Banking New England Jan/Feb 2013

JANUARY/FEBRUARY 2013

INSIDE: THE GROWING EXPOSURE OF NEW ENGLAND BANKS TO INTEREST-RATE RISK

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

A

Conversation With

Ed Hjerpe III of FHLB-Boston

THE RISE OF THE CHIEF RISK OFFICER PATCO CASE: WHAT HAVE WE LEARNED? PLUS HARBORONE’S CHARTER CONVERSION

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LETTER FROM THE EDITOR

Welcome to Banking New England The New England banking region has a lot to be proud of. It’s among the most fiscally solvent in the country, despite an anemic national economy, and it has supported community development projects through good times and bad. Now, it is well prepared for a long-awaited return to a normal economy.

Christina P. O’Neill Editor, Banking New England

But as the economy improves, we have to keep asking the tough questions – particularly in light of ongoing debate over the federal budget and federal regulation.

This magazine is meant for bank management across the New England region. Our objective is to keep you informed, to present multiple viewpoints, and help you navigate the new regulatory atmosphere while keeping your financial institution safe and sound.

The cover story of our inaugural issue reflects that. Edward Hjerpe III, president and CEO of the Federal Home Loan Bank of Boston, is a seasoned veteran of financial cycles. He’s of the mindset that a sound institution should provision today what it will need tomorrow, and his organization sets an example. He is not shy about sharing his

impatience with the inability, so far, of elected policymakers to set parameters that would lift the uncertainty now surrounding the housing and mortgage markets.

We also explore what the industry can learn from the case of Patco vs. People’s United (which started out as Patco vs. Ocean Bank), a cyber-fraud horror story that could have been stopped, if not prevented, with a bit more vigilance.

We will also be running the good news – promotions, community support and news items.

We welcome your submissions. See the back pages for information on how to send your financial institution’s news.

We will publish six times a year, and look forward to hearing from you about your bank’s role in your widely-differing communities. BNE

Strengthening Massachusetts one home loan at a time.

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3

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A PUBL ICAT ION OF T HE WA RRE N GROUP

CONTENTS

NEW ENGLAND

6

RESEARCH CORNER

8

MARKET DATA

10

SWITCH HITTER

Knowledge-Based Authentication

COVER FEATURE

What the Numbers Can Tell You About Your Market

HarborOne Credit Union Seeks Charter Conversion

12 COMPLIANCE

The Rise of the Chief Risk Officer

14

FEATURE

16

VIEW FROM THE TOP

Theft in Plain Sight – The Patco Case

16 VIEW FROM THE TOP

Evaluating the Big Picture

FHLB Boston Charts Sound Path for Future

20 RISK MANAGEMENT

The Growing Exposure of New England Banks to Interest-Rate Risk

24

COMMUNITY GOOD WORKS

27

IN CASE YOU MISSED IT

TWG STAFF CEO & PUBLISHER PRESIDENT

SALES Timothy M. Warren Jr.

David B. Lovins

CONTROLLER DIR. OF OPERATIONS

28 PERSONNEL FILE

DIRECTOR OF MEDIA SOLUTIONS ADVERTISING COORDINATOR

Jeffrey E. Lewis

George Chateauneuf

Joanne Lee

ADVERTISING ACCOUNT MANAGERS

Rich Ofsthun

and Kelsey Bell EDITORIAL www.thewarrengroup.com

CUSTOM PUBLICATIONS EDITOR ASSOCIATE EDITOR

Christina P. O’Neill

Cassidy Norton Murphy

CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John

Bottini Scott Ellison Michelle Laczkoski GRAPHIC DESIGNER Amanda Martocchio DESIGN PRODUCTION MANAGER

©2013 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising,

MARKETING COMMUNICATIONS MANAGER

and Tom Agostino

editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210

BANKING NEW ENGLAND

5

RESEARCH CORNER

Knowledge-Based Authentication Who’s Asking?

BY CHRISTINA P. O’NEILL Editor, Banking New England

6

BANKING NEW ENGLAND

F

inancial institutions (FIs) are moving away from static knowledge-based authentication (KBA), which uses a fixed set of questions, to dynamic models that use a variety of multiplechoice questions to confirm a customer’s identity. They prefer dynamic to static KBA despite the former’s higher cost, according to a 2012 study

by Aite Group, Knowledge Based Authentication: Use and Trajectory in e-Commerce, Health Care and Finance. But as they strive to deliver the same customer experience across all banking platforms, including mobile, they are considering other forms of customer verification, as well as different ways of using the forms they have.

Aite Group surveyed fraud-management executives of eight banks of varying size ranges (two in the top 10 by asset size, three in the top 11 to 20, and three in the top 21-30).

The study also addressed KBA use in e-commerce and health care. The reasons for adopting KBA differed by segment but the needs of each business segment are very similar.

KBA questions must be difficult enough to deter fraudsters but not so difficult that the bona fide customer cannot answer them. Many legitimate FI customers cannot provide the correct responses – up to 15 percent fail their own credit and demographic based questions, says study author and Aite Group senior analyst Shirley Inscoe.

Dynamic KBA in a call center has a higher success rate, but also a significantly higher cost, and may not be enough to shut out fraudsters

impersonating the customer using information available online. These limitations of cost and security are likely to limit the growth of KBA use in banking channels, relegating dynamic KBA to higher-risk transactions, for example.

Online and mobile use are expected to drive up KBA usage by FIs from $56 million in 2011 (the last year with complete figures at the time of the study) to an estimated $78 million by 2015, according to Aite Group’s projections from interviews with the bankers who participated in the study.

Aite Group found that those FIs who were dissatisfied with their static KBA systems at the time of the study (2Q

2012) were deterred from changing them due to cost and complexity. Some FIs are bringing static KBA in-house to eliminate vendor expense.

Inscoe says such internal handling costs very little, and can successfully be used as one layer of authentication.

None of the FIs surveyed had yet implemented a mobile KBA platform; respondents are concerned about cost.

Ultimately, KBA will be part of a larger verification process.

FIs are exploring the use of voice biometrics/voiceprints for call center and mobile use, Inscoe notes. She is currently preparing a report on the potential use of voiceprints to deter call center fraud. BNE

MARKET DATA

Mining Market Share Data Using the Numbers to Chart Your Course

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

“The banking panic started in 2008, the recession hit in 2009 and we’re still in a relatively anemic state of recovery. The damage done to large banks is still reverberating throughout the banking system.” — John Carusone, president, Bank Analysis Center

8

BANKING NEW ENGLAND

T

racking mortgage market share data over the course of several years allows a financial institution to not only see the big picture, but also to evaluate the competition, both large and small, to determine where it may be possible to make inroads. If your marketing officer can look at the data and say, “We should get a bigger share of that,” reviewing market share data can help your team determine where marketing resources are best spent, regardless of the size of your financial institution.

The Warren Group, publisher of Banking New England, compiles, analyzes and publishes real estate transaction data for the financial and real estate industry across most Northeastern states.

A comparison of two years – 2007 and 2012 – shows the impact of the national real estate financial crisis in our discrete state markets.

We recently took a look at data for southern New England for Connecticut, Massachusetts and Rhode Island.

In 2007, when the real estate market was vigorous, nationallybased banks dominated the residential lending scene in Southern New England. Last year’s roster of players includes smaller banks taking home a bigger market share.

The data ranks institutions by market share of total dollar volume for all loan types, both new purchases and refinances, for mortgages of up to $3 million.

The markets in Connecticut, Massachusetts and Rhode Island have weathered the financial crisis far better than markets in other parts of the country. The number of mortgages issued by banks and credit unions, and their dollar volume, declined from 2007 to 2012, and market share of each institution declined, but

a separate analysis of foreclosure activity and short sales for the respective markets for the years from 2007 to 2012 would likely show a taming down of prices that had gotten frothy on the dollar-volume side.

Reshuffling the bench

In 2007, Bank of America led its bank lending class (as distinct from credit unions, mortgage companies and other lenders), accounting for 24.4 percent of all residential lending dollars, or $15.5 billion, in Connecticut, Massachusetts and Rhode Island.

Its next largest competitor, JP Morgan Chase Bank, accounted for 11.4 percent, or $7.2 billion.

But in 2012, Bank of America accounted for just 6.4 percent or $4.3 billion of the market share held by banks, representing a decline of 74 percent – and smaller banks, like Leader Bank and Hudson City Savings Bank grabbed spots among the top 10, next to giants like Wells Fargo and TD Bank.

“Based on the volume of purchased and refinanced mortgages, between 2007 and 2012, community bank mortgage lenders gained market share at the expense of large, money center national bank franchises,” said John Carusone, president of the Hartford, Conn.-based Bank Analysis Center. “Based on these criteria, community banks gained a fairly significant level of share, approximately 15 percent. That’s a very, very big amount in a fiveyear period.”

Organic growth

One bank that made the 2012 list got there through internal growth and initiatives.

Jay Tuli, Leader Bank’s vice president of retail banking and corporate development, attributed

the increase over the last five years to internal growth in the bank’s residential lending department.

“From 2008 to 2009, much of our growth was a result of recruiting new loan officers. From 2009 to 2012, all of that has been organic growth,” he explained.

Big banks experiencing credit problems and other internal issues have been shifting their focus and intentionally decreasing their market share in mortgage lending, Tuli said. Consequently, operations suffer and turnaround time on a mortgage increases, frustrating customers and eventually loan officers.

“This is really key,” he said.

“If they’re taking longer to close a loan than their competitors, customers won’t want to go with them. After that happens enough times, their loan officers will not want to stay with them anymore.”

For others, a wait-and-see policy paid off dramatically.

