal and External), Policy and Procedure creation projects, SAS 70 creation, and specialized Network Operating System Reviews.

Jeremy can be reached at jburris@srsnodgrass.com or 724-934-0344.

www.pacb.org | Transactions | 39

T O DO: PACB’s 135 Annual th

- Register for Vail Colorado at Convention inent-registration/?id=4227 pacb.org/ev ns to io s s e s W E N ix - Sign up for ises to compete in the new learn strateg ancial services normal of fin

MAXIMIZING YOUR COMPETITIVE EDGE THESE SIX INNOVATIVE SESSIONS ARE DESIGNED TO GIVE YOU, YOUR SENIOR STAFF, AND DIRECTORS THE SUPPORT AND VISION NEEDED TO EXCEL IN THE MODERN MARKETPLACE. IF YOU WANT TO BOOST YOUR PROFIT MARGIN WHILE STAYING OUT OF REGULATORY HOT WATER, YOU MUST ATTEND THESE SESSIONS!

Taking Back the Mortgage Market

Changes to the housing industry meant a decline in mortgage originations for many institutions.

Real estate firms and mortgage brokers effectively used the pre-approval process to divert large amounts of business. This informative session will present you with options and give real guidance on implementing a business plan that will give you a competitive advantage to attracting new customers and huge profits.

Services Designed with You in Mind

In this competitive marketplace there are many products from which to choose. Why not pick the ones specifically designed to make your community bank more competitive? Not all products are alike. ICBA offers a line of products designed by community bankers to meet the reality of a community banker. This session presents a road map to greater profitability and customer loyalty through the effective use of ICBA products.

Technology to Beat the Competition

This innovative technology session will put to rest the myth that larger institutions offer better technology services. Community banks are more dynamic and offer greater opportunity to stay on the cutting edge of technology innovation. In a technology driven culture, your customers demand technology convenience. This session will introduce you to what exists and what’s just over the horizon. We’ll also show you ways to make technology investment more affordable.

Building Profitability, Performance, and Market Share Using your Bricks and Mortar

WHERE?

PACB’s 135th Annual Convention Vail Mountain Resort & Spa • Vail, CO

WHEN?

Today, community banks need to understand that it is more important than ever before to elevate the performance and profitability of their retail delivery systems through market demographics analysis, innovative branding and merchandising, staff engagement and renovation projects.

Community banks across the country are utilizing bricks and mortar and finding ways to attract new customers and increase customer loyalty by incorporating their community into the building design. This dynamic presentation will change your thinking on what your building should be doing for you and your community… while decreasing costs, bettering overall performance and reinforcing or renovating your brand.

Membership Means Security and so Much More

August 17, 2012 • 9am-12pm & 1-4pm Maximizing your competitive advantage means using your resources wisely. This session will shed

QUESTIONS?

Contact Saundra J. Cunningham, PACB VP-Education Services, at 717.231.7447 or saundra@pacb.org.

40 | Transactions | www.pacb.org

a different light on your Federal Home Loan Bank relationship, teaching you new ways to use the vast benefits of your membership. Liquidity, security, and flexibility are all benefits of membership, especially in tough times. This session presents dynamic ways to put these benefits to work to increase your bottom line and enhance the relationship you have with your community.

Accounting for a Bright Future

In today’s competitive environment nothing can be taken for granted. One of the benefits of scale is being able to take full advantage of every economic incentive in the tax code and GAAP, but these benefits are not just for large financial institutions. This session will show you ways to increase your capital and maximize the return on every dollar by controlling your tax burden. Think you can’t afford the latest technology enhancements? We’ll prove to you that you can!

R E

U, N NT OF S!

ns. ge ce w

ck ts a ty

THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS

Pennsylvania’s Community Banks. For people and their neighborhoods.

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SUBSCRIBE TODAY! www.pacb.org/transactions

Each issue of Transactions is overflowing with timely news and information concerning all aspects of community banking, including: • PACB Member Spotlights • Legislative Updates From the State and Federal Levels • Vendor News • Regulatory Issues Impacting Community Banks • Hot Topics • New Products and Services Announcements PACB Members & Associate Members:

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is se ur n’t www.pacb.org | Transactions | 41

PACB welcomes our

Member Bank

NEW ASSOCIATE MEMBER

JOB OPENING

Portfolio Manager/Loan Officer/Business Development Mauch Chunk Trust Company, located in Jim Thorpe, PA is seeking a customer-oriented individual with excellent verbal and written communication skills to join our team of commercial lending professionals. Reporting to the Chief Lending Officer, this position is responsible for soliciting and servicing prospective customers, producing a variety of commercial loans as well as generating and managing a portfolio of business and corresponding relationships, while seeking new accounts through calling efforts, marketing, and referrals.

The successful candidate will have 5-7 years of commercial lending experience with proven credit and business development skills, as well as the desire to be a part of a local and growing financial institution serving the needs of a regional business community. In addition, this individual must have highly developed analytical expertise, strong financial analysis skills, and a Bachelor’s degree.

42 | Transactions | www.pacb.org

CONTACT INFORMATION: Anna Bogiatzis VP of Financial Institution Alliances 475 Veit Road Huntingdon Valley, PA 19006 P: 866-253-2227 ext. 15 F: 866-289-6600 abogiatzis@alphacardservices.com www.alphacardservices.com

PACB welcomes our

PACB welcomes our

NEW ASSOCIATE MEMBER

NEW ASSOCIATE MEMBER

Margin Advisors is an independent bank consulting firm dedicated to expanding the depth and capabilities of community bank finance teams, primarily focusing on improving the level, quality, and sustainability of net interest margin. Margin Advisors offers the following services: Margin Driver Analytical Studies / Liquidity Management / Interest Rate Risk Management / Policy, Procedure, and Process Development / Strategic Planning and Execution / and Education and Training.

