Banking New England March/April 2018 by The Warren Group

MARCH/APRIL 2018

INSIDE: ABINGTON BANK: A HUB FOR LOCAL COMMUNITIES

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

‘Maybe Women Don’t Want to be

Commercial Bankers’

PLUS: NEW ENGLAND STATE JOINS AGREEMENT TO STREAMLINE FINTECH LICENSING PROCESS BUSINESS PROCESS MANAGEMENT AND AUTOMATION FOR FINANCIAL INSTITUTIONS BANK CRE CONCENTRATIONS REMAIN HIGH A PUB LICAT IO N O F TH E WA R RE N G R O U P

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

CONTENTS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

FINTECH REGULATION

New England State Joins Agreement to Streamline Fintech Licensing Process

OPERATIONS OVERSIGHT

Business Process Management and Automation for Financial Institutions

Motivating Your Team in the Banking Industry

Bank CRE Concentrations Remain High

‘Maybe Women Don’t Want to be

OPERATIONS OVERSIGHT

Commercial Bankers’

CRE CONCENTRATION

BANK PROFILE

Abington Bank: A Hub for Local Communities

for Maine

PERSONNEL FILE

COMMUNITY GOOD WORKS

DATA ANALYTICS

TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins

www.thewarrengroup.com

INDUSTRY NEWS

©2018 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210

Interested in receiving additional copies of Banking New England? Call 617-896-5357 or email custompubs@thewarrengroup.com

EDITORIAL EDITORIAL & MEDIA RELATIONS DIRECTOR Cassidy Murphy EDITOR Malea Ritz ASSOCIATE EDITOR Mike Flaim SALES DIRECTOR OF BUSINESS MEDIA George Chateauneuf PUBLISHING GROUP SALES MANAGER Claire Merritt SENIOR ADVERTISING ACCOUNT MANAGER Michael Lydon ADVERTISING ACCOUNT MANAGERS Megan Kurtz & Jon Patsavos ADVERTISING & SALES COORDINATOR Sandy Liu CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini COMMUNICATIONS MANAGER Mike Breed COMMUNICATIONS COORDINATOR Joy Cheramie SENIOR BRAND DESIGN MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Elizabeth Rennie & Tom Agostino

FINTECH REGULATION

New England State Joins Agreement to Streamline Fintech Licensing Process Subhead Agreement Could Lead to Further Innovation and Regulatory Clarity

BY BRAM BERKOWITZ Bram Berkowitz is a staff writer for The Warren Group, publisher of Banking New England.

assachusetts earlier this month joined a cohort of seven states to sign a multistate compact that is expected to significantly streamline the licensing process for fintech money services businesses. The gist of the agreement, which also includes Georgia, Illinois, Kansas, Tennessee, Texas and Washington, is that some key elements of licensing approved by one state in the agreement will also be accepted by other participating states. While experts and players in the fintech space know there is still a long and complex journey before ultimately settling on standard fintech regulatory system, they are excited about the prospect of greater innovation and further clarity in the overall process. “It’s a great thing, because it’s an attempt to remove some bureaucracy,” said Fran Duggan, CEO of Payrailz, a national fintech company that partners with financial institutions to offer customers a “do it for you” payment approach. “Currently you have to get licenses in 50 different states with 50 different cost structures. It becomes very difficult.” The compact sets up a two-phase process for fintech companies in the money transmitting space, according to a spokesperson from the Conference of State Bank Supervisors, the organization that coordinated the agreement. In the first phase, one state reviews key elements of state licensing including IT, cybersecurity, the business plan, background check and compliance with the federal Bank Secrecy Act. The other participating states then agree to accept that work as their own. In the second phase, the prospective licensee works with each state on state-specific requirements. Despite being scattered throughout the country, state regulators in the agreement operate with similar principles, said Kenneth F. Ehrlich, co-chairman of the banking and financial services practice group at the Boston-based law firm Nutter. “These are highly professional, like-minded state offices that view themselves as leaders,” he said. “They are also comfortable enough with each other’s decisionmaking ability. They must be comfortable with each other because they are honoring one approval from one state.”

Innovation Nation

With this agreement in place, Duggan said the seven states certainly look more attractive for business, and for fintech companies such as Payrailz to start with in the regulatory approval process. 4

BANKING NEW ENGLAND

“Wow, these states get it, and they want us. It’s not meant to be a confrontational relationship. We want to do business there and you would think states want us to do business as well,” he said. “This reminds me a lot of the college application process, when colleges came out with the common application. We want states to look at it (the regulatory process) like the common app.” A clearer and somewhat less complicated regulatory system will make life easier for startups, which currently need to operate in all 50 states to achieve widespread success, said Ben Malka, a partner at Cambridge-based F-Prime Capital who focuses on investing in early stage fintech companies. “Some believe startups need to first prove customers want their service and then worry about regulation later,” he said. “I think startups should contemplate regulations beforehand. We want them to know what they are up against before they get started. No one wants to be surprised when a company is out of compliance. Fortunately, most startups we come across do a good job of it.”

Navigating the Road Ahead

The Conference of State Bank Supervisors is not the only group looking to harmonize state laws regarding fintech. The U.S. Office of the Comptroller of the Currency has also proposed granting fintechs a limited purpose national bank charter, which would allow fintech companies to get one license and operate nationwide. However, after this proposal, the Conference of State Bank Supervisors sued the OCC, claiming the agency overreached its authority. A similar suit, eventually thrown out, was also brought by the New York banking superintendent. Malka would prefer multiple regulators because he believes that nurturing innovation requires balance; leaving all the power to one entity wouldn’t be good for startups, he said. All of this activity, said Duggan, is certainly good news and will ultimately allow many fintechs to go to market quicker. But it has also led Payrailz to step back and examine its regulatory strategy. “Do we keep moving forward? Should we wait? Things are moving along and then all of a sudden somebody can throw a monkey wrench [in your plans],” he said. BNE

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OPERATIONS PROTECTING OVERSIGHT VULNERABLE CLIENTS

CONTINUED FROM PAGE 6

Business Process Management and Automation for Financial Institutions MARK HOLENSTEIN

Mark Holenstein is the COO of Signavio, has worked in the hi-tech sector for several years, specializing in helping organizations to optimize their customer journeys and the underlying operations that deliver them. Signavio is a leading provider of business process management solutions for business in all sectors. For more information please visit www.signavio.com.

BANKING NEW ENGLAND

he term “business process management” has been adopted to identify the discipline of operations management. It uses for various methods to discover, model, analyze, improve and automate business processes. Any combination of methods used to more efficiently manage a company’s business procedures and processes falls under the BPM category. Most recently the influence of BPM has been seen in the development of AI solutions specific to the banking and financial industry. The largest banks in the United States are investing millions of dollars into updating their capabilities through automation. The finance industry has typically been one where the automation of processes typically performed manually by individual employees was thought of as a nearly impossible task. Yet financial institutions have been at the forefront of technology and automating as many manual procedures as possible. New automation capabilities of automation to replace various teller positions specifically has drawn attention to the technology industry, and has other organizations asking what they can do to replicate the same success in their own businesses. In 2017, Chase Bank automated most of their teller-related procedures and eliminated over 25 percent of their employee expenses. It is estimated that approximately 60 percent of transactions performed by tellers can be executed simply through the ATM, and that number is expected to be over 90 percent by the end of 2018, according to representatives from Chase. Although these changes have increased efficiencies for banks nation-wide, it’s important to consider the systematic approach behind automation that allows the technology itself to function and exist- a Process Management System. In a recent report produced by Business Process Trends, 43 percent of U.S. business respondents reported that they are most interested in automating their business processes. While implementing a BPM system allows for the automation of most if not all processes, it still does not provide detailed insight into cross system/cross people processes. For example, BPM touches all areas of the finance industry. During the ATM process, a customer can deposit cash and checks; then the ATM communicates the transaction to the banking

facility. The customer can log-in to their smartphone application and check the update of status almost immediately. While all of these internal processes are performed through an automation of some kind, rarely are they performed in a single system. The joined-up thinking implied by BPM provides banks with a seamless view of the transaction from beginning to end. This end-to-end view enables management to avoid sub-optimization and to more easily manage and optimize their ongoing operations around the customer. Not only can BPM be applied to assist with daily processes at the procedural level, but can also be used to manage all aspects of internal monitoring, especially relevant when dealing with compliance issues. Any financial institution utilizing a process management system in support of their BPM initiative can monitor progress as well as see their organization from an overview perspective. Banks are more equipped to identify competitive advantages, establish internal processes, and deliver results. A banking institution can identify metrics as well as ROI by standardizing and simplifying procedure workflows. The application of BPM is often considered a critical component of the banking and finance industry not just due to its end to end visibility, but also due to its support of meaningful operational intelligence. Process management systems that deliver real-time, actionable information are now readily available. Because the size and complexity of daily tasks can be too much for one system to run, BPM enables banks to view systems as though they were running seamlessly as a single unit. The discipline of BPM and the use of a process management system can bridge the gap between information technology and business. There is no doubt that automation will play a growing role in business processes in the marketplace for years to come. In the future, banks and financial institutions will continue to look for ways to automate even more of their processes. It’s important to understand not just how automation happens but to connect it with the manual processes that will still occur. An effective process management system touches all facets of the organization and the technology working behind the scenes. With the right process management solution powering your BPM discipline, the customer has a better overall experience with the brand. BNE

CSI KNOWS FUTURE FINTECH.

OPERATIONS OVERSIGHT

Motivating Your Team in the Banking Industry BY STACEY SHIPMAN Stacey Shipman is an executive coach and facilitator who specializes in helping business executives strengthen their public speaking and communication skills. Visit www.staceyshipman.com for more information.

Stacey Shipman

s a leader, you are in the business of motivation. Whether presenting to the board, managing staff or connecting with clients, you must be able to move people into action – for example, buy your products or services, follow a process, or get behind your ideas. So how do you keep people engaged and motivated in order to achieve your business goals? First, let’s talk about Mary. Recently promoted to vice president, Mary was now in charge of leading meetings, managing staff and keeping people engaged. Mary didn’t have the skills or confidence to do any of that effectively. And managing staff in different locations didn’t make her job any easier. As a result, Mary had a lot of questions: “How do I get them to pick up the phone and talk to each other?” “How can I make sure they remember they’re part of a larger team and not working in silo’s?” “How do I get them to follow our processes?” With a full day staff retreat fast approaching, Mary sought guidance from an experienced consultant to make the day engaging and productive. She had two goals for this meeting. First, to make sure her manager knew he made the right decision promoting her to vice 8

BANKING NEW ENGLAND

president. Second, to make sure her staff felt more connected to each other, their customers and their purpose. With the help of that consultant Mary was able to design an interactive experience that focused on small group discussion, trust building and staff appreciation. The activities in this meeting went beyond Mary and her team’s comfort zone. At first she was met with quizzical looks and skepticism. As the day unfolded, her staff became more open and energized. The feedback included: “Wow, I made the right decision by working at this company.” “I’ve worked with some of these folks for years and feel like I finally know them.” “I’m so excited about the mission and I know how I fit. I’m going to keep it at my desk to remind me why I’m here.” Deep down Mary knew this was only the beginning. Keeping people motivated would require an ongoing commitment. She left that meeting knowing she made a solid start. If you, like Mary, want to create experiences that motivate and engage others, there are a number of ways to do that. Keep in mind not everyone is motivated by money. Consider the following to more effectively motivate others.

Have a Shared Purpose

Teams work well when everyone feels connected to the purpose or “why” behind their work and how their role fits to accomplish goals. Take time to reflect and reconnect to that purpose (i.e., at quarterly staff meetings, pin a poster up on the wall) ensuring that everyone works towards a similar outcome.

Communicate Clearly and Consistently

Give Everyone a Voice

Your role as leader is, in part, to bring out the best in yourself and your team. In meetings or conversations, give everyone a chance to share ideas, brainstorm and ask questions. Instead of talking at them, involve them. People want to feel seen and heard. Validate questions, ideas and concerns and encourage quieter team members to speak up and share ideas.

Communication is vital to motivate others and includes everything from a simple “good morning!” when you walk in the office to being present and focused when employees express concerns to providing feedback needed for growth and development. Be clear, present and caring when communicating with others.

Show Appreciation

Set People Up for Success

Motivation is not a one-time event. It requires an ongoing commitment to connect and communicate with staff. When people feel connected to a purpose, to the customers, to each other, they feel more motivated and inspired to do their best work. BNE

As a leader, it’s your responsibility to make sure your team has the tools and resources they need to be successful. That includes hardware, software, appropriate training and working conditions.

Business moves quickly. Yet taking time to appreciate accomplishments and hard work can go a long way in keeping people motivated and engaged. A few ideas include a group lunch or outing, verbal appreciation or written notes.

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CRE CONCENTRATION

Bank CRE Concentrations Remain High Will Banks Continue to Grow Once CRE Lending Dries Up? BY BRAM BERKOWITZ Bram Berkowitz is a staff writer for The Warren Group, publisher of Banking New England.

t’s no secret that commercial real estate concentrations at community banks have been on the rise. While regulators maintain a keen eye on the sector, their concerns do not seem to have increased in recent months as asset quality has remained strong. But even if asset quality holds, some fear that banks have become so reliant on CRE loans that it might be difficult for them to grow once the current real estate boom subsides. “Regulators have been concerned about CRE concentration, but we are as equally as concerned when it comes to CRE growth down the line,” said Collyn Gilbert, managing director of community and regional banks at the Boston office of Keefe, Bruyette & Woods, a New York-based banking investment firm. “Eventually pricing will rise, and demand and values will fall. When that happens, it will negatively impact a banks’ business model, especially when so much of their growth has been in that CRE sector.” Regulators take notice of an institution that has experienced rapid growth in CRE lending, has notable exposure to a specific CRE type or is approaching or exceeds certain supervisory criteria. One threshold in that criteria is whether a bank’s total CRE loans represent 300 percent 10 BANKING NEW ENGLAND

or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased 50 percent or more during the prior 36 months. Many community banks in Massachusetts – indeed, across the country – have exceeded these levels, of which regulators are of course aware. But when asked recently about the situation, a spokesperson for the Massachusetts’ Division of Banks referred to prior comments made by Commissioner Terence McGinnis and said not much had changed. “Over the last 18 months, there has been heightened awareness [by all regulators] of high commercial real estate concentration,” McGinnis told Banking New England last August. “A high concentration in and itself is not bad if it is being managed appropriately. … Our banks have very strong capital and good liquidity.” McGinnis said high concentration alone does not set off the alarm; risk management is another serious consideration – how detailed is a bank’s stress testing? Does the bank’s board know about the high CRE concentration? How is the bank funding its loans?

What Guidance?

Some banks, regardless of the checks they

may have in place, have gotten to a point where the 300 percent guidance from regulators seems irrelevant. In Massachusetts, East Boston Savings Bank has the highest commercial real estate concentration of community banks. EBSB’s parent Meridian Bancorp has a commercial real estate to risk-based capital ratio of 577 percent, according to an analysis by Connecticut-based United Bank in its most recent investor presentation, One of the fastest-growing banks in the state, EBSB increased its CRE loan volume from roughly $1.33 billion to roughly $1.78 billion between the end of 2015 and 2016. The bank grew commercial real estate volume another $287 million between the end of 2016 and 2017, reaching $2.06 billion in total CRE loan volume. The bank has financed major projects all over Boston: It provided $76.35 million in construction financing for the new Boston Celtics practice facility in Brighton, $38.5 million for The Wave, a 132-unit rental complex under construction in Allston, and a $51.4 million construction loan for the Innovation Square Seaport office lab, which is slated for completion in 2019.

Still a Good Market

Other banks in Massachusetts with high CRE to risk-based capital ratios, according to Gilbert, are Brookline Bank’s parent company at 356 percent and Rockland Trust’s parent company at 312 percent.

And some other banks Gilbert covers in New York, such as Dime Community Bank and New York Community Bank, have even higher CRE concentrations than EBSB. But banks have maintained strong asset quality and, in some cases, taken the necessary steps to improve their ratios. Dime Community Bank’s parent company reduced its CRE concentration from 849 to 807 percent by completing a $280 million securitization of multifamily loans through a Freddie Mac sponsored program, American Banker reported last December. As part of the deal, Dime bought structured pass-through certificates that it will treat as available-for-sale securities. Despite EBSB’s huge CRE growth, the bank decreased its provision for loan losses from roughly $7.2 million at the end of 2016 to $4.9 million at the end of 2017. Non-performing assets were $8.4 million at the end of 2017, or 0.16 percent of total assets, the lowest level for the bank since 2006. “Loss levels and delinquencies in CRE have been nonexistent for five plus years, so that is the tricky part. Through this period of excessive growth, portfolios have not yet been tested from credit standpoint,” said Gilbert. “Once we start to see longer term interest rates rise, it will pressure cap rates and also pressure borrowers’ capacities to pay. At that point, we could start to see cracks in credit. But for now, the market seems to still be in very good shape.” BNE

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PROTECTING BANK PROFILEVULNERABLE CLIENTS

Abington Bank: A Hub for Local Communities

BY LINDA GOODSPEED

A Andrew J. Raczka President & CEO Abington Bank

12 BANKING NEW ENGLAND

ndrew J. Raczka, president and CEO of Massachusetts-based Abington Bank, likes to say “luck happens when preparation meets opportunity.” By that definition, Raczka has been very lucky indeed, or maybe just very well-prepared. Since taking over the once sleepy little community bank in 2006, Raczka has nearly quadrupled assets from $80 million to $310 million at year end 2017. Spurring that growth has been mergers with two neighboring banks in the last 18 months. Abington, a once bustling shoe-making town of about 16,000, is located halfway between Boston and Plymouth. The region is home to a mix of commuters, big employers like South Shore Hospital, small businesses and locally employed workers. It is a competitive banking environment with all the usual regional, community and credit union players. “Our niche is service,” said Raczka, a 34-year banking veteran. “Bigger banks could out-bank us every day of the week. But I am convinced none of them can out-service us.” When Raczka arrived in Abington in 2006, the bank – founded in 1888 – was known as North Abington Cooperative Bank. Raczka’s mandate was to improve the bank’s financial performance, products and growth possibilities. In other words: bring the bank into the 21st century. His first task was to change the bank’s name to Abington Bank. “We wanted the name to be shorter and we wanted the name to encompass the whole town, not just North Abington,” Raczka said at the time. “We wanted to create a whole new awareness of the place.

But we wanted to change it through evolution, not revolution.” He said mergers were always on the table as a strategic possibility for growth. “We were always preparing ourselves for that opportunity when and if it came about. We didn’t know when it would come about, but we wanted to be prepared.” The bank’s quiet evolution and behind the scenes preparation paid off in November 2016 when Holbrook Cooperative Bank, a bank with $105 million in assets located 5 miles away in the next town over, contacted Raczka about possibly merging. Six months later in May 2017, Avon Co-operative Bank, with $88 million and also located about 5 miles from Abington, contacted Raczka about merging. “You couldn’t draw a merger on paper any better,” Raczka said. “Three contiguous towns, literally next door to each other. Instead of three banks, each with one location, we now have one bank with three locations. The merger works out very well.” From the front, the three banks do not look any different. Both Holbrook and Avon are still known by their same names, with a small tagline “division of Abington Bank” added to their signs. Inside are all the same employees. “We wanted to respect each bank and its community and history and traditions,” Raczka said. “Legal, entity-wise, we’re Abington Bank. But from a branding perspective, Holbrook and Avon Cooperative Banks didn’t go away.” Each of the three banks are converting to a common single core processing system, and by June 2018, customers will be able to bank at any of the three locations. Although no employees lost their job in the merger (the bank employs 58 people), Raczka said there will be significant cost savings from combining Back office functions, including risk management, compliance, finance, audit, IT, security and human resources. The three banks, which are in the process of moving all of their lending operations into the Holbrook facility, have a total loan portfolio of about $240 million, 45 percent of it residential mortgages. The balance is mainly comprised of nonowner occupied investment properties, commercial real estate and some small business lines of credit. Raczka, who has a strong lending background, said loan demand and production the last few years has been surging. Last year Abington originated a record $55 million plus in new loans.

“We’ve got a great team here. We are definitely committed to being a residential lender.” “It’s all about our communities,” Raczka said. “I think communities in general are struggling. We’re committed to help any way we can.” The bank supports many nonprofits and charitable events in town, particularly youth and elderly related. As just one example, a few years ago, the bank decided to donate $10 to local schools for every new checking account opened. The program has generated more than $22,000 to support local Abington schools, and now will be extended to Holbrook and Avon. “We’re trying to make a difference and help out local people,” Raczka said. Raczka credits his team for the success of the rapid-fire mergers. “I think we are poised well to proceed into the future. We have a great team here. We serve three fantastic communities. We are committed to remaining independent for many years to come.” More mergers in the offing? Stay tuned. BNE

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BANKING NEW ENGLAND

WOMEN IN BANKING

‘Maybe Women Don’t Want to be

Commercial Bankers’

Assumptions Must be Challenged Before Progress Can be Made By Neil (Dima) Berdiev

This is part one of a two-part series; part 2 will appeared in a subsequent issue of Banking New England. Part 1 presents results of a survey of commercial bankers and frames the issue of gender diversity in the industry; part 2 seeks and proposes solutions.