Banks that found it difficult to gain market share against lenders who offered optional adjustable rate mortgages, subprime loans and “no-doc” loans made gains by 2012 as those loan products went sour and the lenders who offered them shrunk or disappeared.

Banks which kept their mortgage servicing local are now in favor with customers.

Salem Five Bank increased its share of the residential lending market through its subsidiary mortgage corporation. In 2007, Salem Five Cents Mortgage Corporation accounted for just over 2 percent, or $578 million, of the residential loans made by finance and mortgage companies in Massachusetts alone and didn’t break the top 10 for the Conn.Mass.-Rhode Island markets.

(Note: Salem Five is classified as a finance/mortgage company rather

2007 MARKET SHARE

than a bank, so it does not appear on the accompanying charts. Its market share in 2012 in the finance and mortgage lender category is 3.3 percent. That market was dominated in 2012 by Mortgage Master, with a 10.8 percent market share.)

But last year was a considerably different picture for the Mass.based lender.

Salem Five increased its share to 3.3 percent, or about $1.6 billion, of loans under that category, coming out at fifth on the list in Connecticut, Massachusetts and Rhode Island. Ed McDonald, president of Salem Five Mortgage Corporation, attributed much of the bank’s success to good oldfashioned word of mouth.

“We’ve just been doing things the way we’ve always been doing,” he said. “We never got caught up in the financial crisis. We have experienced, customer focused loan officers who canvass Eastern Massachusetts, and if a customer needs to close in 30 days, we can do it.”

What hasn’t changed

While southern New England hasn’t seen spectacular job growth, the region has not been hit as hard by the recession as other parts of the country.

And the borrowers’ demographics haven’t changed much in five years. Most banks seemed to agree that first-time homebuyers were among the more profitable clientele to capture, and many community banks work with local Realtors to draw in those customers. Given all this, it remains to be seen whether community banks will hang onto that market share or big banks will make a comeback.

“The banking panic started in 2008, the recession hit in 2009 and we’re still in a relatively anemic state of recovery. The damage done to large banks is still reverberating throughout the banking system,” Carusone said. “Only time will tell whether this is a structural change in market share or whether it’s simply a temporary adjustment to emergency financial conditions.” BNE

BANK LENDERS

ALL

2012 MARKET SHARE

PURCHASE

REFINANCE

ALL

PURCHASE

REFINANCE

Wells Fargo Bank NA

7.3%

12.0%

5.2%

9.8%

12.4%

9.2%

RBS Citizens Bank NA

8.6%

2.1%

11.2%

7.0%

4.6%

7.6%

Bank Of America FSB

24.4%

26.9%

23.3%

6.4%

5.1%

6.7%

JP Morgan Chase Bank

11.4%

10.7%

11.7%

5.8%

2.3%

6.6%

Sovereign Bank FSB

4.6%

3.6%

5.1%

5.1%

3.3%

5.5%

Leader Bank

*

*

*

3.4%

3.8%

3.3%

TD Bank NA

1.5

0.8%

1.7%

3.1%

2.7%

3.2%

Webster Bank

3.4%

2.9%

3.6%

2.6%

2.3%

2.7%

Peoples United Bank

1.6%

1.2%

1.7%

2.2%

1.6%

2.4%

*

*

*

1.6%

2.1%

1.5%

Indymac Bank

2.5%

2.4%

2.5%

*

*

*

Wachovia Bank NA

1.9%

0.1%

2.6%

*

*

*

(All Other Lenders)

35.1%

37.7%

34.0%

52.9%

59.8%

51.3%

Hudson City Savings Bank

A Changed Playing Field in Southern New England These charts show market share data on mortgages of $3 million or less, for banks and credit unions in Connecticut, Massachusetts and Rhode Island, in 2007 and 2012. Market share is measured by dollar volume, not the number of mortgages issued.

Additionally, the percentages for market share are measured within the lending class alone, e.g. the bank class or the credit union class, and not as part of the total universe of lenders, which also include non-bank lenders such as mortgage and finance companies, and government entities. This research is compiled by The Warren Group, which also measures dollar volume and market share for non-bank lenders.

2007 MARKET SHARE CREDIT UNION LENDERS

ALL

2012 MARKET SHARE

PURCHASE

REFINANCE

ALL

PURCHASE

REFINANCE

Digital Federal Credit Union

7.1%

9.0%

6.5%

6.0%

5.8%

6.0%

HarborOne Credit Union

5.2%

4.7%

5.3%

5.9%

6.2%

5.8%

Metropolitan Credit Union

2.7%

1.8%

3.0%

5.0%

3.2%

5.3%

Pawtucket Credit Union

3.4%

3.1%

3.6%

4.5%

3.1%

4.7%

Navy Federal Credit Union

4.9%

10.2%

3.1%

3.6%

7.0%

3.2%

Navigant Credit Union

2.6%

3.1%

2.4%

3.1%

3.0%

3.1%

American Eagle Federal Credit Union

3.1%

4.0%

2.9%

2.9%

3.4%

2.8%

St. Annes Credit Union

2.5%

2.8%

2.4%

2.8%

2.1%

2.9%

Workers Credit Union

*

*

*

2.6%

3.8%

2.5%

Charter Oak Federal Credit Union

*

*

*

2.6%

1.9%

2.7%

3.5%

5.4%

2.9%

*

*

*

Greylock Federal Credit Union Direct Federal Credit Union (All Other Lenders)

3.7%

1.2%

4.5%

*

*

*

61.3%

54.7%

63.4%

61.0%

60.5%

61.1%

BANKING NEW ENGLAND

9

SWITCH HITTER

HarborOne Credit Union Seeks Charter Conversion

BY DEBBIE SWANSON

Converting to a cooperative bank would allow HarborOne to expand outside the four southern Massachusetts counties in which it currently does business.

B

rockton-based HarborOne Credit Union, the largest state-chartered community credit union in New England with assets of $1.9 billion, expects to hold a meeting on March 11 to vote to convert its original charter as a credit union to that of a cooperative savings bank.

“Our goal is to create more flexibility and options for expanding our customer base, both in terms of consumer accounts and commercial lending,” James Rice, senior vice president of marketing of HarborOne, said in December.

Established in 1917 under the name of Brockton Credit Union, the financial institution changed its name in 2004 to HarborOne. The credit union has been recognized as both a financial and a workplace success, having been named as one of the top places to work in Massachusetts by The Boston Globe each year from 2009 to 2012.

Citing what they describe as restrictions of the credit union charter, the credit union elected to convert to a bank. It’s not the only credit union in the country to do so, and the move has its critics as well as its advocates.

Converting to a cooperative bank would allow HarborOne to expand outside the four southern Massachusetts counties in which it currently does business: Barnstable, Bristol, Norfolk and Plymouth. With an estimated one-third of the working population in those counties employed in Boston, a branch in the metropolitan Boston area would better accommodate these members, as well as create additional jobs.

The institution would also like to improve commercial lending ability, currently limited to 12.5 percent as a credit union, and have access to supplemental capital. While raising the business-lending cap for credit unions is clearly on the table in Washington, no clear indication was evident as this issue went to press.

Aside from a new name, the change would be transparent to the credit union’s 141,000 members, and the institution would keep its Brockton, Mass., headquarters.

But critics challenge the move. Last year, Steve Bisker, a former NCUA attorney challenged the assertions in HarborOne’s online disclosure notice of the proposed

TIME FOR A CHARTER CHANGE? Are credit union conversions initiated around the country last year indicative of a trend?

Last March, the industry newsletter CUTimes surveyed some New England credit union CEOs, who expressed the opinion that the credit union charter needs updating by the NCUA and Congress to become more competitive with the mutual savings bank charter.

The NCUA said that 20 of 28 credit unions that converted to a mutual bank since 1995 subsequently became stock-owned banks. Critics say such conversions create a windfall for newly-minted bank executives, and that stock-owned banks are more vulnerable to takeover because a vote by members is not required to approve a sale.

10 BANKING NEW ENGLAND

conversion, saying that the credit union was well within its 12.25 percent member business lending cap. So did NCUA chair Debbie Matz, in an article in The Boston Globe last May. She noted then that the credit union could petition the state to expand its boundaries.

Conversions between credit unions and banks in New England are rare, but they do happen. New Hampshire-based Monadnock Credit Union, chartered in 1971 as AWANE Credit Union, converted to a federally chartered savings bank in 1996, and has since been operating as the $83 million Monadnock Community Bank.

The institution may be coming full circle; currently, GFA Federal Credit Union is engaged in plans to purchase the bank. In Rhode Island, Coastway Credit Union, originally founded as a credit union in 1920, converted to a mutual savings bank in 2009, and has since been operating as Coastway Community Bank, with $312 million in assets.

The conversion process can be lengthy one, requiring approvals from entities including National Credit Union Association, FDIC, Massachusetts Division of Banks and the state of Massachusetts.

As part of the process, the credit union must distribute a series of three informational mailings to all members, posted at intervals of 90, 60 and 30 days prior to a voting meeting.

A majority of the membership must vote in favor of the change to move forward.

HarborOne’s voting meeting is currently scheduled for March 11, after which an independent inspector will tally the votes and make the results available.

NCUA then has 30 days for inspection. BNE

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COMPLIANCE

The Rise of the Chief Risk Officer How You Became One, and What’s Expected of You

BY MICHAEL COHN Michael D. Cohn, CPA, CISA, CGEIT, serves as director of WolfPAC Solutions group and is a principal at Wolf & Company, P.C. He provides risk management advisory services and board training to community based financial institutions.

As CRO, your obligation is to tease out and communicate the key threats that could threaten the viability of the franchise.

12 BANKING NEW ENGLAND

G

iven the current environment and changes in the industry, you, the chief risk officer, have become one of the most important people in your financial institution today.

That’s because community-based financial institutions, like yours, are increasingly becoming more risk-oriented in their strategic and operational focus due to the increasingly competitive and regulated environment.

Enterprise risk management is being implemented more at the community institution level, and experts like you are in need to ensure it is being practiced properly.

Since the position of chief risk officer is new to community banking and still evolving, it’s helpful to take a broad view of how someone like you became a CRO and what is generally expected of CROs from the board, executives, and staff.

The internal forces at play

There are internal forces at your institution that are calling on your expertise and knowledge gained over years of service perhaps in operations, audit, credit or IT. These forces are now looking to you as the CRO to build and implement an enterprise risk management program that will make the institution more competitive and financially secure.

Your CEO needs greater insight over all elements of risk and compliance: The number and frequency of risk assessment analyses grow every day, mostly spurred by business changes and regulatory expectations. Central management and oversight by a risk manager should improve

consistency, which will in turn increase efficiency. With more integrated technology systems, greater reliance on third parties, and continued earnings pressures, better information at a lower cost is required today.

Your board requires a holistic view of all risks: As the institution takes on more risk, your board will demand that you develop a holistic view of all the risks and their relative level of danger. To be fully informed, the board may also require an analysis on the sufficiency of current spending on risk management.

As CRO, you can provide this information by taking stock in the current activities and organizing them along the functional risk areas.

The CEO and board need a process to vet risks of new strategies: Your CEO and board will begin to turn to you as CRO to provide a process to vet the risks inherent in new products and business strategies for the institution. As CRO, your obligation is to tease out and communicate the key threats that could threaten the viability of the franchise.

The external forces at play

There are also significant external forces that are causing the CRO to be needed by the institution. These forces are pushing institutions to be more risk-focused than ever before, which in turn, raises the responsibilities on the CRO. New lines of business: Whether the objective is to put new deposit balances to work, compensate for lower fee income due to reductions in overdraft and interchange fees, or offer more competitive products, your institution is likely growing the number and types of product

offerings.

These activities increase and broaden the spectrum of risk taken on by the institution. A majority of institutions believe they are conservative in their business practices. The process of change plus the introduction of new products gives rise to a risk shift. You must be able to articulate the level and impact of change to the institution’s risk DNA, and ensure all governance bodies accept the changes.

Becoming a $1 billion institution: Many communitybased institutions have seen steady growth in deposits and assets over the past few years. As a result, a number of institutions are approaching $1 billion in assets and facing FDICIA compliance.

The effort to build a FDICIA program by itself is not so expansive, but, in many cases, it serves as the tipping point for the addition of a risk management position to oversee this and the growing list of new compliance initiatives.

Increasing regulatory expectation: Increasing regulatory pressures on community-based institutions are another force causing the institution to establish and formalize the role of the CRO. With continued growth there is likely an increase in operational complexity. To manage the complexity and maintain an adequate level of safety and soundness, regulatory expectations are growing for the creation of the formalization of risk management function and a dedicated CRO in the institution.

As CRO, you must be able to design sustainable processes to mitigate risk, frame the breadth and depth of control testing, evaluate business operations, and participate in the evaluation

of new products and business opportunities. New regulations are also causing institutions to rethink their management structure and add a CRO.

Making an effective CRO

What qualifies a person to be a CRO? The answer lies in the experience you already possess.

A long tenure at the financial institution: Having a long tenure at the institution is a major asset for being a successful CRO. You have been instrumental in putting in place or advising on a number of initiatives and business lines.

You also know well the people who need to be encouraged to embrace a more risk-based approach to their work. And,

you are respected by the staff, C-suite, and board, which is crucial because they will look to you for answers and guidance.

A holistic view of the institution gained from previous roles: Having a holistic view of the institution is absolutely crucial to being an effective CRO because it is essential in creating and overseeing an enterprise-wide management program. It is extremely hard to walk into an institution and gain this perspective. Instead, it comes from understanding the culture and how daily work gets done, and holding positions in which you must have both an up-close and enterprise-wide view of the business.

Having good judgment and integrity: The other executives, who you served in the past, are now turning to you for guidance on business strategy and counting on your sound judgment. In your role as CRO, your reputation for integrity will help you persuade everyone in the institution, from junior associates to board members, that they must embrace a risk-focused view of their work and trust you when recommendations for change are based on the institution’s best interest and not your own.

The CRO and ERM:

Because of the combination of external forces, internal needs, and the qualities you possess, your institution came to an

important decision, and now you are the CRO and one of the most important people in your financial institution.

The institution’s financial well-being, its ability to improve delivery of products and services, and its survival in an increasingly competitive and regulated environment depends on how well it manages and mitigates risk and practices enterprise risk management.

A newly-minted CRO said to me recently, “This will be known as a definitive era in banking, with the CRO in place and enterprise risk management being practiced.”

That’s something you can tell the CEO when it comes time to expand your team’s capabilities. BNE

BANKING NEW ENGLAND

13

FEATURE

Theft in Plain Sight Lessons from the Patco v. United case

BY SCOTT VAN VOORHIS Scott Van Voorhis is a freelance writer.

14 BANKING NEW ENGLAND

T

he case of the Maine bank forced to shell out hundreds of thousands of dollars after a business customer’s account was hacked has served up a sharp wakeup call for financial institutions.

Banks and credit unions across New England have scrambled over the past few years to beef up their online defenses in the wake of the notorious Patco vs.

Peoples United case, in which online fraudsters DANIEL MITCHELL lifted nearly $600,000 from a construction contractor’s account at Ocean Bank, which was later acquired by People’s United Bank, a large regional bank headquartered in Connecticut.

The Sanford, ME-based contractor, Patco, sued Ocean Bank, and Patco won a hefty settlement after a federal court found the bank’s security system was not “commercially reasonable.”

However, the court ruling found fault not with the relatively modern online security system the bank had installed, but rather the way it had set it up and monitored it. Most notably, the hackers initially gained entry not directly through the bank’s system, but by installing Zeus malware on the computer at Patco Construction which was used to make electronic funds transfers.

“Credit unions and banks need to constantly reassess their systems,” said Sari Stern Greene, president of Sage Data Security, an independent information

security firm headquartered in Portland, Maine.

Cyber thieves strike

The Patco case makes for a chilling read, whether you are a small bank or credit union looking to protect yourself from online bank robbers or a small business

the company’ chief executive, filed suit in federal court. After losing the first round, a second federal court reversed part of the earlier ruling, finding Ocean Bank’s security arrangements had not been adequate after all.

Patco and the bank, now People’s United, then came to

Ocean Bank lowered the threshold for challenge questions from $100,000 all the way down to $1, giving cyber thieves tracking the keystrokes on Patco’s computers multiple opportunities to figure the answers to the challenge questions. with an account to protect.

Using the Zeus malware surreptitiously installed on Patco’s computers, the cyber thieves were able to record keystrokes and figure out the company’s login info for the commercial account it maintained at Ocean Bank.

The cyber robbers then lifted more than $588,000 from the account, used by the contractor to make payroll, in several separate transactions over a number of days in May 2009, ranging from $56,000 to more than $115,000.

Once alerted, Ocean Bank scrambled to cancel the transfers – out to Florida and California where Patco does not do business – leaving the construction contractor with a roughly $350,000 loss. When Ocean Bank refused to make him whole or settle, Mark Patterson,

an out of court settlement in November.

“A lot of banks and credit unions are very interested in the decision,” said Daniel Mitchell, Patco’s lawyer in the case and an attorney with Portland-based Berstein Shur. “The last three or four years, the learning curve has really been tremendous for financial institutions in learning about data security and developing better protocols.”

Warning signs missed

Ordinarily, Patco would have been simply been out of luck. After all, the bank had spent good money on an online security system, which should have covered it from any claims, and the virus had originated on Patco’s computers. But Patco’s

lawyers were able to make a case that Ocean Bank failed to properly utilize the protections it had put into place.

“They had a really good system,” noted Mitchell, Patco’s lawyer. “They didn’t implement it the right way.”

For starters, there were all sorts of warning signs the bank failed to heed.

The money transfers out of Patco’s payroll account were for significantly larger amounts than usual, at odd times, to individuals with whom Patco had never done business before, using IP addresses that were not recognized as valid IP addresses of the construction company.

Moreover, the bank’s own security system flagged the transactions as high risk, giving scores in the high 700s on a scale zero to 1,000, Mitchell said.

Previous Patco transactions were never rated higher than 214.

Still, possibly the most damning piece of evidence related to how Ocean Bank adjusted the settings on its online security system.

A year before the cyber heist, in 2008, Ocean Bank decided to lower the threshold at which

challenge questions are asked of customers, and of course; potential thieves seeking to access a commercial account (see related article, page 6). While the previous threshold had been set at $100,000, Ocean Bank lowered it all the way down to $1. Instead of making its customers safer, this decision had the exact opposite effect, meaning that account holders were forced to submit their challenge questions, such as their mother’s maiden name and the like, on a regular basis.

And this in turn meant that the cyber thieves who were tracking the keystrokes on Patco’s computers had multiple opportunities to figure the answers to the challenge questions, said Sage Data’s Greene.

Lessons learned

The Patco case, while unfortunate for the contractor and bank, has had at least one

beneficial side effect: It has provided a badly-needed wakeup call to small banks and credit unions over the threats of cyber thievery.

Playing out in the public domain over a couple years in a court case widely watched in financial industry, smaller banks and credit unions have moved to close loopholes and strengthen their online security, said Greene, who appeared as an expert witness on behalf of Patco. The Patco ruling itself offered up some common sense suggestions for how Ocean Bank could have more effectively used the system it had in place.

