Banking New York - First Quarter 2018 by The Warren Group

PRESIDENT’S MESSAGE | By John Witkowski

IBANYS Hits the Ground Running in 2018 with Some Exciting New Ventures During the first quarter of 2018, IBANYS was focused on our Regional Compliance Conferences, our new Bank Executive Symposiums (previously IBANYS’ CFO/Senior Management Conference) and our Regional Directors Conferences, Human Resources Conferences and advocacy trip to Washington. We closely monitored state and federal legislative and regulatory activities.

ne thing I am especially excited about is our newly enhanced presence on social media. We are connected now more than ever with not only our members, but with everyone. You can find IBANYS on Facebook, Twitter, Instagram and LinkedIn. With the launch of our social media accounts, IBANYS is more accessible, communication is open and information is never missed. The variety of our platforms makes information posted from IBANYS easily accessible to any individual or organization.

Communication between IBANYS and our followers is more open, as the interactive nature of social media (for example, posting comments) provides direct communication. With John Witkowski the feature of notification alerts available on all social media platforms, never miss any news from IBANYS. Each platform offers notification alerts that notify you on any device when an update has been made to the account. Connecting with IBANYS couldn’t be simpler. We look Never miss a beat of IBANYS news and follow us today!

Facebook: @ibanys1 Twitter: @ibanys1 Instagram: @ibanys1 LinkedIn: IBANYS 4 | Banking New York

forward to communicating with various individuals and organizations and keeping all our followers up-to-date on all IBANYS information. If you have any questions, please contact Natalie Rowan at natalier@ ibanys.net or (518) 436-4646.

You Suggested, and We Listened… IBANYS SCHEDULES NEW CEO FORUMS!

I also want to share news about another exciting venture we are launching this year at the association. For the past two years, I have heard one common suggestion from our member bank presidents and CEOs: “We would like more time to network and talk with other bank executives around the state.” I have heard your comments, and this year IBANYS will host CEO Forums in three regions across New York State. They will take place twice a year, from 8:30 a.m.-3 p.m., with the first round on March 26 in Albany, March 27 in Syracuse and March 28th in Rochester/Buffalo market. We hope to have 10-15 CEO participants at each location. The sessions will be moderated by Karl Nelson (KPN Consulting), who has moderated similar forums all over the country. Karl, a very seasoned banker with more than 40 years of experience, understands the issues facing community banks today. He suggests some topics, but the goal is primarily to discuss the issues, questions, subjects and concerns on the minds of our member bankers all across the state. So, we surveyed all participants. IBA-

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IBANYS Board of Directors Officers Chairman R. Michael Briggs US New York Bank, Geneva, NY Vice Chairman Thomas Amell Pioneer Bank, Albany,NY Secretary/Treasurer Michael Wimer Cattaraugus County Bank, Little Valley, NY Immediate Past Chairman Douglas Manditch Empire National Bank, Islandia, NY John Buhrmaster First National Bank of Scotia, Scotia, NY Thomas Carr Elmira Savings Bank, Elmira, NY Randy Crapser Bank of Richmondville, Cobleskill, NY Director Emeritus Ronald Denniston First National Bank of Dryden, Dryden, NY Christopher Dowd Ballston Spa National Bank, Ballston Spa, NY John Eagleton Steuben Trust, Hornell, NY Robert Fisher Tioga State Bank, Spencer, NY Anthony Delmonte Bank of Akron, Akron, NY Gerald Klein Tompkins Mahopac Bank, Brewster, NY Richard Koelbl Alden State Bank, Alden, NY Mario Martinez Catskill Hudson Bank, Kingston, NY Paul Mello Solvay Bank, Solvay, NY G. William Ryan Cayuga Lake National Bank, Union Springs, NY Anders Tomson Capital Bank/ a division of Chemung Canal Trust Company, Albany, NY Kathleen Whelehan Upstate National Bank, Rochester, NY IBANYS STAFF John J. Witkowski President and CEO Stephen W. Rice Vice President of Government Relations and Communications William Y. Crowell III Legislative Counsel Linda Gregware Director of Administration and Membership Services

PUBLIC AFFAIRS UPDATE | By Stephen W. Rice

IBANYS’ Advocacy Efforts Take Center Stage In Albany, Gov. Andrew Cuomo’s proposed 2018-19 State Budget – unveiled Jan. 16 – lacked a critical element – that of taxes. Everyone understood he would likely be proposing a new approach to address the problems caused by the SALT (State and Local taxes) deduction limitation, but the details of whether it would involve a payroll tax, changes in charitable deductions, etc. were uncertain.

he governor’s budget amendment period (21 days and 30 days after the initial proposal) were available to clarify his approach. The governor tweaked his proposal to address changes to the federal tax law (including the loss of deductions) by implementing changes to the state tax code, including a plan to create 2,287 charitable organizations for taxpayers to fund government services designed to circumvent the new $10,000 limit on state and local tax deductions. The governor also recommended a voluntary payroll tax as a substitute for the state income tax. Negotiations with the Legislature then began, leading up to the April 1 deadline for enacting the budget. In the early stages, there are no signs that banks will be specifically “targeted” – other industries seem to be more in the administration’s Stephen W. Rice sights. However, careful scrutiny will be needed as further details emerge. The proposed state DFS budget calls for a $1.4 milllion increase from the previous year, primarily to cover DFS costs in IT updates and salaries. As a result, bank assessments would increase accordingly, with a preliminary ballpark estimate of approximately 5 percent. Article 7 legislation in the budget proposal includes only one provision that could potentially impact banks (compared to last year, when as many as eight provisions in his initial budget would have done so.) This year, the only one involves student loans, specifically the DFS licensing and regulating student loan industry and student debt consultants. However, it appears that he believes banks may well be excepted from this provision. On early session non budget issues, the Senate has supported legislation that IBANYS played a large part in drafting – to establish that banks with less than $1 billion in assets that have received at least a satisfactory CRA rating from their federal CRA exams would be exempted from a state DFS CRA exam. The legislation has passed the Senate the past three years; IBANYS is seeking sponsors and support in the Assembly. The Senate Banks Committee also reported legislation that would establish bank robbery as a Class C Felony, and another bill that would require public posting in banks of the DFS Consumer hotline. One other bill would require a DFS website presence on Home Equity conversion – specifically, addressing the matter of reverse mortgages – for consumers to review.

Two bills presented to the governor were signed, but with a contingency that they be amended. One was to create a Task Force on Online Lending, which was to report by April 15, 2018. The new amended version, expected to pass both chambers, would instead call for a study by DFS to be released by July 1, 2018. The second bill involves pension loan advancements, with the amended version (also expected to pass both houses) eliminating the requirement that public hearings be held, and would require a report by DFS by Jan. 1, 2019. IBANYS is opposing the state Department of Labor’s “predictive scheduling” proposal, which could require employers to schedule employees 14 days in advance, and pay employees for an extra four hours if changes are made. It would also require they be paid an additional two hours if employees are called in unscheduled. While not specifically targeted to banks, it would present the likelihood of future DOL audit procedures, and – with New York community banks already paying the recently increased minimum wage – would potentially add even more regulatory burden. In Washington, the early session primary focus is support of the bipartisan Senate regulatory relief bill (S.2155). It was reported by the Banking Committee, and ICBA is hoping it can pass the full Senate without amendments or changes, perhaps by late February or during March. IBANYS has signed onto a letter co signed by all state ICBA affiliate associations supporting the bill. There is some concern the House could eventually seek to amend it, which could risk the bipartisan support the current Senate legislation enjoys. ICBA (the Independent Community Bankers of America) will hold its Capital Summit advocacy program April 8 11 in Washington, D.C.. One speaker already announced is Sen. Pat Toomey (R Pennsylvania), who may well be in line to chair the Senate Banking Committee. IBANYS will once again schedule meetings “on the hill” with members of the New York Congressional Delegation for New York community bankers in attendance. It’s a valuable opportunity to make our industry’s voice and priorities heard in the nation’s capital. ■ Steve Rice coordinates government relations and communications for the Independent Bankers Association of New York State. He has worked in the New York banking industry and New York state government for more than three decades. First Quarter 2018 | 5

TECHNOLOGY AND INDUSTRY SHIFTS | By Daniela Bigalli

Adapting Mortgage Lending to Today’s Standards Over the past several years, there has been a paradigm shift in the mortgage industry. With easy-touse interview style applications available online and access to online rates and product information, many borrowers today are well-versed and have a healthy understanding of what is involved with a mortgage. Much of the mystery of the mortgage process has been dispelled and transactions are transparent. In decades prior, borrowers would almost exclusively obtain a mortgage through their local bank or utilize a lender suggested by friends and family. While this is still a common occurrence, borrowers have gradually been moving towards more of an online experience and technology has almost made mortgages more of a commodity. What was once a face-to-face transaction is now done predominantly via the internet.

any of Homestead Funding’s licensed loan originators, and at other organizations, find they meet with their clients in person less frequently each year. This is not a negative: borrowers still receive the attention they need and deserve from our loan originators. It is just provided on different platforms. The mortgage process is shifting to a high-tech, high-touch (many points of contact along the way) experience. Millennials, and even previous generations, have grown to expect companies to function in a technology-driven environment. Convenience and quick responses are important aspects of any modern business transaction, and that is no different for mortgage applications. Even before a client starts the application process, the majority of applicants will begin their product search online. This applies to mortgages, cars, appliances, and everything in between. This research is an important step that borrowers take during their home finance journey. They want to see if a company Daniela Bigalli is credible, and online reviews through third party websites like Zillow, Yelp and even Facebook, can have as much influence on a person’s decision to use your company as a personal recommendation. Having an online presence is a valuable asset for any business. By providing customers with an excellent experience and streamlined processes, it is possible to cultivate a positive review base.

Trends and Transitions Another industry change has been a transition to getting loans from non-banks, rather than banks. After the 2008 financial crisis, many banks both large and small, removed themselves from the mortgage business. 6 | Banking New York

This provided non-banks with an opportunity to fill the void that was created by the exit. In this new financial landscape, non-banks, with their wide product offerings and relative flexibility regarding loan decisions, provide a valuable service in the post-recession world. As the newfound foothold of non-banks continues to hold firm, it is likely that their market share will continue to expand. While residential mortgage companies like Homestead Funding have been honing their craft for decades, the financial ups and downs of recent years have put many organizations, both on the local and national level, through their paces. Thankfully, in part due to their agility and flexibility, many of these companies have been able to weather the economic storms.

Facing the Challenges The aforementioned changes in the mortgage industry have created a new set of challenges for local community banks. A direct consequence of the financial downturn was the creation of new regulations and regulatory agencies like the CFBP. Keeping pace with the changes issued by the government can be difficult for any institution, but especially for those not consistently providing residential mortgages as part of their day to day services. With new regulations and other industry changes happening almost daily, the old adage, “the only constant is change,” really rings true. Mortgage bankers have experienced the ebb and flow of the mortgage industry, and are able to prepare for and adapt to any regulatory changes with relative ease. Having a staff on hand who are trained specifically to handle, receive, interpret and implement mortgage specific changes introduced by Dodd-Frank and the CFPB is one of the hallmarks of companies like Homestead Funding. Where traditional banks may need to allocate those resources from

other areas, Homestead has specific personnel dedicated to helping navigate through the sea of mortgage regulations. Community banks and credit unions can reduce employee overhead, reduce the costs associated with maintaining compliance, and increase efficiencies by working with local mortgage bankers like Homestead Funding. By partnering together, these companies can capitalize on the areas of their expertise and leverage each other’s strengths. The mortgage banker is able to help the local bank retain and develop its footprint in its marketplace while ensuring the client receives exceptional service. An added advantage of the relationship is that it is mutually beneficial. Because the two companies offer exclusively different products (mortgages versus personal loans, car loans, etc.), there is no direct competition. If one organization is unable to fill the needs of a consumer, the other can step in and provide the necessary service. And by forming a partnership with a local mortgage banker, there is a certain level of security in that they would not be siphoning off your client base with peripheral product offerings, which likely could happen with a large conglomerate.

Market Outlook The National Mortgage Bankers Association and other financial talking heads have indicated that the 2018 housing market is moving towards a purchase driven environment. With rates increasing, clients may be less inclined to refinance. Non-banks, like Homestead Funding, offer a wide variety of purchase-specific products that consumers can take advantage of. Excellent customer service along with traditional mortgage options are a vital part of a mortgage company’s long-term success, while niche programs help to supplement business when and where necessary. An environment of increasing rates does not imply that there will be a decrease in the number of homes being purchased. Many people still consider homeownership an important part of the American dream and while younger generations are delaying when they buy a home, it is still part of their financial roadmap. Homeownership provides benefits that many people enjoy like stability, freedom and the opportunity to build equity.

Success Through Strategic Partnerships Despite the exodus of many companies from the mortgage business, the mortgage industry, and banking in general, remain highly competitive fields. Market share is gained in inches through the hard work of employees and executives alike. On a whole, the mortgage industry has changed significantly since 2008. But in the past decade, there have been many opportunities for growth and learning. And while ultimately it is impossible to know what the financial future hold, it is possible to mitigate risk through strategic partnerships. The diversified mortgage products offered by Homestead Funding provide a while range of channels for

partners to utilize and leverage. By providing clients with a wide array of residential mortgage products, Homestead Funding is able to cater to a wide audience of potential homebuyers. From traditional mortgages like conventional 30-year loans to VA loans to state bond programs and beyond, there is an option for almost every buyer. Homestead Funding has also worked very closely with banks in the past to cultivate collaborations based on mutual trust, honesty, and integrity. In doing so, our goal is to offer banks an avenue for their clients to obtain a mortgage. And even though the customer is utilizing an outside entity for their home financing needs, the banks are still able to retain the client and the underlying financial relationship. Each bank is able to develop a business to business plan based on the specific outcomes they wish to achieve. Ideally, any agreement that is reached will help improve the bottom line for the bank, as well as Homestead Funding. Our friendly and knowledgeable licensed loan originators and dedicated support staff work hard to move each loan through the application process quickly and accurately so each client has an excellent experience. And with locations throughout New York, no matter where you are, we most likely are near one of your branches. ■ Daniela Bigalli is the vice president of sales and marketing at Homestead Funding. She has 15 years of mortgage industry experience.

PRESIDENT’S MESSAGE | continued from page 4

NYS’ CEO Forums are the perfect events for New York community bank executives to share and learn about new topics, ideas and resources that can help them and their organization succeed. • Learn what’s working and what’s not • Form long lasting relationships with other CEOs • Solve your immediate concerns • Obtain access to highly respected industry experts • Discover new solutions being utilized by your peers We hope many if not most of our member bank CEOs join us as we gather around the state, throughout the year. I think it will be time well spent! Clearly, we’re off to a very busy start of 2018. We continue to benefit from the strong member driven atmosphere of IBANYS, and will need their full participation to succeed. Whether it’s joining a committee, registering for a program or webinar, contributing to our state political action committee NYSIBPAC, or taking a look at the products and services offered by our preferred providers and associate members – our members are the key to our success. As I often remind them: “It’s YOUR association. Make it work for you!” ■ John Witkowski is president and CEO of the Independent Bankers Association of New York State. He may be reached at johnw@ibanys.net or (518) 436-4646. First Quarter 2018 | 7

‘GREEN’ BANKING | By Bram Berkowitz

Obama Administration’s Cole Memo Was Guidance, Not Law

.S. Attorney General Jeff Sessions rescinded the Cole Memo at the beginning of the year, an Obama administration guidance that essentially said the federal government would not interfere with marijuana programs in states in which they are legal. U.S. Attorney for Massachusetts Andrew Lelling followed that up a few days later, saying in a statement that he could not “provide assurances that certain categories of participants in the state-level marijuana trade will be immune from federal prosecution.” But despite the language, which some consider to be a federal crackdown, industry experts and lawyers say nothing has changed for banks when it comes to deciding whether or not to bank marijuana deposits. “We believe and are optimistic that the DOJ’s ‘reversal’ will not have a significant impact upon the present course of the cannabis industry in Massachusetts,” said Frank Segall, co-chair with Scott Moskol of the Cannabis Advisory Group at the Boston-based law firm Burns & Levinson. That’s because the Cole Memo was not a law, but a direction to try to provide some clarity at that time, Moskol said. “Presently, the federal government remains barred from using federal funds to prosecute properly licensed, compliant medical marijuana facilities as a result of the bipartisan Rohrabacher-Blumenauer Amendment; such protections are silent as to adult-use marijuana,” he said. Even when the Cole Memo was intact, banks were extremely cautious about working with the marijuana industry, and very few have tested the waters. Medford-based Century Bank is the only bank in Massachusetts known to be willing to do business with marijuana dispensaries. However, a marijuana investor told the audience at a marijuana conference last October that there were three state-chartered banks in Massachusetts working with marijuana businesses at that time. Momentum has undoubtedly been building given the potential size of the marijuana industry. Moskol and Segall say they have seen increased interest in the area. There were 400 financial institutions in the U.S. banking marijuana businesses as of Sept. 30, 2017, up from 340 nine months earlier, according to the Financial Crimes Enforcement Network. Katrina Skinner is the general counsel at Safe Harbor Services, a subsidiary of Partner Colorado Credit Union, 8 | Banking New York

which offers an automated compliance platform to help financial institutions provide financial services to marijuana business. She said that only one beta financial institution Safe Harbor Services is working with has gotten spooked since the rescinding of the Cole Memo.

THE CONSEQUENCES While it may not have been a law, rescinding the Cole Memo, a move that Skinner considers an attempt by Sessions to try to slow down the momentum of legalized marijuana, did send some upheaval through the industry. Various media outlets reported earlier this month that numerous medical dispensaries in Massachusetts had to stop accepting debit cards after the payment company facilitating the transactions called to say that movement at the federal level made it too risky. “My opinion is that the dispensaries taking debit or credit cards are likely doing it under the radar because Mastercard and Visa do not want to be in the space right now,” said Skinner. “So, for those processors, the Sessions memo likely reinforced their fear of prosecution under antimoney laundering laws.” This could be a big hit for business. According to Skinner, the demand from consumers and users of patients and customers in Colorado is 25 percent to 30 percent higher when plastic can be used. But Skinner agreed with Segall and Moskol that the movement will not slow down; more banks are now willing to do an extraordinary amount of due diligence in order to enter the industry. The best method, according to Moskol, is to not only check for compliance and a license, but to also make sure the customer is asking for information and disclosures from the bank. Safe Harbor’s platform helps this process by working with both the financial institutions and the marijuana businesses to make sure all operations comply with the local rules and regulations of the Bank Secrecy Act, FinCen guidelines and anti-money laundering requirements. It first assists the marijuana business with the onboarding process, which includes critical document collection and review, a full operational review, background checks, a business practice and, formerly, a Cole Memo compliance review. Continued on page 18

COMMANDING RESPECT | By Stacey Shipman

How to Project Confidence and Professionalism During Your Next Meeting

resentation skills are vital for motivating, engaging and connecting with others. Yet for some bank executives, presenting to groups, sharing ideas in meetings or motivating others is unnerving. Take Joe for example. As a bank marketing executive, Joe excelled at his work. He was smart, accomplished and had a lot of creative ideas. What he lacked was the ability to present his ideas in a clear, compelling way. Joe mumbled, his messages weren’t clear or focused, he spoke in a soft voice and was unable to capture and keep attention. Stacey Shipman Joe knew this because his boss pulled him aside after a meeting one day and suggested he get some executive coaching. As an executive, Joe needed to power up his leadership presence and ability to command a room, present ideas clearly and ultimately motivate others and get buy-in for his ideas. Mumbling, a lack of focus and his soft-spoken nature wouldn’t get him the results he wanted. Communication is at the heart of business. It’s how leaders motivate and inspire. It’s how teams collaborate and get great work done. It’s how businesses grow and strengthen client relationships. It’s how early and midcareer professionals get ahead. And how you come across during verbal interactions – formal presentations, meetings, individual conversations – matters. Joe worked with a professional coach on his presence and communication skills for a couple of months. Using a holistic approach and astute questions, Joe was able to get at the root of his mumbling, understand the key themes in his presentations and identify ways to power up his leadership presence and command attention when speaking with others. Not only did Joe feel more confident, his boss noticed the positive changes, too. If you or someone you know can relate to Joe, consider the three Cs – confidence, clarity and connection – to project more presence and professionalism during your next meeting, presentation or conversation.

burden but as an opportunity to connect with and help others. To appear confident to others, stand in a tall, open, yet relaxed way. Non-verbals like body language, dress and posture tell a story before words are even spoken. Finally, be grounded in who you are and the unique skills you bring to the table to bring your best self to every interaction.

CONFIDENCE

Stacey Shipman is an executive coach and facilitator who specializes in helping business executives strengthen their public speaking and communication skills. Get her free monthly newsletter at www.staceyshipman.com or connect with her on LinkedIn. (linkedin.com/in/staceyshipman)

The most well-planned conversation or presentation doesn’t matter if you feel uneasy, distracted or unable to focus. To project confidence consider both mindset and outward appearance. Create a positive mindset by viewing communication not as a

CLARITY “Winging it” is not an effective communication strategy. You must be able to express your vision, stories and ideas in a clear and compelling way to get buy-in and inspire action. Start with the end in mind by clarifying what you want to happen as a result of the meeting or presentation. Know the audience you’re speaking to and what they need to hear. And keep your message simple. Identify up to three main points to help get your message across and back that up with stories, content and data. To engage audiences include strategies like storytelling, questions, humor and other interactive activities. The best communicators take time to plan for, prepare and practice what they want to say before getting in front of people.

CONNECTION Once in front of clients, staff or audiences, it's no longer about the speaker. To build trust and inspire action, employees, colleagues and others use empathy, curiosity and listening to show you care. Your body language, voice tone and variety can help to bring energy, engagement and enthusiasm to your words. Tap into the emotion (yes, you read that right) behind your message or ideas and use that to create a real connection with your audience. Make sure to validate any concerns that come up, ask questions to understand, be quiet and listen.

THE BOTTOM LINE? Just as banking is a people business so is communication. Like Joe, you may have great ideas and to make those ideas heard, commit to do the work to see the results. Your ideas matter. Whether you’re a nervous speaker or a seasoned pro, remember the 3Cs – confidence, clarity, connection – to get better results from your verbal communication. ■

First Quarter 2018 | 9

BANK PROFILE | By Mike Flaim

Bank of Cattaraugus: A Minnow Among the Tritons

here are less than a thousand people in Cattaraugus, a small village in the Chautauqua-Allegheny region about an hour south of Buffalo. The town’s only bank – the Bank of Cattaraugus – enjoys exclusivity; its closest competitor is a 10-minute drive south on highway 353 into the county seat of Little Valley. With just a single location in a town with no stoplights and about $19 million in assets, it’s hard to recognize it as the financial institution that caught the attention of tens of millions around the country just a few years ago. The bank and its president, Patrick J. Cullen, were the subject of a piece written by Alan Feuer in The New York Times in Dec. 2011. Feuer displayed Cullen as the community-minded banker he is; the kind of banker who loans money based on the whole person, not a three-digit credit score, or who once had his son buy a house just so the former owners, who had fallen behind on property taxes and were forced to sell, could stay on as renters. This attention snowballed and, six months later, Cullen sat down for an interview with Dean Reynolds from CBS evening news. The Huffington Post ran a profile on the bank a week after the CBS piece and, within a span of six months, people came to understand the Seneca word “Cattaraugus” as the home of the nation’s best banker. For a time in 2012, the renown of this microbank far surpassed that of institutions with hundreds of branches and billions in assets. More importantly, it was a reminder that a heart existed in the industry, and that not every financial institution neither wants nor needs to grow to a “too big to fail” size.

AN AXIOLOGICAL APPROACH TO BANKING “We’ve got a lot of tiny little businesses around here that need the money,” says Cullen, as he explains his role in the community. Cullen’s called Cattaraugus home for most of his life, except for two years when he was a banker in Buffalo upon graduating college. His father was president of the Bank of Cattaraugus, and Patrick himself has been president for more than 35 years. His daughter Colleen, who started working there in high school, is now the CFO. She’s been there for 27 years. His wife Joan – “a brilliant woman,” Cullen effuses, is the bank’s corporate secretary. “A lot of prominent people established the bank as a way to build the town. A cousin of Davy Crockett was one of our founding stockholders.” Abraham Lincoln’s cousin also had a stake in the bank early on, and it’s clear that since 1882, that mission of building up the town hasn’t changed. The bank continues to put the welfare of the community above profitability by rarely posting profits and routinely making microloans to 10 | Banking New York

neighbors on a handshake in lieu of a credit check. That system has been working just fine for Cullen; this past month was the first time in approximately 15 years that the bank lost money on a loan – a resident forgot to pay his insurance premium and unfortunately crashed his car. Another practice that would raise a banker’s brow is the website. It doesn’t follow the design trends that so many financial institutions cling to: there are no stock photos of overly-excited people staring blissfully at a smartphone, no barrage of warnings reminding customers that their online data is constantly at risk and there aren’t a dozen links in as many garish tabs at the top of the page. “Banks have been sued by lawyers claiming the disabled are denied services according to the ADA,” explains Cullen, “so we took the proactive step and took ours down.” There’s no rush to get it back up and running, either, since Cullen says that they don’t offer online banking. “I can’t tell you how much simpler that makes life for us. I get compliments from regulators all the time because of how safe our mainframe is. It’s simple: it’s not connected to the internet because there’s no reason for it to be connected.” Cullen described how things have changed for him in the years since the unexpected wellspring of publicity. “We’ve grown a little bit, but it’s all been systemic growth. … That experience [with the Times and CBS] has been interesting; thousands of people have approached us about opening up accounts.” He also acknowledged that the attention has led to some interesting phone calls from both admirers and opportunists. Requests to open accounts, to donate money to people in the town and to buy him out poured in after the Bank of Cattaraugus was brought to national attention. Though the fame is recent against the backdrop of the bank’s 136-year history, it has always enjoyed local renown as a community institution. As such, the town has no interest in altering its anchor. On one occasion in which a big change was proposed, the owner of the grocery store in the next town came

‘GREEN’ BANKING continued from page 8

over and said to Cullen, “We hate our bank … would you please open a branch near us?” Cullen told him they have never in their history opened a second branch, nor did they have much interest in it, but he told the man he would mention the idea at the next bank meeting. During this public meeting, Cullen reiterated the request, which was rejected after some lively debate. A diminutive old lady stood up and said, “they should open up their own damn bank if they want a good one so bad.” ■ Mike Flaim is an associate editor with The Warren Group, publisher of Banking New York. He can be reached at mflaim@ thewarrengroup.com.

The platform, which has a fintech option in areas of the country where there are no financial institutions willing to bank marijuana, also does constant monitoring, compliance reporting and independent program reviews. The company has been able to reduce the time it takes perform due diligence from months to weeks, and it has also been through numerous regulatory exams. It hopes to set the national standard for compliance when banking marijuana. “It’s very labor intensive,” said Skinner. “But I think it’s really helped the industry grow and consolidate some, and become more of a traditional enterprise as opposed to one that is cash-driven.” As the industry continues to expand – California recently began recreational marijuana sales and Massachusetts will follow suit later this year – Sessions’ move to rescind the Cole Memo may be a push for quicker action. “It’s very possible that the DOJ’s action will galvanize Congress to delist cannabis as a schedule 1 controlled substance or result in an amendment to the RohrabacherBlumenauer Amendment, thereby further legitimizing this industry,” said Segall. ■ Bram Berkowitz is the banking reporter for The Warren Group, publisher of Banking New York.

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www.icba.org/summit18

First Quarter 2018 | 11

ASSET TRACKING | By Renaud Megard

The Bottom Line: Improved Asset Tracking Can Cut Bank Costs

or banks, credit unions and other financial institutions, keeping track of work-related assets like computer screens, hard drives, printers, office desks, client chairs and communal work stations is a constant challenge that, when not properly managed, results in decreased productivity and additional expenses (where are they, when did we buy it, how much did we buy it for, when will it be fully depreciated, when should it be replaced?). Yet by implementing a robust asset tracking/ asset management system throughout their institution, banking organizations Renaud Megard can keep much better track of what they have, and as a result, make more informed decisions regarding future purchasing while reducing expenses and positively impacting overall productivity. To start, banking organizations should take a close look at their current asset tracking practices. In doing so, they may discover that the actual location of multiple items (such as laptop computers, IT equipment, furniture and other costly physical assets) simply is unknown. Additionally, many past purchases will turn out to have been unnecessary, because an identical item is later found in storage or at another location. These discrepancies occur despite some organizations’ attempts to institute some hit-and-miss asset tracking procedures – without a complete commitment to asset tracking, financial organizations are often surprised to learn how many items are not tracked and have been misplaced, lost or even stolen. A robust asset tracking program will help banking institutions tightly control physical assets – and cut costs. Many financial organizations have multiple branches and office locations nationally or internationally, which makes tracking property, plant and equipment (PP&E) exponentially more complex. Most likely, these larger organizations have basic asset tracking procedures put in place through their facilities or IT departments. Yet, thanks to advances in technology, an all-encompassing asset management program can be significantly more robust and leak-tight. And when it comes to managing assets, running a tight ship will cut costs. Tips to track and tightly control tangible assets: • Typical physical assets include an organization’s computers, audio/visual equipment, IT equipment, vehicles, furniture, tools and the like. Tracking tangible assets involves assigning a unique identification number to each asset. ID numbers could be serial numbers

14 | Banking New York

as well as barcodes or QR codes that are scanned via a mobile app. Some businesses use RFID readers and GPS tags to provide real-time location of their assets. Asset tags are adhered to the physical property, and the number is added to the asset tracking system. • High-quality custom asset tags (also known as security labels or inventory control tags) are an important piece of the asset management puzzle. Clearly, durable label material combined with long-lasting adhesive is imperative. Quality asset tags utilize sub-surface printing techniques. This means information is printed on the reverse side of a specific type of plastic (glossy or textured). This sub-surface printing technique protects the ink, color and image to ensure the asset tag is durable and long-lasting. This manufacturing approach makes your custom asset tags resistant to abrasion as well as all types of outdoor weather conditions. Sequential serial numbers may need to be digitally produced or hot-stamped. Alternatively, imprintable labels allow individuals to type or handwrite information onto property tags, such as maintenance schedules.

• In addition to identifying assets, some financial organizations need to discourage theft of certain items with “tamper-proof” asset tracking labels. There’s a lot of confusion around this term, so here’s a quick primer. Known as being tamper-evident, tamper-proof, or tamper-resistant labels, these labels warn any against any potential nefarious action by stating the label is “Void if removed.” When someone tries to lift off this label, the message underneath says “VOID” or shows a pattern. Another type called destructible vinyl labels (also known as indestructible labels) disintegrate into tiny pieces when someone tries to remove them, which can thwart potential theft. This type of sticker shows clear evidence of being disturbed. • Asset management software is also an important piece of the puzzle. Searching on the phrase “asset tracking software” will reveal a wide variety of software programs. Some features to investigate include: a check-in/check-out feature, maintenance schedules, parent/child hierarchical relationships, full life cycle management, storage and inventory features, depreciation and “retiring” assets and, of course, robust reporting functions.

This year, track and tightly control tangible assets to reduce expense growth. A robust asset tracking program implemented throughout a financial organization will cut costs and improve the financial institution’s bottom line. By giving employees the tools to quickly locate any physical asset when needed, disruptions in operations will be reduced, the expense of purchasing unnecessary equipment will be avoided, and managers throughout the organization will be empowered to make more informed purchasing decisions. ■ Renaud Megard is President and CEO of NFI Corp. (Nameplates for Industry), a New Bedford, Massachusetts-based business established in 1975. NFI Corp. is the global leader in manufacturing custom, high-performing printed graphics. The wide array of solutions includes long-lasting barcode labels, serial number labels, domed labels, asset tags, tamperproof labels, metal nameplates, and electrical membrane switches. Backed by 40 years of success – and fueled by a commitment to innovation – NFI Corp. is certified in ISO-9001-2015, MIL specs, UL®/CSA/CE/RU, Lean Manufacturing and Green Workplace. Visit www. NFIcorp.com to learn more.

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First Quarter 2018 | 15

LOAN GROWTH | By Dave Carlson

Best Practices to Grow Your HELOC Portfolio in 2018

ome equity lines of credit (HELOCs) are again becoming a relevant strategic instrument to accelerate loan growth. While consumer interest in HELOCs has revived and will likely continue growing, many financial institutions are struggling to capitalize on these opportunities. 2017 began with several key housing and economic indicators pointing favorably to a continued resurgence in HELOCs. However, despite these decidedly HELOC-friendly indicators, HELOC growth is proving to be an uphill climb. In the first quarter of 2017, the dollar volume of HELOC originations David Carlson was at a three-year low. The pace quickened in Q2 but origination growth still lags behind 2016 performance. It’s not that community financial institutions aren’t trying. Many are devoting considerable resources to gain traction with HELOCs, only to have their efforts rewarded with lackluster results. If you ask an officer at one of these under-performing institutions to explain their financial institution’s subpar HELOC results, they might point you to a long list of legitimate frustrations. Often, these are valid concerns; however, a select number of community financial institutions are successfully identifying and attracting new borrowers through the use of innovative strategies. The results – significant growth through increased loan volume and enhanced income. What’s the differentiator? Why are some financial institutions succeeding while others flounder? Research shows successful execution of a HELOC strategy requires attention to three key areas: process, product and promotion. While many financial institutions may believe they have these elements in place, most do not have a formal foundation to drive actual results.

PROCESS Without a defined process, a successful HELOC strategy cannot be effectively implemented. Developing a consistent organizational process includes: (1) internal education for all team members and (2) a dedicated internal process. Internal Education Internal education should focus on recognizing HELOC opportunities – specifically, what is a HELOC and how consumers can actually use a HELOC. In addition, employees need to know who the dedicated product owner 16 | Banking New York

is and how to make a successful referral to the HELOC specialist. Internal Process The HELOC growth strategy must have dedicated owners who are HELOC experts. Each product owner must have access to an online application process which is well-defined, intuitive and easy to navigate. In addition, financial institutions must have clear processes around loan closings. Specifically, what is the internal documentation process and where will they be closed (e.g., in branch, online, in a lender’s office, etc.)?

PRODUCT With the process defined, it is time to focus on the product. Although it isn’t always obvious with a product such as HELOCs, there are significant ways a financial institution can differentiate itself. For example, will your financial institution focus on a fixed-rate offer or an introductory rate offer? Consumers will want to compare rates, so it is important to understand how compelling your rate offering will be to prospects. Other items for consideration include decisions regarding closing costs and credit quality – essentially, will you charge closing costs and what will your risk tolerance be as it relates to consumer credit scores. Like our other products, HELOCs are most successful when financial institutions pair a compelling product offering with targeted marketing and differentiating service. Continued on page 18

LEADERSHIP TACTICS | By Stacey Shipman

Motivating Your Team in the Banking Industry

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 Stacey Shipman 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 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. Is your team working towards a shared purpose or mission? Continued on page 18 First Quarter 2018 | 17

LOAN GROWTH continued from page 16

PROMOTION Once you have the right process and products in place, the final step is promotion. A random survey of many websites shows most financial institutions don’t even promote their HELOC offerings. The first step in effectively promoting HELOCs is to include them on your organization’s website. The next and most important part is to utilize data to make strategic decisions. Imbedded in your financial institution’s data is a wealth of information regarding targeting opportunities, specifically, who are your best customer or member HELOC targets? When this information is paired with non-customer or member targeting information based on external data sources, a financial institution can then successfully implement a targeted omnichannel marketing approach to increase HELOC acquisition. HELOC promotion utilizing an omni-channel marketing approach includes a variety of sequenced and targeted methodologies. For example: • Emailed offers to targeted customers or members directing them to a HELOC microsite • Digital integration with social media through strategically placed digital marketing • Promotional visibility at your branches • Targeted mailings to high probability prospects • Digital display ads to targets across multiple electronic devices

When executed properly, the impact of targeted marketing drives actual results. A case study highlighting one financial institution’s success with an omni-channel marketing approach shows an 11-branch institution that implemented its first HELOC growth strategy in Q1 of 2017. Even with the dollar volume of HELOC originations at a three-year low nationally, the following results were achieved: • Averaged 15 additional funded HELOC loans per month • Recouped marketing investment early in Q3 • Doubled new HELOC production The time for a proven HELOC strategy is now: (1) The resurgence in HELOCs represents a significant opportunity for community financial institutions to boost loan volume, (2) The current underlying economic fundamentals are conducive to HELOC growth and (3) Consumer interest exists. In order to capitalize on this opportunity, financial institutions must now decide if they are willing to design and deploy a HELOC strategy consumers will embrace. ■ David Carlson, senior vice president at Haberfeld Holdings, a data-driven consulting firm specializing in core relationships, customer and profitability growth for community-based financial institutions. Carlson can be reached at (402) 323-3600 or dcarlson@haberfeld.com.

MOTIVATING YOUR TEAM | continued from page 17 COMMUNICATE CLEARLY AND CONSISTENTLY 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. Is your communication clear, consistent and caring?

quieter team members to speak up and share ideas. How can you make all team members feel seen and heard?

SHOW APPRECIATION 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.How can you show more appreciation to people on your team?

SET PEOPLE UP FOR SUCCESS 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. Does your team have the tools and resources they need to be successful?

THE BOTTOM LINE 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. ■

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 18 | Banking New York

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First Quarter 2018 | 19

LONG-TERM PLANS | By Bram Berkowitz

M&A Activity Likely to Soften in 2018

With Promised Regulatory Relief, Mutual Banks No Longer Feel a Pinch

ompanies across a variety of industries are expecting larger deals and a pickup in merger and acquisitions in 2018 – but in the banking world, experts expect the opposite. “Most community banks that may have been considering selling previously may not sell,” said Arthur Loomis, president of Loomis & Co., a New York-based investment bank that has worked with community banks in the Northeast on stock conversions and mergers and acquisitions. “We are expecting less M&A activity in New England in 2018. … The same for mutuals, too.” One major explanation is continuing favorable macroeconomic trends; the country likely has another year or two of vibrant economic growth before the business cycle turns, Loomis said. And as banks expect to pay much less in taxes and regulatory compliance costs in the near future, they can also expect to boost earnings, making themselves more attractive purchases in a year or two. “The astute seller probably does not sell now, unless it is for cash,” said Loomis, while noting that there are always exceptions. Recent analysis from the American Bankers Association found that bank M&As, unlike other industries, have not been as active as of late. Bank deal activity in 2017 was similar to 2016, with about 200 deals, representing roughly the same 3.5 percent to 4 percent annual shrinkage of bank charters that has occurred since the financial crisis. The ABA anticipates a steady, but not over-heated environment in 2018, with activity mostly concentrated in the community bank sector.

WAIT AND SEE Demand for acquisition is strong, but banks are typically sold and not bought. Independent Bank Corp. and Rockland Trust have made six acquisitions since 2009, and CEO Christopher Oddleifson has made it clear the bank is still very interested in making a purchase. According to Loomis, target banks should be able to grow their earnings between 8 percent to 15 percent per year for the next two years. This increase, combined with a typically smaller correction or decline in their change of control value, is expected to result in more favorable stock exchange ratio for sellers when the ultimate economic recession occurs. Based on past precedent, acquirer stock prices will tumble more than the change of control value to sellers when the next business cycle bottoms and begins to improve, said Loomis. 20 | Banking New York

On the mutual side, banks will be focusing on regulatory relief, which has been a driving force behind a number of mergers that have taken place since the financial crisis. Mergers and acquisitions by U.S. banks surged to about $18 billion in 2015, the highest level since 2009. That figure was even larger in 2016, according to data compiled by Bloomberg. Nationally, 1,106 community banks were acquired between 2010 and 2016, and the number of banks in Massachusetts shrank from 171 in 2009 to 128 at the end of the third quarter of 2017, according to the FDIC. Regulation is a primary contributor to the consolidation, specifically the Dodd-Frank Act, which lawmakers created after the financial crisis. The bill was geared toward the larger banks mostly responsible for the crisis, but it impacted community banks in unintended ways. For instance, the Dodd-Frank Act instituted the Volcker Rule, which prohibited banks from conducting certain investment activities such as short-term proprietary trading of securities, derivatives, commodity futures and options on their own accounts. While most small mutual banks did not engage in these activities, they still had to prove it by implementing policies to comply with the 950-page bill – not an inexpensive proposition. Constant adjustment of regulations requires increasingly burdensome time and effort to revise regulatory processes, Massachusetts community bankers said in a 2017 national survey conducted by the Federal Reserve and Conference of State Bank Supervisors. “Personnel involved in these processes are not revenue generators and, to that extent, limit a bank’s ability to remain profitable,” survey respondents said. Now a new bill pending in Congress would provide relief from Dodd-Frank to smaller banks – for example, exempting banks with less than $10 billion in assets and total trading assets and liabilities that are 5 percent or less of total consolidated assets from the Volcker Rule. “In addition to the rising tide of macroeconomic elements, regulatory burden is easing. Up to now, regulation has been analogous to a very small pipe with a lot of water pressure. There were enormous regulatory compliance costs, which small banks, mutual or stock had difficulty absorbing, thereby creating an urge to merge,” said Loomis. “Now, all this pressure to affiliate is going to go away… It’s not going to be as attractive or mandatorily necessary.” ■ Bram Berkowitz is the banking reporter for The Warren Group, publisher of Banking New York.

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INDUSTRY NEWS

FIRST WOMAN NAMED CEO OF BANKING SCHOOL Gretchen Claflin received the recognition of being named first CEO of any banking school across the U.S. when she accepted the role at Pacific Coast Banking School (PCBS) in Washington. Claflin has served as COO of PCBS since 2013 and as president since 2016. Claflin began her career working as a CPA for Ernst and Young. As an auditor, she Gretchen Claflin gained experience working with banks, particularly in the special credits area.

BOFA ENDS CHECKING ACCOUNT POPULAR AMONG LOW-INCOME CUSTOMERS Bank of America will end free checking accounts that were popular among some lower-income customers. The eBanking accounts launched in 2010 had no monthly fee as long as customers didn’t use a bank teller for routine transactions and received online statements. Now, those customers will be charged a $12 monthly fee unless the customer has a direct deposit of $250 or more or a minimum daily balance of $1,500. BofA stopped offering the product to new customers in 2013, but those who already had the account were allowed to keep it, according to reports in The Wall Street Journal. A change.org petition was launched by consumers in response to the product’s cancellation; it had garnered more than 46,000 signatures as of the morning of Jan. 23. Charges for checking accounts has long been a puzzle for banks, as the accounts are expensive to maintain. BofA retains a checking account option intended for lower-income customers; the account has a monthly $4.95 fee and doesn’t allow customers to write paper checks or overdraw their account.

CFPB WILL RECONSIDER PAYDAY RULE The Consumer Financial Protection Bureau intends to engage in a rule-making process to reconsider the Payday Rule, which could result in a full repeal or significant revision. A payday loan is a small, short-term and unsecured loan, typically with high rates that must be repaid in a few weeks or typically on the borrower’s next payday, hence the name. The products have received criticism for squeez22 | Banking New York

ing borrowers already in tight financial situations. The proposed payday rule would require lenders to determine upfront whether people can afford to repay the loans. The decision to try to revise or repeal the rule illustrates the dramatic shift in the consumer watchdog agency since President Donald Trump named Mick Mulvaney as director. Sen. Elizabeth Warren, who helped create the CFPB, immediately blasted the decision to reconsider the rule. Other organizations also came out against the decision, but not all were opposed. The rule technically went in early January, but the CFPB said most of it would not be enforced until August 2019.

CITIGROUP TAKING STEPS TO PROVIDE GENDER AND ETHNICITY WAGE DATA Citigroup and Arjuna Capital announced that Citi is taking steps to provide gender and ethnicity wage data in an effort to help closing the pay gap, making it the first U.S. bank to respond to shareholder concerns. In response to Citi’s steps, Arjuna Capital withdrew its gender pay shareholder proposal that it had submitted to Citigroup Inc. on Nov. 13, 2017 regarding gender pay equity submitted under Rule 14a-8 for inclusion in Citigroup’s 2018 proxy statement on behalf of Hilda Toth Maibach. Citi’s announcement represents a major shift for U.S. banks and credit card companies, since no financial services company so far targeted by shareholders for gender pay has taken such action. Bank of America, MasterCard, American Express, JP Morgan, Wells Fargo and Citi all rejected proposals in 2017 asking for detailed reports on the percentage pay gap between male and female employees across race and ethnicity, including base, bonus and equity compensation, policies to address that gap, the methodology used and quantitative reduction targets. To date, Citi is the first bank targeted to respond with quantitative reporting. Arjuna Capital, which in 2016 succeeded in getting seven tech companies to disclose their gender pay gaps, filed nine shareholder proposals for the 2018 proxy season, asking Citibank, J.P. Morgan, Wells Fargo, Bank of America, Bank of New York Mellon, AmEx, Mastercard, Reinsurance Group and Progressive Insurance to publish the companies’ policies and goals to reduce the gender pay gap. The financial services sector has been under scrutiny for a lack of female representation in senior roles, despite a majority of female employees. In the UK, where employers are required to publish their gender pay gaps by April, banking peers have been called out for among the largest median pay gaps, 24 percent on average. ■

SMALL CHANGE

QUONTIC BANK EXPANDS LITE DOC AVAILABILITY Asotoria-based Quontic Bank has expanded its stated income loan called the “lite doc.” The bank now offers the loan nationwide and recently lowered Quontic Bank senior loan officer the minimum down paySteven Ho and mortgage customer ment. The product was Fuan Song. previously offered only in areas with a physical presence, but Quontic Bank now offers the loan in all 50 states. BANKONBUFFALO RECEIVES SBA AWARD FOR LENDER ACTIVITY BankOnBuffalo, now celebrating its first-year anniversary in the Western New York market, recently received a Bronze Award for lender activity and an individual honor from the Buffalo District of the U.S. Small Business Administration. SBA Buffalo District Director Franklin J. Sciortino presented BankOnBuffalo with the Bronze Award for its FY 2017 SBA guaranteed lending activity. During that period, BankOnBuffalo had seven loan approvals for over $2 million, which supported 94 jobs in the local community. Sciortino also presented SBA’s Ignite Award to David Hawker, assistant vice president/ commercial lending at BankOnBuffalo. SBA’s Ignite Award is presented to an individual that “ignites” the lender’s utilization of SBA’s loan programs within the organization.

JP MORGAN CHASE MAY BRING BRANCHES TO BOSTON New York Citybased banking giant JPMorgan Chase may soon open retail branches in Boston. The company said in a statement that it would be investing billions in order to expand into new markets and open up hundreds of new retail branches. While J.P. Morgan did not specifically say it would be opening branches in Boston, it did cite the city as one of the major markets in which it is not yet a leader. In the announcement, the company said it intends to expand into 15 to 20 new markets and open 400 new branches, which will employ 3,000 people. JP Morgan currently has 5,130 retail branches. The expansion news was part of a broader announcement that the company would invest a $20 billion over the next five years not only to add branches, but also to in-

crease employee wages, increase philanthropic events by $1.75 billion, increase small business lending by $4 billion and accelerate affordable housing lending. The company attributed the new investment to business performance, recent changes to the U.S. corporate tax system and a more constructive regulatory and business environment. KEYBANK GIVES BACK TO THE COMMUNITY

KeyBank’s Hudson Valley team participated in the United Way’s Day of Caring where they volunteered at People to People, Rockland County’s largest food pantry and used clothing center. Key employees cleaned external and internal spaces at the center, and sorted and organized food and clothing supplies. AMERICANS FRUSTRATED WITH DIGITAL BANKING EXPERIENCE More than two-thirds of participants in a recent study said they were frustrated with their digital banking experience, and are prepared to walk away from their current financial institution if a better digital experience should present itself. The study, conducted by D3 Banking Technology and Harris Poll, surveyed 1,600 digital banking users, defined in the survey as those who have used digital banking in the past 12 months. Sixty-eight percent of respondents said they have been frustrated with their digital banking experience. The survey found that digital banking users ages 18 to 34 are more likely than those ages 55 and older to be frustrated with their digital banking experience. Seventythree percent of the younger group indicated that they have been frustrated with their digital banking experience over the past year, compared to only 61 percent of adults ages 55 and over. survey also found that more than half of digital banking users feel it is important for financial institutions to provide mobile deposit (70 percent), P2P services (66 percent) and mobile account opening (51 percent) as part of their digital banking offerings. In addition, the results indicated that financial institutions that fail to elevate the digital experience risk losing a significant portion of their customer base, as 32 percent of digital banking users report that they are willing to leave their current bank or credit union for a better digital experience. ■ First Quarter 2018 | 23

CSI KNOWS FUTURE FINTECH.