he reaction to the article “Women In Banking,” published in The Warren Group’s Banking New England magazine, was overwhelmingly positive from men and women at all levels of the corporate hierarchy. It looked at key causes for the lack of growth opportunities for women in commercial banking, especially at senior levels. It also offered ideas and strategies for sustainable solutions to greater gender diversity in the industry. Consistent comments from male readers included: “I now understand the reality much better” and “We clearly need to do better.” There were, however, a few unexpected comments, which these individuals were hesitant to voice and did so only because they knew me personally: “Maybe women just don’t want to be in banking?”; “Maybe women don’t want to be in leadership positions in banking?”; and finally, “Maybe women prefer to focus on their families rather than their careers?” These comments came from a broader age group, men in their 30s to their 50s. They proposed that perhaps women prefer to focus on their families, raising children and being caretakers for family members, even if they were given the same opportunities that men historically have enjoyed. If your reaction to the above questions and suppositions is a sheer offense, exasperation and that logic like this is what’s led to limited opportunities for women in banking and other industries, you’re not alone. There is clear evidence that women face more challenges in commercial banking compared to their male counterparts and have to make a series of tough choices to pursue a career in the industry. But this question – do women want to be in banking? – is a logical one to raise and seek to answer. It is important is to recognize that some men – and possibly some women – may feel this way but will never speak about it. As a result, these individuals continue to believe what they believe and act as they acted all along, inadvertently helping to perpetuate the cycle in which women are squeezed out of the workforce and growth opportunities. It is crucial to encourage honest conversations and for people to question the reality as part of finding correct answers through education, looking at evidence and true causes, and ultimately driving solutions.

To better understand the issue and its implications, let’s start with a survey of what men and women think of gender diversity and equality in commercial banking (largely represented by New England).

Survey: Genders in Commercial Banking

Respondents were asked to rank the following on a scale from one to five, “strongly disagree” to “strongly agree.” Commercial banking industry as a whole lacks gender diversity at all levels. Most respondents answered with a four, with the next two largest groups concentrated in three (neither agree nor disagree). Commercial banking industry lacks gender diversity at senior, executive and board levels. Over half of respondents said they strongly agreed with this statement. It’s also a statement already known to be true, and the survey responses further confirm an unequal reality.

Although management has lately focused on gender diversity, the results fall far below expectations. Women face more challenges in the workplace than men do. The majority of respondents answered as a four to five. Women and men are treated equally. The largest group of respondents answered as a “no,” with answers falling within somewhat disagree, followed by neutral and then strongly disagree. Women have the same growth and advancement opportunities as do men. The majority of responses fell within two and three, followed by four, showing leaning toward a no, although not as strongly as other statements. CONTINUED ON PAGE 16

BANKING NEW ENGLAND

WOMEN IN BANKING

CONTINUED FROM PAGE 15

Commercial banking industry as a whole lacks gender diversity at all levels Strongly disagree 1

Strongly agree 5

No Opinion

5.30%

15.89%

21.85%

35.10%

20.53%

1.32%

Commercial banking industry lacks gender diversity at senior, executive and board levels Strongly disagree 1

Strongly agree 5

No Opinion

3.31%

7.95%

8.61%

27.15%

50.99%

1.99%

Women face more challenges in the workplace than men do Strongly disagree 1

Strongly agree 5

No Opinion

1.99%

6.62%

16.56%

36.42%

37.75%

0.66%

Women and men are treated equally Strongly disagree 1

Strongly agree 5

No Opinion

15.23%

39.07%

28.48%

12.58%

4.64%

0.00%

Women have the same growth and advancement opportunities as do men Strongly disagree 1

Strongly agree 5

No Opinion

13.91%

31.79%

29.14%

15.89%

9.27%

0.00%

When asking if the industry should do more to promote gender diversity, the answer was a resounding yes. More detailed comments included: • “Comparing today’s diversity with 1960s and 1970s, huge improvement. Still more to accomplish, but women are excellent bankers and could well dominate the industry.” • “While tremendous progress has been made, banking still needs to do more to promote work-life balance so as not to lose parents (particularly moms) during the key parenting years.” • “There is still the ‘good old boys club’ mentality. These seasoned lenders have much to share and offer young talented and motivated lenders (or potential lenders) with their experiences. I just feel they don’t invest as much in females as they do in male counterparts.” Others noted double standards and how the same behavior is received and interpreted differently coming from a man versus a woman. Stereotypes are well and alive, although they may not be as blatant and in the open as they used to be, which makes them even more dangerous (conscious moving into covert and subconscious). It was also noted that there is not open but more subtle discrimination in favor of men versus women. Although management has lately focused on gender diversity, the results fall far below expectations. This question is further supported by the respondents who stated overwhelmingly that their organizations are supportive of diversity and 16 BANKING NEW ENGLAND

gender diversity specifically, but in response to whether their organizations meet their diversity goals, the answers were more muted, with 25 percent of respondents having no opinion. This may indicate the lack of specific, measurable goals or colleagues not knowing what those goals are. While some organizations offer better personal and professional life balance, it was clear from the survey that it all hinges on individual managers. In the absence of strong, flexible work arrangement frameworks, managers can make diversity happen. Over 50 percent of respondents strongly agreed that their team leader (manager) accommodates family care needs and other personal situations. This kind of management results in employee loyalty and employee retention. Lastly, 39 percent of respondents indicated that they expect to experience negative career implications if they speak up about gender diversity issues and challenges, or they are not certain if there will be career repercussions. This is quite disturbing; gender and other diversity can only be achieved by active and passionate participation from top down and bottom up without fear. If employees do not feel encouraged and safe being ambassadors in solving issues that have a direct connection with talent development and retention, this is one of the first obstacles to tackle. BNE Neil (Dima) Berdiev is managing partner and founder of DNB Advisory LLC, a Boston-based advisory firm. He may be reached at dnb@dnbAdvisory.com or at 617-233-1405.

DATA ANALYTICS

Data Analytics for Maine

n addition to its publishing division, The Warren Group, publisher of Banking New England, also has a data product and analytics division. Presented here is part of its analysis of the New England marketplace, specifically Maine; analysis from New Hampshire, Rhode Island, Massachusetts will appear in subsequent issues of Banking New England. Here are the top three loan originators for six of Maine’s counties, along with the institution they represent and their ranking in the previous year. Here too are the top three institutions for mortgage origination and their rankings at the same time last year.

Both data sets are for the second quarters of 2016 and 2017 and include all residential loans, both purchase and refinance, for all residential loan categories (single-families, condominiums and twoand three-families). HELOC and home equity loan products are not included in the rankings. Loan originator rankings are derived from The Warren Group’s Loan Originators Module; lenders are derived from the Mortgage Market Share Module. For more information please visit www.thewarrengroup.com/ business/data-solutions, email customerservice@thewarrengroup. com or call (617) 896-5388.

Top Loan Originators Maine 2017 York

Androscoggin

Kennebec

Washington

Franklin

Penobscot

2016

Top Mortgage Originators Maine

Name

Institution York

2017

2016

Institution

Matthew Ryan Tardiff

Camden National Bank

Kirk A. Todd

Mortgage Network Inc.

Kennebunk Savings Bank

Jocelyn Picard

York County Federal Credit Union

Quicken Loan Inc.

Debra Nancy Bodwell

Residential Mortgage Services Inc.

Luke Sk Cote

DIRIGO Federal Credit Union

Mortgage Network Inc.

N/A

Jamie Turcotte

Otis Federal Credit Union

LoanDepot.Com LLC

Anthony Rhoades

Kennebunk Savings Bank

Tracy Warren

Kennebunk Savings Bank

Camden National Bank

Gary Lapierre

Kennebunk Savings Bank

Bangor Savings Bank

Lisa A. Holmes

Machias Savings Bank

N/A

Stephen Leackfeldt

Bangor Savings Bank

N/A

Joanne M. Cushing

Down East Credit Union

N/A

Thomas L. Sawyer

Franklin Savings Bank

Rebecca M. Davis-Allen

Bangor Savings Bank

Skowhegan Savings Bank

Cynthia Gilmore

Skowhegan Savings Bank

N/A

JP Morgan Chase Bank

Charles Michael Pine

Residential Mortgage Services Inc.

Bangor Savings Bank

Shannon Monty Odom

Northeast Bank

Katahdin Trust Co.

Alison Bailey

Bangor Savings Bank

LoanDepot.Com LLC

Androscoggin

Kennebec

Washington

Franklin

Penobscot

Synergy One Lending Inc.

Figures are for loans originated in 1Q2018 and 1Q2017. Top Lenders ranked by volume of loans; Originators ranked by number of loans. All rankings include purchase and nonpurchase loans for all residential categories. Source: The Warren Group’s Loan Originator and Mortgage Market Share modules BANKING NEW ENGLAND

PROTECTINGFILE VULNERABLE CLIENTS PERSONNEL

Career achievers in banks across New England are constantly on the move, with their professional journeys reflecting a combination of mobility and longstanding service. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Malea Ritz at mritz@thewarrengroup.com

Featured Banks • BankNewport • Bank of New Hampshire • Bridgewater Savings Bank • Camden National Wealth Management • HarborOne Bank • Liberty Bank • Lowell Five Bank • Northfield Savings Bank • Norway Savings Bank • SIS Bank

Appointments and Elections BankNewport Rhode Island-based BankNewport appointed Adriana I. Dawson to vice president and community development officer. She will Adriana I. Dawson be responsible for developing, implementing and administering strategic aspects of the bank’s Community Reinvestment Act Program, through building and maintaining relationships with community-based, charitable and nonprofit organizations to help ensure the bank meets the needs of the community and attains CRA compliance goals. Dawson comes to BankNewport from Roger Williams University, where she served as assistant dean of admissions and community engagement for the School of Continuing Studies at the Providence campus. She was formerly the state director for the Rhode Island Small Business Development Center at Johnson and Wales University in Providence.

Liberty Bank Connecticut-based Liberty Bank President and CEO Chandler J. Howard became the newest member of Boston Fed’s board of directors. Howard, who celebrated 10 years with Liberty in 2017, will serve as a Class A director representing member banks in the Federal Reserve’s first district. Prior to leading Liberty Bank, Howard held various roles from teller to executive for People’s United Bank, Bank of America and Fleet Bank, among others in his

more than 35-year banking career. In addition to the Boston Fed, Howard currently serves on the boards of Middlesex Hospital, the Middlesex Chamber of Commerce, the Connecticut Bankers Association, the Connecticut Business Industry Association, the Greater Hartford Community Foundation, the Goodspeed Opera House, the American Bankers Association and the FDIC Community Bankers Advisory Council.

Lowell Five Bank Massachusetts-based Lowell Five Bancorp, the parent company of Lowell Five Bank, elected Amy Hoey to the executive committee Amy Hoey of the board of directors. Dr. Steven Saro and Brian Chapman were also elected to the board of directors. Hoey joined Lowell Five in 2011 as a member of the board of corporators and was appointed director in 2014. Dr. Steven Saro Saro, owner and proprietor of Saro Chiropractic Health Centers, has been a member of the board of corporators for Lowell Five for the past eight years. Chapman, president and founder of Brian Chapman Mill City Environmental Corp., has a 17-year working relationship with Lowell Five and joined the bank’s board of corporators in 2013.

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WWW.THEWARRENGROUPEVENTS.COM/BANKNEWS 18 BANKING NEW ENGLAND

Promotions assistant vice president, branch relationship manager and Michael Hannon, assistant vice president, mortgage loan originator. The bank also promoted Sherry Seskin to vice president and treasury services sales officer.

HarborOne Bank

Brockton, Massachusetts-based HarborOne Bank promoted Scott Sanborn from senior vice president of commercial lending to executive vice president. Sanborn continues to drive the bankâ&#x20AC;&#x2122;s strategy and growth for all commercial and small business lending activities. Sanborn joined HarborOne Bank in 2014. Prior to joining Scott Sanborn HarborOne Bank, Sanborn served as regional vice president at TB Bank where he built and led a team of eight commercial relationship managers for the Metro Boston and Rhode Island Markets.

Sherry Seskin

Norway Savings Bank

Lake Sunapee Bank

Marion Steiner

Michael Hannon

Lebanon, New Hampshirebased Lake Sunapee Bank, a division of Bar Harbor Bank & Trust, promoted two employees to the title of assistant vice president: Marion Steiner,

Amanda Dyer

Maine-based Norway Savings Bank promoted Amanda Dyer to branch manager of the Freeport, Maine office. Dyer joined Norway Savings Bank in 2011 as a financial solutions specialist at the Yarmouth office before working her way to assistant branch manager of the Freeport office in January 2017.

New Arrivals Bank of New Hampshire

Bank of New Hampshire hired Greg Frazer as a mortgage loan officer serving the greater Claremont, New Hampshire area. Frazer joins Bank of New Hampshire with more than nine years of banking experience including mortgage origination, sales management and financial management. He has spent many years in retail banking and has experience with new lending programs designed to suit the individualized needs of each customer including first-time homebuyer programs, investment properties and second homes.

Bridgewater Savings Bank

John Decker has joined Massachusettsbased Bridgewater Savings Bank as vice president and commercial loan John Decker officer. Decker has over 29 years of experience in the banking industry and building strong relationships with his customers. His most recent employment was as vice president commercial lending at Dedham Institution for Savings. Decker partners with his clients to help them meet their business banking needs.

Camden National Wealth Management

Maine-based Camden National Wealth Management added Audrey Klein-Leach as its vice president and client advisor. KleinAudrey Klein-Leac Leach brings over 25 years of experience stewarding client relationships, overseeing trust administration and developing effective wealth management strategies. Klein-Leach previously worked as vice president and trust relationship manager with Columbia Trust Co. in Salem, Oregon.

Meredith Village Savings Bank

Christopher Dickinson has joined New Hampshire-based Meredith Village Savings Bank as vice president Christopher Dickinson of business development and small business lending. Dickinson offers a full range of banking solutions to local business owners, municipalities and nonprofits. Prior to joining the bank, Dickinson held leadership positions in retail banking, small business banking and commercial lending. Most recently, he was the chief credit officer for a financial institution based in the Boston, Massachusetts area.

Northfield Savings Bank

Rob Wheeler recently joined Vermont-based Northfield Savings Bank as vice president of commercial banking. Wheeler brings over 25 Rob Wheeler years of customer-focused banking experience in commercial lending and credit analysis in Chittenden County, where he will continue to support the bankâ&#x20AC;&#x2122;s expanding commercial business base. Prior to his appointment, Wheeler held business banking positions at New England Federal Credit Union and Merchants Bank.

SIS Bank

Sanford, Maine-based SIS Bank hired Ellen Niewoehner as its new commercial lender for its Buxton, Maine branch. Niewoehner is responsible for soliciting and servicing Ellen Niewoehner prospective customers with a variety of commercial loans, as well as generating and managing a commercial loan portfolio and corresponding business relationships. Most recently, Niewoehner has held positions as the vice president, private banking and senior relationship manager at TD Bank in Portland, Maine, developing and expanding the bankâ&#x20AC;&#x2122;s commercial loan portfolio and business relationships. BNE BANKING NEW ENGLAND

PROTECTING GOOD VULNERABLE COMMUNITY WORKS CLIENTS

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

bankHometown

Featured Banks • bankHometown • Camden National Bank • Centreville Bank • East Cambridge Savings Bank • Liberty Bank • Meredith Village Savings Bank • New Hampshire Mutual Bancorp

Oxford, Massachusetts-based bankHometown raised $12,800 during its Annual Giving Campaign benefiting three local chapters of the United Way.

Camden National Bank

Centreville Bank

• Northfield Savings Bank • Norway Savings Bank • SI Bank & Trust • SIS Bank • TD Bank

Maine-based Camden National Bank donated $7,500 to assist the boys and girls teams in the Maine State Basketball Championships. The donations were dedicated to making game tickets or bus transportation free for students so that they could cheer on their teams.

East Cambridge Savings Bank

Massachusetts-based East Cambridge Savings Bank presented a $5,000 donation to the Somerville Homeless Coalition from the bank’s charitable foundation. The Somerville Homeless Coalition is a not-for-profit organization that provides service and support to individuals and families that are homeless or at risk of becoming homeless. 20 BANKING NEW ENGLAND

Liberty Bank

Middletown, Connecticut-based Liberty Bank donated $5,000 to Mental Health Connecticut in an effort to help improve health for all state residents.

New Hampshire Mutual Bancorp.

Sister companies and subsidiaries of New Hampshire Mutual Bancorp MillRiver Wealth Management, Meredith Village Savings Bank and Merrimack County Savings Bank each contributed $3,000 as gold level sponsors to support the New Hampshire Jump$tart Coalition. The organization aims to improve the financial literacy of pre-kindergarten through college-age youth by providing advocacy, research, activities, standards and educational resources.

Norway Savings Bank

Maine-based Norway Savings Bank collected $1,576 in spare change as part of its â&#x20AC;&#x153;Pocket Change for Patriotsâ&#x20AC;? program. The bank distributed the funds to Gray/New Gloucester schools to help engage students in Science, Technology, Engineering and Math (STEM) and literacy programs.

SIS Bank

Sanford, Maine-based SIS Bank donated 900 gallons of heating fuel to benefit nine local families in need.

Meredith Village Savings Bank

The Meredith Village Savings Bank Fund at New Hampshire Charitable Foundation awarded $120,000 to 35 nonprofit organizations. These include $99,000 awarded to 21 local agencies, and $21,000 donated to 14 area food pantries.

Northfield Savings Bank

Vermont-based Northfield Savings Bank donated $10,000 to the Vermont Association of Snow Travelers to help complete the Lamoille Valley Rail Trail, a four-season recreation trail located along 93 miles of the former St. Johnsbury and Lake Champlain Railroads.

SI Bank & Trust

TD Bank

The TD Charitable Foundation, the charitable giving arm of TD Bank awarded more than $5.9 million in grants to 18 nonprofit organizations supporting affordable housing, financial literacy/health, neighborhood revitalization, economic development and human service needs in communities from Maine to Florida. BANKING NEW ENGLAND

INDUSTRY NEWS

Credit Card Charge-Offs Surging at Small Banks

Credit card charge-offs are skyrocketing at small banks. According to media reports, charge-off rates have hit 7.2 percent on average during the fourth quarter for banks with $10.4 billion or less in assets. That level is up from 4.5 percent one year ago. The average charge-off rate for smaller banks is near an eightyear high, while large banks have an average charge-off rate of 3.5 percent, well below the 10.6 percent seen in 2010. Alliance Data Chief Executive Ed Heffernan told The Wall Street Journal he isn’t worried, citing the fact that many riskier consumers got shut out of credit during the recession and now have returned. The company is capturing more households, which have a higher tendency to write off after a period marked by unusually low losses, he said. But Robert Hammer, founder and chief executive of creditcard industry consultant R.K. Hammer, said the losses could be more indicative of what is to come. In the run-up to the last recession, losses accelerated for small banks before they did for big ones, he said. The overall credit card borrower-level delinquency rate increased modestly from 1.79 percent in the fourth quarter of 2016 to 1.87 percent in the fourth quarter of 2017, according to TransUnion’s insights report from the fourth quarter of 2017.

BofA to Open 500 New US Branches in Four Years Reuters

Bank of America Corp. said it plans to open more than 500 new branches across the United States over the next four years, as the bank continues to invest in physical and digital enhancements. The Charlotte, North Carolina-based lender said the latest push includes a move into three Ohio cities – Cincinnati, Cleveland and Columbus. The growth in the state follows recent expansions in Denver, Minneapolis and Indianapolis and a plan to do so in Pittsburgh, the bank said. With the addition of those four cities and the three Ohio 22 BANKING NEW ENGLAND

cities, the bank will have branches in 30 top urban markets which generate 88 percent of U.S. gross domestic product and have a similar share of U.S. population, Dean Athanasia, co-head of consumer and business banking at the bank, said in an interview. In January, JPMorgan Chase & Co. said it will build up to 400 new branches over five years as it expands into 15 to 20 new states and cities that could include Boston, Philadelphia and Washington, D.C. There are currently Chase branches in 23 states. The moves point more head-to-head competition between the three biggest U.S. banks for loan and deposit business of individuals and small businesses. JPMorgan, Bank of America, and Wells Fargo Co. are the three biggest U.S. banks by assets, respectively, and are neck-and-neck in deposits, with each having about 12 percent of the U.S. total, according to research from Credit Suisse.

Survey: Banks Missing Opportunity to Connect with Retail Customers

Close to 80 percent of retail bank customers want financial advice from their banks, but only 28 percent of retail bank customers say they are actually getting it, according to a new survey from J.D. Power. The study finds that customer satisfaction surges when banks get the advice formula right. Among other findings in the survey, 58 percent of those who received face-to-face advice felt it completely met their needs. But that number falls to 45 percent among customers who received advice digitally and to 33 percent among those who received advice via email. Furthermore, 58 percent of customers want to receive advice through their bank’s website and mobile app, but only 12 percent of them have received advice in this manner. Millennial customers are among the most receptive to bank advice. According to the survey, 34 percent of customers younger than 40 years old say they are “very interested” in receiving advice from their bank, and bank customers ages 25-39 have the highest levels of satisfaction with bank-provided advice. Only 9 percent of customers ages 25 to 39 feel the advice received from their bank added no value. The inaugural study further measured retail banking customer satisfaction with 17 large U.S. banks as well as best practices related to retail bank-provided advice and account opening processes. Chase ranked the highest in the study with a score of 829 on a 1,000-point scale, followed by Regions Bank, M&T Bank and Bank of America. Citizens Bank ranked last in this category with a score of 777. BNE

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