To avoid an Ocean Bank-like cyber debacle, financial institutions should have personnel reviewing suspect transactions identified by their online security systems, actively seek to notify customers of transactions that appear suspect.

Moreover, they should also avoid blanket security measures and try

and tailor them to fit the profile of individual account holders.

In addition, Greene said many institutions are now using multi-factor identification, meaning that someone trying to transfer money needs to match up in two other ways and can’t just gain entry by regurgitating a challenge question.

In fact, Greene contends that customers also need to up their game in order to thwart increasingly sophisticated cyber thievery.

One simple and effective way of doing this is to have a computer reserved just for banking business and not for anything else. This can effectively seal it off form the threats that can come from visiting various websites and unwittingly becoming a target for hackers.

“Do your online banking on a restricted computer and don’t do anything else on it,” she said. BNE

PREVENTATIVE MEASURES •

Have financial-institution personnel reviewing suspect transactions identified by their online security systems actively seek to notify customers of transactions that appear suspect.

•

Avoid blanket security measures. Instead, tailor security measures to fit the profiles of individual account holders.

•

Consider adopting multi-factor identification, which requires more than an answer to a challenge question.

•

Advise customers – particularly business customers – to do online banking on a restricted computer that is not used for anything else.

BANKING NEW ENGLAND

15

VIEW FROM THE TOP

EVALUATING THE BIG PICTURE

BY CHRISTINA P. O’NEILL

W

hen Edward Hjerpe III joined the Federal Home Loan Bank of Boston in July 2009 as its president and CEO, the bank was feeling the effects of the national financial crisis roiling the housing sector. At yearend 2008, the FHLB Boston board of directors had elected to temporarily cease paying a dividend, and to suspend repurchase of excess stock that it held from its member banks. FHLB Boston would also take losses from a then-large portfolio of private-label mortgage backed securities that had become credit impaired.

Upon his arrival – actually, a reunion, because he had served as a director of financial analysis and economic research, as an executive vice president and CFO at FHLB Boston from 1988 to 1997 – Hjerpe, his management team and the board of directors developed a five-year strategic plan to turn things around and shore up the bank’s capital. The top priority was preserving the bank’s core mission of providing liquidity for member institutions. During the credit crisis, demand spiked. Loan advances that normally run in the $30 billion range doubled to almost $60 billion in 2008.

16 BANKING NEW ENGLAND

The offices of the FHLB Boston look out onto a city view – and a larger economy – that is in rebuild mode. FHLB Boston President and CEO Edward Hjerpe III at the bank’s Prudential Tower offices.

Photos: (c) 2013 Mike Ritter

The bank reduced its shortterm money market investments, and reconfigured the rest of its investment portfolio into agency-backed mortgage-backed securities. It continued to buy mortgages in the Mortgage Partnership Finance program (which allows member banks to sell their mortgage participation but to keep the customer relationship by managing the credit risk of the loans), and adjusted its asset-liability management strategy to reduce risk. Internal cost cuts included a staff reduction in 2009 of almost 10 percent and a move to a lower-cost office in the Prudential Tower.

The senior management team has since been rebuilt.

So have retained earnings, which reached a record $538.2 million in third-quarter 2012.

The market value of the bank’s stock continues to improve. At press time, fourth quarter and yearend results had yet to be announced.

Following are edited highlights of a conversation with Edward Hjerpe III. BNE: Third-quarter 2012 results show that demand for advances was down. Is that because member banks probably have more deposits than they know what to do with right now?

EH: Overall economic growth has been rather anemic for the last couple of years. We don’t have a lot of demand for advances. Member banks are flush with deposits, and therefore don’t have as much demand for short-term cash; and so a lot of members have paid off, particularly, the shorter-term advances.

And we understand that; that’s actually exactly how our bank is supposed to work. We’re

supposed to expand, as we did during the crisis, when lenders need us, and contract when they don’t need us.

[W]e are blessed with an incredibly strong membership base here in the six New England states, particularly relative to the other parts of the country. We have had one FDIC-insured bank failure [in the New England region] since 1993. Other states are having 20, 30, 40 each year. And the membership base [is] well-

We also have a large percentage of short-term advance funding. Members who borrow short term – three weeks, three months, six months – are not protected if rates go up. That doesn’t create a stable advance book for us, because every three weeks, or six weeks, whatever it is to maturity, we don’t know if that’s going to re-up, so to speak.

BNE: In November 2009, bank suspended the activity-based

We didn’t worry about losing many [members] to insolvency and they’ve been very supportive of changes that we’ve made here, and very patient while we did so.

— Ed Hjerpe III capitalized. We didn’t worry about losing many to insolvency and they’ve been very supportive of changes that we’ve made here, and very patient while we did so.

We have had a focus, all through 2012, and we will again in 2013, on encouraging members to consider long-term advances, because the cost of funds is so low right now.

So, we’re suggesting that members consider three-year, five-year, [or] seven-year advances now, when funds are so cheap. As interest rates go up, they won’t get stuck having to pay higher rates if they’ve locked in long term advances.

Now that’s good for the membership, we think that helps them manage their interestrate risk; it’s also good for the bank, because it would help us stabilize our advances portfolio.

stock investment requirement, for certain loans that members sell the bank under MPF. Is that stock holiday still in effect?

EH: That stock holiday is currently in effect. It’s not permanent. We have a regulatory capital requirement of four percent; we’re actually running well above 8 percent.

So we’re more than double our capital requirement. Why ask members to put up more capital if they want to sell loans into the MPF program? At some point, when the bank grows, and we see a steady increase in demand, we will consider putting the activity-based stock requirement back in effect.

BNE: What do you seew ahead in terms of restructuring of Fannie and Freddie?

Does anybody have a handle on that?

EH: I think it’s an overdue question. When the U.S. Treasury and the FHFA put Fannie Mae and Freddie Mac into conservatorship, in 2008, they referred to it as a “time out,” meaning – and I think the markets thought – that was 30 days, 90 days, maybe 180 days, and then they would either restructure them, wind them down, put a plan in place to wind them down, or something [else]. That was 2008, and it’s now 2013, so it’s four and a half years into that time out, and I think it’s a real shame, and a disappointment that nothing has been done to resolve that.

I understand it’s a political issue at some level, but the U.S. taxpayer is on the hook for everything that happens.

They’re the stockholders, in effect, for Fannie Mae and Freddie Mac – they’ve pumped billions of dollars into Fannie Mae and Freddie Mac, and I think Congress and the administration have an obligation to say, we need to fix Fannie Mae and Freddie Mac. There are many different views depending on where you stand politically, on what the right answer to that is. But the fact that there’s no plan, is very disconcerting.

Between Fannie Mae and FHFA, they buy something like 90 percent of the mortgages in our country, Fannie and Freddie alone buy something like 50 percent of the mortgages in our country. They really are the majority of the secondary mortgage market. And that creates tremendous uncertainty for the housing sector, not knowing what the future of the secondary mortgage market Continued on next page

BANKING NEW ENGLAND

17

Evaluating the Big Picture Continued from page 17

Do we know that the secondary mortgage market is ultimately going to be a private sector entity, a government-driven entity, or a quasi-government, whether it’s a GSE or some other quasi-government structure?

Until we know the answer, it’s not quite clear to me who should design it.

— Ed Hjerpe III

is going to be. That has ramifications for consumers, originators, servicers, sellers, investors, everyone through the whole mortgage sector.

BNE: Who’s responsible for revamping the securitization of the secondary mortgage market?

EH: Ultimately Fannie Mae and Freddie Mac are creations of Congress; they were created

by Congress [and] chartered by Congress, so ultimately Congress will have to pass legislation that will resolve the current situation at Fannie Mae and Freddie Mac. Who’s responsible for creating what succeeds Fannie Mae and Freddie Mac,

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as the primary drivers of the secondary mortgage market? It seems to me that FHFA has stepped in, [possibly] because nobody else has. But they’ve [announced their intent to] design a platform for mortgage securitization going forward.

(Editor’s note: The FHFA, which oversees Fannie and Freddie, and regulates the FHLB system, announced and sent to Congress a strategic vision for the next phase of its conservatorship of Fannie and Freddie on Feb. 1, 2012. In public remarks during December 2012, Acting FHFA Director Edward DeMarco laid out the framework for revamping mortgage securitization, and called on Congress to draw the conservatorships to an end and to define the government’s future role in housing finance.)

Do we know that the secondary mortgage market is ultimately going to be a private sector entity, a government-driven entity, or a quasi-government, whether it’s a GSE or some other quasi-government structure? Until we know the answer, it’s not quite clear to me who should design it. Do you want the government creating something that the private sector is ultimately going to use, or likewise, would you want the private sector designing something of which the government is ultimately going to be the primary driver?

Until we really know what the structure of that market is going to be, is the private sector going to step in and fill it, or are we going to restructure Fannie and Freddie and have them in some other form? It’s a hard question to answer.

BNE: During the fiscal cliff discussions, the tax deductibility of mortgage interest was on the table, at least for a brief while,

and at least in the media. How real is that possibility?

EH: I don’t think that question will go away, because if you think about the fiscal cliff, Congress only solved a very, very small portion of the financial issues in our country. The government has to figure out how to both reduce spending and increase revenue. I think it will constantly come up as a topic of discussion.

I think it really comes down to what you believe, and what Congress ultimately believes, about housing policy in our country. Do we want to continue to advocate home ownership? This is one way to do that, by allowing deductibility of mortgage interest, which in effect a subsidy for housing.

BNE: And that’s been baked into the formula. And if you take it out, that’s going to be a big dislocation.

EH: Yes, and that’s why I don’t think you’ll have the extreme of it’s on or it’s off, but some people will take runs at it and some may be marginal or more than marginally adjust it down, I don’t know whether they’ll

be successful or not – frankly, in the end, it will be the homebuilders and the realtors and others who will impose pressure for keeping it. Certainly if you take a subsidy away from an industry or a sector, it has

I think it really comes down to what you believe, and what Congress ultimately believes, about housing policy in our country.

— Ed Hjerpe III an impact. But in the end I think it comes down to where the country ultimately decides we should be in terms of subsidizing housing through the deductibility of mortgage interest.

BNE: In articles in FHLB-Boston publications, both Avidia and Peoples United indicated that even in cases where the FHLB role in a deal was not the

dominant part of it, it made community development projects come together more easily than they would have if FHLB were not there.

EH: We often say that we are a catalyst for deals that might not take place otherwise, because many times we’re the first funding in. A lot of other sources don’t want to be the first ones in, so if we can say, “we’re in,” then that can often act as a catalyst for others to come in.

To the extent we do anything here, wherever this money ends up, it’s always through our members. We’re facilitators. We raise the money, we get them the money, they are the ones that do the lending and economic development.

I’m proud of the fact that we’ve strengthened the financial condition of the bank as a financial institution. Capital has grown, retained earnings have grown, as have a number of other measures – all at a time when our advances balances have come down. But again, that is how we think the bank is structured to work. We’re on a great trajectory; we need the economy to grow if we want to grow, but we really have, [been] on a nice trajectory in the past few years. BNE

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BANKING NEW ENGLAND

19

RISK MANAGEMENT

The Growing Exposure of New England Banks to Interest-Rate Risk

BY JASON HWANG Jason Hwang is the vice president and director of financial strategies, research and membership applications at the Federal Home Loan Bank of Boston.

20 BANKING NEW ENGLAND

A

t the beginning of 2013, the interest-rate environment remains historically remarkable. Rates throughout maturities continue at or near historic lows. The Federal Reserve maintains its commitment to the Quantitative Easing Program, purchasing massive amounts of government and mortgagebacked bonds in an effort to boost what has so far been moribund growth since the financial crisis. In December 2012, the Federal Reserve announced that it would purchase more than $85 billion in Treasury and agency bonds and mortgage-backed securities per month – over $1 trillion a year – and that such purchases would continue for an extended period.

Moreover, the Federal Reserve has adopted the “Evans Rule,” named after the president of the Federal Reserve Bank of Chicago, Charles Evans, who has advocated making monetary policy more transparent by linking policy instruments to explicit thresholds on key macroeconomic indicators.

Under the new policy, the Federal Reserve would keep the federal funds rate target between zero and 25 basis points as long as: the unemployment rate remained above 6.5 percent; inflation between one and two years ahead was projected to be below 2.5 percent; and longterm inflation expectations were “well-anchored.”

Whether the new method of forward guidance will achieve the intended effect of making interest-rate policy more transparent and anchoring expectations remains

to be seen. Some market participants caution that the Federal Reserve’s growing use of unconventional policy tools is “bolster[ing] artificial asset prices,” according to Mohamed El-Erian in his recent article, “How Risky is the Fed’s Major Move?” Others, like Matthew Bosesler writing in Business Insider, see danger in the

2012, for example, a significant minority of five out of 19 FOMC participants expected the federal funds rate to increase prior to 2015. The magnitude of eventual rate increases is also subject to significant uncertainty. While the median projection for the federal funds rate target at the end of 2015 was 100

Currently federal debt held by the public exceeds 70 percent of U.S. gross domestic product, the highest percentage level in 60 years. According to recent projections by the Congressional Budget Office, absent drastic deficit-cutting actions, federal debt is expected to climb to 90 percent of GDP by 2022.

Federal Reserve’s aggressive policy stance potentially leading to sudden inflation, especially if some of the current unemployment is “structural,” such that the natural rate of unemployment is higher today than it was before the financial crisis.

Taking the Federal Reserve’s guidance at face value, when will we see meaningful movements in rates? With respect to shortterm rates, “sometime in 2015” is the frequently heard answer, consistent with the projections of the majority of Federal Open Market Committee (FOMC) members. However, less appreciated by the media concerning FOMC announcements is the degree of uncertainty inherent in these projections. In December

basis points, five of the 19 participants expected a target rate of 200 basis points or higher.

The long-term budget outlook for the U.S. federal government represents another source of significant uncertainty concerning rate movements. Currently federal debt held by the public exceeds 70 percent of U.S. gross domestic product, the highest percentage level in 60 years.

According to recent projections by the Congressional Budget Office, absent drastic deficitcutting actions, federal debt is expected to climb to 90 percent of GDP by 2022 and move the U.S. into “fiscal territory unfamiliar to it and other developed nations.”

Once such levels of debt are reached, and perhaps much

earlier, it is unlikely that the federal government would enjoy the U.S. dollar’s safehaven status and exceptionally low yields resulting from it. The impact on interest rates from reduced foreign demand for U.S. treasury securities could be large. For example, recent research from the OCC has found that “if foreign official inflows into U.S. Treasuries were to decrease in a given month by $100 billion, fiveyear Treasury rates would rise by about 40-60 basis points in the short run.” Such outflows are not difficult to imagine given that at current yields, foreign governments are effectively providing the U.S. government with interestrate insurance and paying the U.S. government in real terms to do so. Moreover, because some foreign governments hold vast amounts of U.S. Treasury securities in reserves – $2.5 trillion by China and Japan alone – even a small re-allocation of their reserve portfolios could cause large movements in interest rates. In fact, as of October 2012, China had reduced its U.S. Treasury holdings by approximately $100 billion compared to a year earlier. While this reduction was more than offset by purchases of other central banks, such outflows highlight the risk that treasury yields could change substantially due to reduced foreign demand.

In sum, on the shorter end of the curve, rates appear unlikely to change in the near term. However, financial institutions face substantial uncertainty regarding both when and by how much rates will increase. With the federal funds rate tied to

CHART 1: Long-Term Assets / Total Assets New England Banks (in millions) $41 $40 $39 $38 $37 $36 $35 $34

= Assets $1 billion to $10 billion = Assets less than $1 billion

$33 $32 2010 Q1

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

Source: Federal Home Loan Bank of Boston

macroeconomic outcomes as opposed to a specific date, we may find that rates will become more volatile as market participants update their expectations regarding the speed of recovery and corresponding Federal Reserve action as new economic data become available.

Interest-rate exposure of New England banks

As most banks are aware, the present low-rate environment has made it challenging to find assets with sufficiently high yields. For small New England banks with assets under $1 billion, the average net interest margin has declined by 20 basis points over the past two years alone, reaching a low of 3.37 percent in the third quarter of 2012.

For medium-sized banks in

New England with assets between $1 billion and $10 billion in assets, the average net interest margin was 3.30 percent in the third quarter of 2012, also the lowest since 2010.

Against the backdrop of shrinking margin, New England banks have lengthened their asset maturities in pursuit of yield.

The chart below shows the share of long-term assets (loans and securities not repricing within five years and CLOs not repricing within three years) in total assets for FDIC-insured banks in New England states, broken out by asset size. (See Chart 1) Small banks increased their share of long-term assets in total assets from 35 percent in the third quarter of 2010 to 41 percent in the third quarter of 2012. Medium-sized banks

increased the long-term asset share by a similar magnitude.

The liability side of the balance sheet tells a similar story. A crude but informative measure of interest-rate risk is a repricing gap, the difference between rate-sensitive assets and rate-sensitive liabilities as a percentage of total assets. As shown in the chart below, small and medium-sized banks have maintained a sizable “negative gap,” suggesting that were rates to rise, liabilities would reprice up much faster than assets. (See Chart 2) A further potential concern for interest-rate-risk managers is that deposits, once plentiful as a source of inexpensive and potentially stable funding, may not be in such bountiful supply in the future. Chart 3 on the next page shows that for small Continued on next page

BANKING NEW ENGLAND

21

The Growing Exposure page 21

and medium-sized banks, the ratio of net loans and leases to deposits (loan-to-deposit ratio) bottomed out in the third quarter of 2011 and has been rising since. (See Chart 3) In fact, the loan-to-deposit ratio for medium-sized institutions is the highest it has been since the beginning of 2010. This trend reversal warrants careful attention since an improvement in the economy and rising investment returns elsewhere could lead to substantial deposit outflows, exposing banks to costlier funding options just as loan demand picks up and funding needs intensify. A further complicating factor is the termination of the Transaction Account Guarantee program at the end of 2012, which may cause municipalities, businesses, and other users of non-interestbearing transaction accounts to shift deposits from smaller to larger institutions or into money market funds.

The combination of lengthening asset maturities and slowing deposit growth suggests that New England banks are increasingly exposed to capital losses on assets and higher funding costs when interest rates rise. The increasing exposure of small and medium-sized banks to interest-rate risk has been a recent focus of bank regulators across the nation. For example, in the fall 2012 issue of Semiannual Risk Perspective, the Office of the Comptroller of Currency noted that “[s] mall banks have increased the maturity profile of their investment portfolios since 2007,” exposing some banks to “potentially significant interest rate risk.” Similarly, the managing examiner of the Federal Reserve Bank of Kansas City recently wrote that “[t]hose institutions extending asset maturities without a corresponding shift in liabilities are particularly exposed to

significant upward movements in interest rates, which is not as uncommon as often perceived.”

Managing interest-rate risk

In a December 2012 survey, members of the Federal Home Loan Bank of Boston indicated that interest-rate

risk remains a high priority in their 2013 planning even as they expect the low-rate environment to continue for some time. This was reflected in 2012 member activities, with over 100 member institutions borrowing $1.9 billion in advances with maturities of one year or greater, including nearly 70

CHART 2: One-Year Repricing Gap New England Banks (in millions) $-30 $-32

= Assets $1 billion to $10 billion = Assets less than $1 billion

$-34 $-36 $-38 $-40 $-42 $-44 $-46 $-48 $-50 2010 Q1

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

Source: Federal Home Loan Bank of Boston

CHART 3: Net Loans and Leases / Deposits New England Banks (in millions) $92

$89

$86

$83

$80 2010 Q1

2010 Q2

2010 Q3

2010 Q4

Source: Federal Home Loan Bank of Boston

22 BANKING NEW ENGLAND

members who borrowed $1.3 billion with maturities of four years or greater. With the uncertainty inherent in the unprecedented nature of the present economic environment and heightening regulatory focus, prudent bank managers should take stock of their interest-rate exposure and balance-sheet risk. BNE

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

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COMMUNITYGOOD GOODWORKS WORKS COMMUNITY

Financial institutions large and small have been making a difference in their communities for years. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors.

For submission information, see page 26.

Featured Banks • Bank of New Hampshire • Berkshire Bank • Citizens Bank • Country Bank • Clinton Savings Bank • Kennebunk Savings • Rockland Trust Company

Bank of New Hampshire

Laconia, NH-based Bank of New Hampshire realized $12,000 in proceeds from its 2012 Holiday Auction. A total of 167 items were a uctioned off, with the proceeds donated to the New Hampshire National Guard’s Chaplain Emergency Relief Fund. The fund was established during Operation Desert Storm when many military families faced financial hardship during the deployment of their loved ones. Any military member living in New Hampshire or serving in a New Hampshire unit is eligible to receive support. Monies are used exclusively to assist military members and their families who are experiencing an unexpected financial crisis. In the five years that Bank of New Hampshire has been supporting the NHNGCERF through their annual auction, the bank has donated more than $65,000 to the fund.

In other community-activity news, Bank of New Hampshire raised $120,000 in 2012 to donate to local United Ways, setting a new high for donations. In addition to employee contributions and the banks match, Bank of New Hampshire’s United Way Committee, consisting of Karon Thibault, Donna Harris, Candice Hada, Lindsey Ball, Janice Dall, Tiffany Benton, Kyril Mitchell, Michele Thomas, Kayne Kreitzer and Lisa Cole, coordinated fundraisers such as an intranet auction, jeans days, cook book sales, bake sales and a cutest pet photo contest to raise an additional $13,932.

Thibault, assistant vice president and bank office support manager, and Donna Harris, vice president and customer service center manager, volunteered to be the campaign co-chairs for the bank. Through creativity and hard work, the employees delivered a record level of funding and employee participation.

Berkshire Bank

The Berkshire Bank Foundation, charitable arm of Pittsfield, Mass.-based Berkshire Bank, has launched its scholarship program for high school seniors in Massachusetts, New York, Connecticut and southern Vermont. The program, which has been expanded from 2012, will award $45,000 in total scholarship dollars to students who have exemplified community service through their volunteer efforts, have been successful academically and have a demonstrated financial need. Additionally, students must attend a school that is located in a community with a Berkshire Bank office or a school in a community served by a Berkshire Bank office.

Through the program, 30 scholarships of $1,500 apiece will be awarded to high school seniors who will be attending a two- or four-year college in the fall. Applications will be evaluated based on demonstrated volunteerism in the community and through participation in extracurricular school activities. In addition, applicants must have a 24 BANKING NEW ENGLAND

GPA of at least 3.0 and a financial need (total family income under $75,000). An independent panel of bank employee volunteers will review all applications and select this year’s winners.

In other Berkshire Bank news, the bank awarded a $5,000 grant to the American Red Cross late last year to support ongoing relief efforts in communities affected by Hurricane Sandy. The funds will be used to assist individuals meet basic needs such as food, clothing, and shelter as the recovery process continues.

1

Citizens Bank

Citizens Bank Foundation, the charitable arm of Providence, RI-based Citizens Bank, awarded a $50,000 grant for the seventh annual holiday event, “A Sparkling Affair,” to benefit the Community Gems Partnership. The event was held on Dec. 8, 2012, and the foundation was the lead sponsor. Jerry Sargent, president, RBS Citizens and Citizens Bank Massachusetts, served as the event chairman. The Community Gems Partnership, established in 2004 by five nonprofit organizations, is a collaboration to raise funds and awareness, pool resources and create initiatives to serve youth and families in the greater Boston area. Citizens Bank has contributed more than $250,000 to the Community Gems Partnership since its creation. The five Community Gems are: Boston Higher Education Resource Center, Children’s Services of Roxbury, La Alianza Hispana Inc., Roxbury Youthworks, Inc. and YouthBuild Boston, Inc.

2

Country Bank

Ware, Mass.-based Country Bank pledged $500,000 to Old Sturbridge Village late last year to support educational programs at the museum. Old Sturbridge Village President Jim Donahue has renamed the village’s educational building “The Country Bank Education Center” in the bank’s honor. More than 65,000 schoolchildren visit Old Sturbridge Village on field trips each year, and a majority of school groups augment their visits with in-depth learning and hands-on historical activities led by OSV museum teachers in the village’s education building. Donahue called the Country Bank gift “transformative,” and one that will allow Old Sturbridge Village to reach even more schoolchildren every year.

“The year before I came to the village, this beautiful building had been closed and shuttered as part of downsizing and cost-saving efforts. Now, it is humming with activity again, and thanks to Country Bank’s generosity, its future is secure,” Donahue said.

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Jerry Sargent, president of RBS Citizens and Citizens Bank Massachusetts, recently presented a $50,000 grant from The Citizens Bank Foundation to The Community Gems at their seventh annual “A Sparkling Affair” event in Boston that raised funds to support their work for more than 20,000 people. Sargent (left) is joined by (left to right) Pastor Sam Acevedo, executive director of Boston Higher Education Resource Center; Pam Ogletree, president and CEO of Children’s Services of Roxbury; Ken Smith, executive director of YouthBuild Boston; Mia Alvarado, executive director of Roxbury Youthworks; and Apolo J. Cátala, executive director of La Alianza Hispana.

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Citizens Bank

Providence, RI-based Citizens Bank has contributed $18,000 to the Rhode Island Community Food Bank in the wake of Hurricane Sandy. The storm spiked demands for aid from all the region’s food banks, which sent most-needed food items to their colleague food banks in the hardest-hit areas, even while dealing with increased challenges in their home states. Citizens’ donation enabled the Rhode Island Community Food Bank to restock its shelves with 38,000 pounds of pasta, after the food bank sent an 18-wheeler full of food to the Connecticut Food Bank in New Haven. The Rhode Island food bank also provided other aid to the Connecticut-based food bank for a week.

“When we heard that our friends at the Rhode Island Community Food Bank helped the Connecticut Food Bank following Hurricane Sandy, we knew it was important to offer our support in the effort of providing much-needed food to those who were adversely impacted by the storm,” said Ned Handy, president, Citizens Bank and RBS Citizens, Rhode Island and Connecticut.

Citizens Bank Rhode Island also supported the “Lunch On Us” at McAuley House by funding meals prepared at the Providencebased meal site and volunteering to help serve to their clients. The year 2012 was the sixth year the bank has supported this initiative.

President Ned Handy donned an apron alongside members of his leadership team and regular McAuley House volunteers to serve lunch to 300 guests.

Citizens Bank provided a $10,000 grant to McAuley House in honor of National Hunger Awareness Month during November 2012.

4 Also last year, Citizens Bank Rhode Island also teamed with Cumulus Broadcasting radio stations 92 PRO-FM, Lite Rock 105 and News Talk 630 WPRO and 99.7 FM, and Hasbro Inc. to support a fifth year of Neighbors in Need, a program designed to help nonprofit organizations and individuals during the holiday season. For five weekdays in early December, Citizens Bank

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awarded $500 per day on 92 PRO-FM, Lite Rock 105 and News Talk 630 WPRO and 99.7 FM to a family in need. A donation was also made in that family’s name to the Rhode Island Community Food Bank and Crossroads Rhode Island to help other neighbors in need. Hasbro donated toys and games to the children in each winning family.

5 Clinton Savings Bank

Clinton, Mass.-based Clinton Savings Bank joined Berlin Memorial School students and faculty to make a donation to the United Way of Tri-County in late December to feed five families over the holiday season. Berlin Memorial School teacher Elizabeth Bennett’s first-grade class initiated the charitable collection, and Clinton Savings Bank pledged to match their gift. Earlier in the month, Bennett launched a week-long reward system where her students could earn “Bennett Bucks” (each equivalent to $1) for random acts of kindness and other good behavior in the classroom and at home, if parents chose to participate. The student knew from the start that any money they earned would be used to purchase holiday gifts for others in need. After a week’s effort, the children’s hard work and good conduct resulted in a collection of $131, which they decided to donate to the United Way of Tri-County. On hand to accept the combined bank and school donation of $262 was United Way of Tri-County Board Member and Treasurer Michael D. Tenaglia, who is also senior vice president and chief information officer at Clinton Savings Bank. The class also presented Tenaglia with a new stuffed animal from Build-A-Bear Workshop for him to share with a child in need.

Citizens Bank

The Citizens Bank Foundation has provided $60,000 in contributions to seven organizations serving the homeless across New Hampshire. These programs will directly support individuals and families in New Hampshire who need housing, food and social services, as demand continues to rise.

Continued on next page

BANKING NEW ENGLAND

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Community Good Works page 25

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New Hope Executive Director Kim Thomas, Rockland Trust First Vice President and District Manager Arthur Viana, and Laura Hennessey Martens, New Hope vice president of development and public relations.

“Homeless shelters continue to find ways to support the significant number of individuals and families turning to them for help in their time of need,” said Joe Carelli, president of Citizens Bank and RBS Citizens, New Hampshire.

The organizations that received grants from the Citizens Bank Foundation to address homelessness are: New Horizons for New Hampshire, Manchester, $10,000; Child and Family Services of New Hampshire, Manchester, $15,000;Cross Roads House Inc., Portsmouth, $10,000; Marguerite’s Place, Nashua, $5,000; Front Door Agency, Nashua, $10,000; Harbor Homes, Nashua, $5,000; and The Upper Valley Haven, Inc., western region, $5,000.

The Citizens Bank Foundation, a subsidiary of the Citizens Charitable Foundation, which is a charitable contributions vehicle of RBS Citizens Financial Group, Inc., RBS Citizens, N.A. and Citizens Bank of Pennsylvania, has invested more than $800,000 over the past nine years in homelessness prevention, transitional housing and emergency shelters.

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Kennebunk Savings

Kennebunk, Maine-based Kennebunk Savings recently provided a $25,000 grant to North Berwick’s D.A. Hurd Library to fund its current building project, its first significant renovation in 80 years. Construction began in the fall of 2012 on what will be a 1,500-square-foot addition and updates to its electrical, plumbing and air circulation systems.

With more than 2,700 library cardholders and over 20,000 visitors per year, the library had been in need of the expansion for some time. The Kennebunk Savings grant brings the library closer to its $600,000 goal for the project that will increase the building’s comfort, efficiency and provide for technology infrastructure upgrade. Kennebunk Savings donates 10 percent of its earnings

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Left to right: Library Director Beth Sweet receives a check from Bradford C. Paige, Kennebunk Savings president and CEO, and Dale Barrows, vice president and manager of the North Berwick branch, accompanied by Library Board President David Dutch and members of the board of trustees, Meleta Baker and Ginny Reusch, who met as the library addition construction got under way. back to the nonprofit community, resulting in over $8 million in donations since 1994.

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Rockland Trust Company

Franklin, Mass.-based Rockland Trust Charitable Foundation awarded a matching grant of $10,875 late last year to New Hope Inc. in support of its Highlights for Hope fundraiser. New Hope, which serves 54 cities and towns in Southeastern and Central Massachusetts through community outreach programs, seeks to break the cycle of domestic and sexual violence.

The Rockland Trust Charitable Foundation’s donation supports New Hope’s 24-hour hotline and an emergency shelter located in the foundation’s service area. BNE

SEND US YOUR GOOD NEWS! Does your bank have news of its community support activities? Whether it’s a cash donation, a financial literacy initiative, a nonprofit organization volunteer day or another creative outreach, we’d like to recognize it in Banking New England. Please send press releases and accompanying photos to: Christina P. O’Neill, custom publications editor, via email at coneill@thewarrengroup.com.

IN CASE YOU MISSED IT

Maine

quarter of this year.

Thomas S. Leavitt, president and CEO, will serve as CEO of the unified bank, and South Coastal Bank CEO Robert Fraser will become chief operating officer. The action to consolidate Hoosac Bank, Williamstown Savings Bank – a division of Hoosac Bank – and South Coastal Bank under one bank charter was approved by the board of directors of each of the banks and by MountainOne Financial Partners.

Marlborough Savings Bank Aids Business Expansion Kennebunk Savings officials opened its newest location at 701 Central Ave., Dover, NH, with a ribbon-cutting event on Friday, Dec. 14. Local Chamber of Commerce officials, Kennebunk Savings’ executives and board of trustee members joined those involved in getting the office up and running, along with executives from two local nonprofits. Dover Children’s Home Executive Director Donna Coraluzzo and Cocheco Valley Humane Society Director Leslie Heindl each accepted a check for $1,500, as part of the celebration. The Dover office marks the second New Hampshire office for Kennebunk Savings, and is now the company’s 16th office throughout seacoast New Hampshire and York County, Maine.

Massachusetts

Financing through the Small Business Banking Partnership is helping a family-owned business expand and create jobs. The Vin Bin is adding seven jobs in Marlborough and will create 10 or more jobs in a new location in Hopkinton. The Vin Bin, a retailer of fine wine, artisan cheese, specialty foods, craft beer and spirits, opened in 2004. The Small Business Banking Partnership moves Treasury cash reserve funds typically held by large national and international financial institutions and deposits them in amounts of up to $10 million in Massachusetts community banks. In exchange for the infusion of new deposits, the banks agree to enhance their loan portfolios to small credit-worthy Massachusetts businesses.

The Treasury has deposited $293 million in 50 community banks statewide, which has helped leverage over 3200 small business loans totaling $477 million. .

“The Vin Bin had two great growth opportunities in the past year, but neither could be realized without the faith and backing of the Marlborough Savings Bank,” said Rick Lombardi, owner of The Vin Bin. “We are grateful for their support and belief in the Vin Bin and we are fortunate to have them as our local bank.”

New Hampshire New Hampshire Thrift Bancshares Inc. Completes Acquisition of The Nashua Bank

St. Mary’s Credit Union held a groundbreaking ceremony on Dec. 11 at the site of its newest branch in Westborough. The branch, at the junction of Routes 9 and 30, is at the site of a former Friendly’s Restaurant. Members of the board of selectmen and Westborough Town Manager Jim Malloy participated in the ceremony, along with officials from St. Mary’s Credit Union and the Corridor Nine Chamber of Commerce. The new branch will feature a “dialogue banking” floor plan, to allow staff to provide more personal consulting service to its members.

MountainOne Financial Partners to Unite Bank Operations under Single Charter

MountainOne Financial Partners in North Adams plans to unite its banking operations under a single charter this year, following the combination of Hoosac Bank and Williamstown Savings Bank operations in 2012. MontainOne is bringing its South Coastal Bank unit into a common MountainOne Bank charter for all three banks. The banks will retain their current identities and independent community focus while operating as divisions of MountainOne Bank. The integration is subject to regulatory approval and is targeted for completion in the third

Newport-based Thrift Bancshares Inc. completed its acquisition of The Nashua Bank on Dec. 21, expanding its presence in southern New Hampshire. Shareholders of The Nashua Bank approved the acquisition, and Lake Sunapee Bank, the company’s subsidiary bank, and The Nashua Bank, received the required regulatory approvals in early December. The combined company has total assets of approximately $1.2 billion and a network of 29 branches serving customers in Grafton, Hillsborough, Sullivan and Merrimack counties in New Hampshire and in Addison, Rutland and Windsor counties in Vermont. The Nashua Bank will operate under the name “The Nashua Bank, a division of Lake Sunapee Bank.”

Vermont Merchants Bank Opens New Barre Branch

South Burlington-based Merchants Bank celebrated the opening of its new Barre branch on North Main Street in the Rite Aid Shopping Plaza on Nov. 29. The event was marked with all-day raffles and giveaways, as well as a formal ribbon cutting event, and weekly raffles until the Christmas holiday, with raffle prizes all coming from local businesses. BNE

BANKING NEW ENGLAND

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PERSONNEL FILE

Career achievers in banks and credit unions across New England are constantly on the move, with their professional journeys reflecting a combination of career mobility and longstanding service. We acknowledge them, and welcome readers to submit news of their own staff. For submission information, see page 30.

Featured Banks • Berkshire Bank • East Cambridge Savings Bank • North Middlesex Savings Bank • New Hampshire Thrift Bancshares • The Cooperative Bank of Cape Cod • Meredith Village Savings Bank • Needham Bank • Northern Bank

Appointments and Elections

Lawrence A. Bossidy

Michael P. Daly

Berkshire Bank Berkshire Hills Bancorp. Inc. and its banking

subsidiary, Pittsfield, Mass.-based Berkshire Bank, have announced the election of Michael P. Daly, president and CEO of Berkshire Bank, as chairman of the company board of directors effective Jan. 1.

East Cambridge Savings Bank The board of trustees of Cambridge, Mass.based East Cambridge Savings Bank elected Gilda M. Nogueira chief executive officer in late 2012. She joined the bank in 1977 and held various positions. She was elected assistant vice president in 1988, vice president of operations in 1991, and senior vice president and senior operations officer in 1999. Nogueira became executive vice president of East Cambridge

Chairman Lawrence A. Bossidy was elected to the new position of lead independent director, effective the same date. Daly was appointed president and CEO of the company and the bank in October 2002. He joined Berkshire Hills in 1986, rising to executive vice president and senior loan officer prior to his appointment as CEO. Bossidy joined the board as chairman in 2002 and serves on the compensation and corporate governance/nominating committees. In his new position as Berkshire’s lead independent director, he is expected to have involvement in agendasetting, communication with other independent directors, planning, and performance evaluation activities.

Berkshire also announced the retirement of Catherine B. Miller as a director of the company and the bank. Miller had served as a Berkshire Bank director for nearly 30 years and as a director of the company since 2000.

Savings Bank in 2006. She is a member of the bank’s board of corporators and was elected a trustee in 2009. Additionally, Nogueira serves as clerk of the bank’s board of investment. She will continue to hold the position of president, to which she was elected in March. She also serves as president of the bank’s charitable foundation.

She is a board member and past president of the Rotary Club of Somerville and a board member of the Somerville Chamber of Commerce and the Cambridge Family YMCA.

• Clinton Savings Bank • Katahdin Trust Company • Meredith Village Savings Bank • Bank of New Hampshire • SpencerBANK • Unibank • IC Federal Credit Union

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North Middlesex Savings Bank

New Hampshire Thrift Bancshares

Ayer, Mass.-based North Middlesex Savings Bank appointed Walter J. Dwyer IV as its new president and CEO on Dec. 1, 2012. Previously, he served as executive vice president of lending at the independent community Walter J. Dwyer IV bank. He succeeds William Marshall, who recently retired after 27 years at the helm of North Middlesex Savings Bank. Prior to joining NMSB, Dwyer was the senior vice president of lending for Spencer Savings Bank and held a similar position at Bay State Savings. Since vacating his post as president, Marshall remains involved at NMSB, serving on the board of trustees, the audit committee and as the company’s clerk.

As the result of the Dec. 21, 2012, acquisition of The Nashua Bank by New Hampshire Thrift Bancshares Inc., G. Frank Teas, formerly president and CEO of The Nashua Bank, has become senior vice president of Lake Sunapee Bank, New Hampshire Thrift Bancshare’s subsidiary bank. Stephen J. Frasca and John P. Stabile II have been appointed to the boards of directors of New Hampshire Thrift Bancshares and Lake Sunapee Bank, to serve until at least the third anniversary of the merger. The remaining members of the board of directors of The Nashua Bank have been invited to serve as members of an advisory board to be established and maintained by New Hampshire Thrift Bancshares for at least three years following the merger.

Mark Chasson has joined The Cooperative Bank of Cape Cod, based in Hyannis, Mass, as a residential loan officer. He will serve the towns of Harwich, Chatham, Orleans, Eastham, Wellfleet, Truro and Provincetown. He has more than 25 years of experience in the lending industry, including roles at Citizen’s Mortgage, Mortgage Master and Countrywide, and is an established veteran of the Cape’s real estate scene, working with Realtors, appraisers, attorneys and other industry professionals.

her new capacity, Lashway will work closely with the retail banking regional managers to ensure products and services are effectively and efficiently communicated to customers while maintaining outstanding customer satisfaction. Lashway joined Berkshire Bank as vice president and regional manager of the New York region in April 2011, bringing with Heather Lashway her 17 years of experience in retail banking.

Prior to joining Berkshire, she was with Citizens Financial Group, where she served as senior vice president and sales manager for 225 branches in New York.

Meredith Village Savings Bank

Clinton Savings Bank

New Arrivals The Cooperative Bank of Cape Cod

Meredith, NH-based Meredith Village Savings Bank has hired Jaimie Sousa as a business development officer. She will work closely with business owners throughout the Lakes Region to offer a full range of banking solutions. She brings nine years of banking experience to her new role at MVSB. She began her career in 2004 as a teller, and was Jaimie Sousa subsequently promoted multiple times to other roles, such as teller supervisor, marketing and retail coordinator, executive coordinator, and teller manager. Most recently she worked as a retail banking analyst at Mechanics Cooperative Bank in Fall River, Mass.

Needham Bank

Needham, Mass.-based Needham Bank has named Paul M. Totino of Dedham as executive vice president, commercial lending and finance, and John Whittaker as assistant vice president, customer and marketing analytics. Totino brings 28 years of experience in the banking industry to his executive post; prior to joining Needham Bank he was executive vice president and chief financial officer of Middlesex Savings Bank.

Prior to joining Needham Bank, Whittaker was the marketing director at MIS Training Institute in Southborough; previously he was with NEACH (New England Automated Clearing House Association) in Burlington, as marketing director.

Northern Bank

Joan C. McNamara of Burlington has joined Woburn, Mass.-based Northern Bank & Trust Co. as vice president and information security officer. Most recently, McNamara served as senior vice president and director of auditing with Salem Five Bank after nine years with Century Bank and Trust Co. in Medford, where she was first vice president and audit director.

Earlier in her career, she held internal audit positions with Eastern Bank, US Trust and Citizens Bank.

Promotions Berkshire Bank

Pittsfield, Mass.-based Berkshire Bank has promoted Heather Lashway, formerly the bank’s New York regional manager, to a vice president position overseeing product and sales manager. In

Clinton, Mass-based Clinton Savings Bank has promoted Geoffrey Green to branch manager of the Bolton office. He has served there as assistant manager since 2010. In his new position, he will build upon existing customer relationships. Green is a member of both the Assabet and Nashoba Valley Chambers of Commerce, and is also a notary Geoffrey Green public. He previously worked at Sovereign Bank for nearly a decade.

Katahdin Trust Company

Katahdin Trust Company, based in Houlton, Maine, has promoted Diane Green to vice president and Billi Blanchard to the officer position of trainer. Green has been affiliated with Katahdin Trust Company for 20 years. In her new role she will continue with her responsibilities as manager and retail services officer at the Presque Isle office.

Diane Green Throughout her career she has been very active in civic and community activities and currently serves on the board of directors for Homeless Services of Aroostook, Junior Achievement of Central Aroostook and the Kiwanis Club of Presque Isle. Blanchard joined Katahdin Trust Company’s training department in 2011, after a brief career in insurance sales and service.

She is active in the Young Professionals Billi Blanchard Institute and recently completed the American Management Association’s Human Resources and Management Certificate programs.

Additionally, Sue McCarthy has been promoted to commercial services officer at Maine Financial Group, which operates as a loan production office of Katahdin Trust Company providing equipment financing for individuals and businesses in the forestry, Sue McCarthy construction, transportation, and marine industries throughout northern New England, primarily in Maine and New Hampshire. McCarthy joined Maine Financial Group in 1993 as an administrative assistant, was later promoted to officer manager, and in 2007 was named commercial services specialist.

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Personnel File Continued from page 29

Meredith Village Savings Bank

Scott Laurent (left), loan officer, Lori Borrin (center), vice president and loan officer, and Pam Noble (right), vice president and loan officer, were all recently promoted to at MVSB.

New Hampshire-based Meredith Village Savings Bank has announced a restructuring and an associated group of promotions.

Lori Borrin, vice president and loan officer, will relocate to the bank’s main office in Meredith. In addition, she and Pam Noble, vice president and loan officer, have been promoted to expand their respective roles and responsibilities within the retail lending department. Scott Laurent, whose most recent title was consumer loan/mortgage loan originator at the main office, has been promoted to loan officer, and will take Borrin’s place at the bank’s Center Harbor office.

Borrin began her career at MVSB in 1993 as a part time-teller at the bank’s Route 104 office in Meredith. Borrin is an active member of her community as a volunteer for Moultonborough/ Sandwich Senior Meals and the Circle Program.

Noble joined MVSB for the second time in 1990 as a part time teller at the bank’s Route 104 office. She is an active volunteer in her local community as a long-term planning committee member and past event co-chair for Lakes Region Making Strides Against Breast Cancer.

Laurent attended Plymouth State University and joined MVSB in February 2008 as a mortgage loan originator. Laurent is an affiliate member of the Lakes Region Board of Realtors, and has served on its scholarship committee since 2009.

Meredith Village Savings Bank has also promoted Becky Reposa to branch and business development manager of the bank’s Gilford office. She joined MVSB in 1999 as a teller in Gilford. She most recently served as branch services supervisor at the Route 104 office. She is involved with the Lakes Region Young Professionals, Lakes Region Youth Football and Cheer Association, and the Becky Reposa Belmont Baseball Organization.

Bank of New Hampshire

Vickie L. Routhier has been promoted to senior vice president and director of marketing and public relations.

Routhier joined Bank of New Hampshire in May of 2010 with over 15 years of marketing experience in banking and the communications industry. She has presided over the celebration of the bank’s 180th anniversary, as well as managing the announcement and implementation of the bank’s name change from Laconia Savings Bank to Bank of New Hampshire last April. A graduate of the Northern New England School of Banking and in 2012, graduated from the ABA School of Bank Marketing & Management. She serves as chair of the Greater Rochester Chamber of Commerce’s annual banquet committee and by participating on the chamber’s PR and events committee.

SpencerBANK

Spencer, Mass.-based SpencerBANK named Lori Kelly, who joined the bank in July, as vice president and branch administrator, overseeing branch activity at all of the bank’s locations. Kelly has more than 20 years of experience in the banking industry. She is active in the local business community and is a member of the board of directors for the Worcester Educational Development Foundation. As a vice president branch administrator, Kelly will help to direct operations of all SpencerBANK branches. She will be responsible for developing new and existing business and ensuring customer satisfaction in relation to services offered by SpencerBANK.

Unibank

William M. Mahoney has been promoted to executive vice president at Whitinsville, Mass.-based Unibank.

Mahoney continues in his role as CFO and chief administrative officer. These responsibilities include all financial management and investment functions, as well as all administrative functions William M. Mahoney including human resources, marketing, compliance, security, operations and information technology.

Mahoney, a veteran of the United States Army, joined UniBank in 2009 and has more than 30 years financial management experience in the banking industry. Prior to joining UniBank he was the CFO of CNB Financial Corp. in Worcester, held a financial management position with BankBoston Corporation and was the CFO of Mechanics Bank in Worcester. BNE

SEND US YOUR PERSONNEL NEWS Does your financial institution have individuals who deserve recognition as they celebrate a career milestone? If you’d like to see them recognized in Banking New England, please send press releases and accompanying photos to: Christina P. O’Neill, custom publications editor, via email at coneill@thewarrengroup.com. NOTE: Photos should be in color, jpeg format, file size no smaller than 400 KB.

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A solution to support a helpful bank.

Southbridge Business Center had a growing company that was adding jobs, but loan-to-value ratios made funding for building renovations challenging. For a solution, MassDevelopment worked with TD Bank–the center’s existing bank–to provide a $1.5 million loan. More growth for the Center. More jobs for the community. More security for the bank.

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