CONTACT INFORMATION: John D. Finley President 121 Clouser Road Mechanicsburg, PA 17055 P: 717-697-6276 jfinley@marginadvisors.com www.marginadvisors.com

Alpha Card Services is a credit card processor and business solutions provider that partners directly with Financial Institutions. In addition to credit card processing, Alpha Card offers complementary products including POS Systems, Payroll Services, Cash Advances, Gift and Reward Cards, and ATM Services. Alpha Card delivers tailored programs to Financial Institutions that include marketing support, employee incentives, lifetime residual income, and portfolio ownership.

Steptoe & Johnson is a business-focused firm with particular strengths in energy, labor, employment, and litigation. For nearly a century, Steptoe & Johnson has demonstrated its commitment to quality, devoting personal attention, experience, skill, and resources to client-focused service.

CONTACT INFORMATION: Kenneth J. Barton, Jr. Attorney 1250 Edwin Miller Boulevard, Suite 300 Martinsburg, WV 25404 P: 304-263-6991 kenneth.barton@steptoe-johnson.com www.steptoe-johnson.com

REGISTER TODAY!

WEBINAR & TELEPHONE SEMINARS JULY JULY 10, 2012 JULY 11, 2012

JULY 12, 2012

JULY 17, 2012 JULY 18, 2012

JULY 19, 2012 JULY 24, 2012 JULY 26, 2012 JULY 27, 2012

JULY 30, 2012

JULY 31, 2012

AUGUST Capital is Available: How Do You Find It? Jeffery C. Gerrish, Gerrish McCreary Smith Protecting the SBA Guaranty Start to Finish Ethan W. Smith & Kimberly A. Rayer, Starfield & Smith, PC Facebook & Community Banking: What Should Your Strategy Be? Eric C. Cook, WSI Internet Consulting Asset/Liability Management for Directors Gary J. Young, Young & Associates, Inc. 10 Key Factors in Making Good Consumer Loan Decisions Tim Harrington, Team Resources Call Report Preparation: RC-R Risk-Based Capital Judith Jenkins, Bank Training Services Regulatory Compliance for Deposit/Operations Deborah L. Crawford, gettechnical inc CRA Compliance & FAQs Ann Brode, Brode Consulting Services, Inc. New IRS Rules for Interest Reporting on Nonresident Alien Accounts: Effective With 2013 Tax Year Deborah L. Crawford, gettechnical inc Responsibilities of the Board Secretary Including Electronic Board Package Considerations Ann Brode, Brode Consulting Services, Inc. Dealing with Record/Document Retention & Destruction Elizabeth Fast, Bankers Choice

AUGUST 2, 2012

AUGUST 7, 2012

AUGUST 9, 2012 AUGUST 14, 2012

AUGUST 16, 2012

AUGUST 21, 2012

AUGUST 23, 2012

AUGUST 27, 2012 AUGUST 28, 2012

AUGUST 30, 2012

All Things Mobile: Banking, Payments, Security & More Lee Wetherington, ProfitStars Recent Accounting Developments & a Look Ahead Bruce Richter, Eide Bailly, LLP Regulator Issues for the Credit Analyst S. Wayne Linder, Young & Associates, Inc. Beware! Signature Card Danger Zones: Account Titling, Ownership & Access Deborah Crawford, gettechnical inc Understanding & Navigating ACH Rules for RDFIs Shelly Simpson, EPCOR Head Teller Development: Improving Teller Performance Ann Brode, Brode Consulting Services, Inc. Garnishments, Subpoenas, Summonses, Levies: Getting It Right!

Elizabeth Fast, Bankers Choice Ten Lessons Learned When a Depositor Dies Deborah Crawford, gettechnical inc Call Report Preparation: RC-C Part I & Related Lending Schedules Judith Jenkins, Bank Training Services Preparing for Your FFIEC Authentication Guidance Regulatory Exam Debi Randol, Gladiator Technology

www.pacb.org | Transactions | 43

PRSRT STD U.S. POSTAGE PAID HARRISBURG PA PERMIT NO. 547 2405 N. FRONT STREET HARRISBURG, PA 17110 RETURN SERVICE REQUESTED

PACB PREFERRED VENDORS JUST ANOTHER VALUE INCLUDED IN THE PRICE OF PACB MEMBERSHIP! PACB PREFERRED VENDORS OFTEN OFFER DISCOUNTS OR PROMOTIONS ON PRODUCTS AND SERVICES TO PACB MEMBERS.

CALL PACB AT 717-231-7447 TO FIND OUT HOW YOUR ORGANIZATION CAN BECOME PART OF THIS SELECT GROUP OF PROFESSIONAL FIRMS. WITH THE EXCEPTION OF OFFICIAL ANNOUNCEMENTS, THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS AND STAFF DISCLAIM RESPONSIBILITY FOR OPINIONS EXPRESSED AND STATEMENTS MADE IN TRANSACTIONS. THIS PUBLICATION IS INTENDED AND DESIGNED TO PROVIDE ACCURATE AND AUTHORITATIVE INFORMATION, NOT TO PROVIDE LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES.