Banking New York 3Q 2015 by The Warren Group

THE INDUSTRY MAGAZINE FOR FINANCIAL EXECUTIVES & PROFESSIONALS • THIRD QUARTER 2015 • VOLUME 37

In the

Cybersecurity Wars, We are All Targets

Produced in partnership with the Independent Bankers Association of New York State

Our guts.

Your glory.

We’re better together. It’s tough to compete out there. Constant challenges —regulatory, technology and changing consumer attitudes—force your institution to rethink the way you manage your clients’ wealth. We are the proven partner to provide the products, processes and people you need to succeed. Your team collaborating with the only firm focused on financial institutions for over 30 years—that’s the power of a real partnership. Let’s get started at ceterafinancialinstitutions.com or call 800.245.0467, ext. 65014. Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC, member FINRA/SIPC. 400 First Street South, Suite 300 – St. Cloud, MN 56301.

BANKING NEW YORK Volume 37 | Third Quarter 2015

In the

Cybersecurity Wars, We are All Targets

04 PRESIDENT’S MESSAGE

New York Community Banks And ‘Cure the Blue’

06 PUBLIC AFFAIRS UPDATE A New York State of Mind 08 BANK COMPLIANCE Modern Methods Improve

Regulatory Change Management

10 GOING VIRAL Are Online Videos the

Equivalent of a Corporate Selfie?

24 BANK PROFILE Making Customers out of Friends,

12 TECH REVOLUTION

Amersia Expands into Florida Marketr

26 INDUSTRY NEWS

CONTRIBUTING WRITERS Linda Goodspeed, Scott Van Voorhis, Steve Vivker

28 ACTING LIKE A PRO Indentifying Behavioral Traits in

TWG STAFF CEO & PUBLISHER Timothy Warren Jr. PRESIDENT David Lovins ACCOUNTING MANAGER Mark DiSerio

High-Performance Bank CEOs

SALES DIRECTOR OF BUSINESS MEDIA George Chateauneuf ADVERTISING ACCOUNT MANAGERS Bob Holzhacker, Mike Lydon, Claire Merritt

30 SMALL CHANGE

EDITORIAL EDITORIAL DIRECTOR Cassidy Murphy ASSOCIATE EDITOR Malea Ritz, Joe Kourieh

The Tech Companies are Coming

14 A DIFFERENT SIDE OF SALES New Approach to Social Media

CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini PUBLIC RELATIONS & SOCIAL MEDIA MANAGER Ian Murphy MARKETING COPYWRITER Mallory Weiss DESIGN PRODUCTION MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Tom Agostino & Tyler Grazio

Could Be a Game Changer

22 BANKING NAPA STYLE Surprising Similarities

Between Banking and Winemaking

©2015 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 www.thewarrengroup.com

PRESIDENT’S MESSAGE | By John Witkowski

New York Community Banks And ‘Cure the Blue’ In New York and throughout the nation, community banks are deeply involved in their communities through economic development, civic organizations and philanthropic activities. Whether it involves youth programs, senior citizen projects, health-related programs or a myriad of other initiatives, the local community bank is generally in the thick of things: providing financial support and making bank officers, directors and employees available to lend their experience, support, leadership and expertise.

or these reasons, the Independent Bankers Association of New York State (IBANYS) believes the “Cure the Blue” program is particularly deserving of our industry’s support. Cure the Blue, sponsored by the National Football League’s Buffalo Bills Alumni Foundation, will allow New Yorkers to participate in a comprehensive effort to promote prostate cancer awareness, prevention and research with local hospitals and health care providers in our John Witkowski state. Prostate cancer is the most common malignancy in American men and the second most leading cause of deaths from cancer after lung cancer. According to the American Cancer Society’s most recent estimates, approximately 238,590 new cases of prostate cancer were diagnosed in 2013 and approximately 29,720 died from the disease. It is estimated that two men are diagnosed with this disease every five minutes. Last spring, IBANYS launched a partnership with the Bills Foundation. Our support is something we are taking very seriously. An effort of this magnitude is long overdue, and we commend the Bills Alumni for taking the lead. We are asking our New York community banks to join us. One member bank already on board is Lake Shore Savings Bank, a communityoriented financial institution originally 4 | Banking New York

Dan Reininga, president and CEO of Lake Shore Savings Bank (right), and colleague display the Cure the Blue flag on Mt. Whitney in the Sierra Nevadas. At 14,505 feet, the mountain is the highest peak in the lower 48 states.

chartered as a savings and loan association in New York in 1891. Lake Shore is headquartered in Dunkirk, New York. It serves Chautauqua and Erie counties through 11 full service branch offices and 16 ATMs. Lake Shore’s President and CEO Dan Reininga joined former Bills Coach and NFL Hall-of-Famer Marv Levy (another prostate cancer survivor) at a recent Cure the Blue event. Lake Shore plans a branchwide fundraising effort during September. continued on page 11  For more information about how you can help Cure the Blue, please contact: Booker Edgerson Buffalo Bills Alumni Foundation P.O. Box 118 Getzville, NY 14068 (716) 631-0715 Edgerson24@yahoo.com Or visit http://bit.ly/1IOzGvi

IBANYS Board of Directors Officers Chairman Christopher Dowd Ballston Spa National Bank, Ballston Spa Vice Chairman John Buhrmaster First National Bank of Scotia, Scotia Treasurer/Secretary Doug Manditch Empire National Bank, Islandia Immediate Past Chairman Gregory Hartz Tompkins Trust Company, Ithaca Directors Thomas Amell Pioneer Savings Bank, Troy Ronald Bentley Chemung Canal Trust Company, Elmira R. Michael Briggs USNY Bank, Geneva Brenda Copeland Steuben Trust, Hornell Randy Crapser Bank of Richmondville, Cobleskill Ronald Denniston First National Bank of Dryden, Dryden Robert Fisher Tioga State Bank, Spencer E. Peter Forrestel Bank of Akron, Akron Stephen Gobel First National Bank of Groton, Groton Richard Koelbl Alden State Bank, Alden Paul Mello Solvay Bank, Solvay David Nasca Evans Bank, N.A., Hamburg G. William Ryan Cayuga Lake National Bank, Union Springs Glenn Sutherland Catskill Hudson Bank, Monticello Kathleen Whelehan Upstate National Bank, Rochester IBANYS STAFF John J. Witkowski President & Chief Executive Officer Stephen W. Rice VP Government Relations & Communications William Y. Crowell, III Legislative Counsel Linda Gregware Director of Administration & Membership Services

TODAY I DRILL DOWN TO WHAT MATTERS. It’s time for service to be at the core of every relationship. Your customer relationships are built on service. Shouldn’t you expect the same relationship with your core processing provider? For 50 years, CSI has empowered banks like yours to meet tomorrow’s technology demands through unmatched levels of customer support.

csiweb.com/drilldown

NUPOINT®

•

MERIDIAN.NET

PUBLIC AFFAIRS UPDATE | By Stephen W. Rice

A New York State of Mind With apologies to the great Billy Joel, the “New York State of Mind” I refer to in the title of this update is not his memorable ballad, but rather the unique legislative and regulatory environment we faced this year. Unique? Indeed. This year, the term “chaotic” also applies.

he New York state Legislature is both bicameral and politically divided. Republicans control the Senate, currently holding 31 of the 63 seats and governing in a coalition with one elected Democrat from Brooklyn and several other “Independent Democrats” who have broken away from their “regular” party. (A special election this November will fill a vacancy in the 52nd S.D. in the Southern Tier. Republicans hold an enrollment advantage, but the race looks to be competitive.) Meanwhile, in the Assembly, Democrats control 102 of the 150 seats, with the vast majority of their members representing the downstate New York City region. Stephen W. Rice So, while divided government has been norm in the best of times, this year brought unprecedented challenges. We witnessed dramatic changes in the leadership of both chambers, as the Democratic Assembly speaker and Republican Senate majority leader stepped down from their leadership positions (although not from the Legislature). Each faces separate federal corruption charges. The deputy Senate majority leader also resigned following his conviction on a different legal matter. And, we also saw a new chair of the Senate Banks Committee take the helm, and our longtime financial services superintendent resigned to join the private sector. All this change had a significant impact on the normal legislative routine of the Legislature and on organizations such as ours, which represent our members in the arena. As always, the first three months of the session were dominated by state budget negotiations. With the Legislature scheduled to adjourn June 17, the window for legislative activity was complicated and compressed. The Independent Bankers Association of New York State actively advocated for several new initiatives to enhance community banking, and the communities and customers our members serve. We also played what has become an annual game of intense defense – opposing a number of proposals that would enhance and expand the fields of membership and powers of tax-exempt credit unions, threatening to make what is already an unequal playing field even more so. Senate Banks Chair Diane Savino sponsored and introduced several new IBANYS’ initiatives. Two passed the Senate late in the session, but failed to receive support in the Assembly for companion legislation. 6 | Banking New York

S.5296 would amend Section 2 of the state banking law to change the interval and asset threshold for examinations by the NYS Department of Financial Services. Our proposal would make mandatory the NYS DFS superintendent’s current option to extend the exam cycle from 12 to 18 months for community banks which are well capitalized and determined to be well managed with a composite condition of outstanding or good with no pending enforcement proceeding. The bill would also raise the threshold from $250 million to $1 billion in assets. Community banks face challenges from increased regulatory and technology demands, especially in the aftermath of the Dodd-Frank Act. These increased burdens and costs have had an impact on the number of community banks. (From 1992 to 2011, the total shrunk from 299 to 169 institutions, and the trend has not dissipated.) Extending the exam cycle and raising the asset threshold would provide some measure of relief. S.5297, another IBANYS initiative, would amend the state banking law by adding a new Section 46 that would exempt community banks with assets of less than $1 billion (and which have received a “satisfactory” or “outstanding” CRA rating from their primary federal regulator) from having to endure a state CRA exam from the NYS DFS. Under current law, the New York state conducts CRA evaluations/ exams on a biennial basis. With the multitude of regulatory and compliance burdens under Dodd-Frank and in the face of the evolving technology demands, S.5624 would amend the state banking law by adding a new article 2-D to create community bank service corporations. The bill would permit community banks to invest in and utilize service corporations to achieve economies of scale. Community banks have significant regulatory burdens, whether they involve BSA, anti-money laundering, cybersecurity, technology or CRA requirements. Too often, banking laws and regulations are based on a “one size fits all” approach. Obviously, regulatory and compliance costs are much more easily absorbed and managed by large banks. This legislation would allow community banks to work collectively to provide services, using another bank, third-party vendor or under a joint undertaking. On the defensive side, IBANYS closely monitored a host of bills involving credit union expansion, mortgage foreclosure, cyber security, fair lending among others. continued on page 11 

THE POWER OF AN ADVANCE

One advance can help fund hundreds of neighborhood needs. FHLBNY advances are a reliable liquidity source for our member lenders to finance home mortgage, small business, and economic development activities. M&T Bank, an FHLBNY member, used an advance to fund the purchase of a commercial real estate property for Cooks’ World, a gourmet kitchen store in Rochester, New York. The move to the new space ensured that this small business was able to keep jobs in the Rochester community. Contact us to see how the power of an advance can help your community.

101 Park Avenue, New York, NY 10178 | (212) 441- 6700 | www.fhlbny.com Note: The Federal Home Loan Bank of New York uses the word “advances” to refer to the loans it provides to our member lenders.

BANK COMPLIANCE | By Pam Perdue

Modern Methods Improve Regulatory Change Management Regulatory change wreaked havoc long before the Dodd-Frank Act. Every quarter since 1975, there have been 60 to 80 regulatory changes affecting banks. That number holds steady regardless of which party controls Congress or the White House, across cycles of regulation and de-regulation.

et despite this predictable velocity, and advances in technology, the average bank still manages change the old-fashioned way: by throwing more people or more dollars at it. But traditional methods no longer work. Why? As the Banking Compliance Index illustrates, there are more pages to read, more rules to follow and more enforcement actions being levied than ever before.

But never fear: by modernizing your methods, you can ensure that regulatory change management runs smoothly regardless of the volume or velocity you face. Modern Solutions

Modern regulatory change management systems alleviate much of the burden of this process. Leveraging technology, these systems perform many of the tasks that before, only human hands could handle. Refer to the second chart to see how each stage of the process is improved when it is standardized and automated. Modern Solutions and Why They’re Better Stage

Solution

Discover

Data feeds come directly from Federal agencies through programmed interfaces. Nothing falls through the cracks when it comes directly from the source to your desktop.

Analyze

Crowdsourcing intelligence from a team of recognized regulatory experts eliminates the worry whether requirements have been correctly interpreted.

Decide/ Develop

Online access to answers and intel are found on a 24x7x365 basis. Self-service or expert-aided help means expertise is never more than a few clicks away. Fast answers expedite decisionmaking, avoiding wasted time and needless worry.

Execute

Software can facilitate project oversight. Admin tasks get handled by machines. Deadlines are set, reminders and ticklers generated, notices delivered automatically - and progress dashboards provide real-time status on every implementation.

Evaluate

With everything managed in a unified software platform, activities are visible and can be tracked and reported. Compliance defects or missed deadlines can be promptly spotted and corrected and evidence gathering happens automatically.

Traditional Solutions and Why They Fail Stage

Risks in Plain Language

Discover

Something gets missed. Your scan fails to identify new rules.

Analyze

Something gets misinterpreted. You decipher the rule incorrectly or fail to recognize that it applies to your bank.

Decide/Develop

Something gets overlooked. You make a bad decision, or omit important considerations.

Execute

Something goes wrong. You make mistakes, miss deadlines, or go over budget.

Evaluate

Something gets by you. You fail to detect a problem before third parties such as examiners (or customers) do.

The Compliance Change Cycle

When a new or changed regulation is issued, a mistake at any of the critical stages in the chart can spell trouble. Institutions who try to cut corners, tinker with steps out of sequence or omit documentation of progress can find themselves running afoul of the rules. Traditional Methods

Errors and oversights are inevitable with high volumes. At each step, risk is introduced. You don’t need a COSO cube – just common sense – to understand the risks of manual methods. If this cycle had to be done infrequently, you could painstakingly address each step. But when the cycle is repeated 60-80 times a quarter, that’s a change nearly every day. It’s no wonder you are scrambling to keep up. 8 | Banking New York

Taking a methodical, high-tech approach to regulatory change management is no longer optional for institutions that need to stay competitive. Regulators demand that any compliance management system have a facility to effectively and accurately process new regulations and incorporate them into business processes. Reliance on obsolete tools or antiquated techniques is folly: it takes more time, costs more money, and leaves gaping unmitigated risks. Applying advanced techniques and investing in more modern tools allows smart bankers to solve this problem once instead of continually losing time, money and peace-of-mind in the compliance vortex. Upgrading your approaches to regulatory change management should be a topic for your next board agenda. ■ Pam Perdue, is is executive vice president of regulatory operations at Continuity.

Strengthen Your Core

Integrated Technology for the Heart of Your Institution Maintaining your health starts by strengthening your core. Maintaining the financial and operational health of your financial institution is no different. A strong and flexible core should be at the heart of your institution. At COCC, we deliver the latest in relational core technology. The COCC INSIGHT platform provides our clients with strength at the core while integrating the best-of-breed in ancillary products. Our powerful core platform ensures that we can develop, integrate and deliver capabilities that you need, when you need them. Through our unique cooperative structure, clients have a strong voice in determining the future of the technology at the core. The trust we have developed in this partnership structure is the foundation of COCC and we measure that commitment each quarter by client report cards and surveys. With COCC, each client receives: • The highest ratio of customer service staff to financial institutions • The most ambitious visitation, training and education in the industry • A mutual ownership structure that ensures our focus remains on our clients • A voice in determining your future core technologies Exercise your right to learn how COCC can strengthen your core. Call us today at 888.678.0444 or visit our website at www.cocc.com

100 Executive Boulevard, Southington, CT | www.cocc.com | 888.678.0444

GOING VIRAL | By Lawrence Pruss

Are Online Videos the Equivalent of a Corporate Selfie? Whether financial institutions can make use of online videos, and whether they should do so, are two very different questions.

e will address the “should,” at the end of this article, but certainly, online videos can serve as the business equivalent of a selfie. They are a way of connecting with customers and illustrating what an FI is: a group of humans with their own thoughts, passions and flaws. When it comes to engaging audi10 | Banking New York

ences, retailers already know nothing beats a video. With its strong visuals combined with audio, it quickly grabs a person’s attention. They can also be extremely humanizing. According to Geek.com, YouTube gets 3 billion hits per day and over 48 hours of video are uploaded every second. Additionally, good branding

campaigns are available on other popular sites like Vimeo and Vine. Using online videos to educate and sell is one of the top tactics Forrester Research recently highlighted FIs could learn from their retail peers. According to Forrester, as far back as 2011, nearly a third of 10 retailers surveyed found videos to be an effective marketing tactic on their websites. Great retail examples exist from Dove (Real Beauty Sketches) and Budweiser (Puppy Love),, each driving over 50 million YouTube views and evoking human emotion. According to Forrester, web visits where the prospect views a video yield conversion rates at more than twice the rate of visits where no video was viewed. And, if your potential consumers/ members are Millennials, then that’s all the more reason to get into video advertising. In a post by eMarketer. com, 18- to 34-year-olds said they found online ads the most influential. Though for some time people have been using the Internet and YouTube to make fun of financial institutions (Google “Damn It Feels Good to be Banker”). FIs have only recently caught on to the value of online videos. For a video to be effective, it must be funny, entertaining and/or inspirational. Simply pushing products won’t cut it. Customers, especially Millennials, want honest, humanizing content. While not common, there exist some very good examples of honest, humanizing and fun online video content coming from financial institutions: • Royal Bank of Canada (RBC) last year produced a number of movielike trailers promoting its mortgage products and driving more than 1 million views.

PRESIDENT’S MESSAGE | continued from page 4

“Our organization understands the importance of this effort,” Reininga said. “We are proud to partner with the Bills Alumni Foundation and IBANYS. The exciting thing about this is that it's going to be a national campaign at some point. It's very exciting and we're very proud. It's what Lake Shore is all about – putting people first.” Lake Shore is selling Cure the Blue ribbon pins in their branches. Furthermore, a number of IBANYS member community banks are planning walkathons and 5K runs to support the program, and Tioga State Bank President and CEO Bob Fisher will be meeting with representatives of the Bills Foundation and IBANYS to discuss potential ideas and plans. Former Bills star and Alumni Foundation member Booker Edgerson (a two-time prostate cancer survivor) and Foundation President and fellow Bills alumni Ed Rutkowski have graciously expressed appreciation for IBANYS’ support. The Bills Alumni Foundation was founded in 1999 and is com-

• TD Bank had one of its videos go viral, producing over 22 million views and highlighting TD thanking various customers. • DNB in Norway recently recruited Norway’s most famous choir, the Norwegian Broadcasting Boys Choir, to sing all of the messages for its automated, touch-tone telebank. For the entire Christmas season, every word on DNB’s phone banking system was sung by the choir. During December, the telebank was called more than 2 million times. For contrast, the entire population of Norway is only 4.9 million people. American FIs, like Bank of America, U.S. Bank and Wells Fargo, have also been developing clever videos focusing on financial education, community involvement, environment, business and providing advice. Online video can be a great place to rerun popular TV spots or test media concepts before investing in more expensive TV media. Additionally, if a company has an entertaining story or a creative way of telling it; attention can be captured for longer than a traditional television advertisement might run. So, to answer our original question: “Should” online videos be your institution’s version of a selfie? Based on our research, yes! Online videos are a cost effective way to communicate with your existing customers, members, and/or prospects. They should serve as “selfies” to represent who your company really is: human. Just keep in mind; those online videos need to be funny, entertaining or inspirational. ■

prised of past Bills players that have left an imprint on society during their football careers and want to continue molding society in a positive manner. Edgerson hopes to eventually make Cure the Blue similar to the highly successful “pink” programs for breast cancer research. The 24 Prostate Cancer Project (named in tribute to Booker’s uniform number with the Bills) has been strategically developed to raise financial support for the program. Participants are asked to contribute $24 a day for 24 days – a total contribution of $576. I hope that more New York community banks – and businesses affiliated with them – will join us to help Cure the Blue score a big victory over prostate cancer. Anyone interested in participating should email me at Johnw@IBANYS.net. ■ 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.

PUBLIC AFFAIRS UPDATE | continued from page 6

IBANYS strongly opposed legislation (S.3616 Funke/A.774 Rodriguez) that would permit tax-exempt credit unions to receive state deposits by establishing a Credit Union Deposits Program, modeled after the successful Community Bank Deposits Program proposed by IBANYS and enacted several years ago. Such new powers would represent a “nose under the tent” precedent toward authorizing them to enter the municipal deposits business as well. IBANYS helped defeat this legislation for the second straight year, initiating a successful full-scale legislative contact outreach by member banks. On the subject of the municipal deposits, we also helped stop another bill (S.4785 Robach/A.7017 Robinson) that would have permitted tax-exempt

Lawrence Pruss is senior vice president for Strategic Resource Management Inc. He may be reached at (800) 748-2577 or lpruss@srmcorp.com. For more information, visit www.srmcorp.com.

allow credit unions (and federal savings institutions) to accept and secure municipal deposits. It was also the second consecutive year we managed to stop this legislation, again after organizing a highly successful grassroots effort by member banks. In New York, community banks face a challenging legislative and regulatory environment. Regardless of how many changes or obstacles we encounter along the way, IBANYS works hard to represent the interests of community banks and, by extension, of their local customers and communities. ■ 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. Third Quarter 2015 | 11

TECH REVOLUTION | By Nicole Rovi and Ryan Whalen

The Tech Companies are Coming How Community FIs Can Fight Back

he growing customer utilization of mobile technology has driven systems investments in mobile banking for banks across the country over the last decade. Spending on IT at banks has increased by over 49 percent over the last five years. These investments have generally been defensive in nature. While some early adopters realized a small increase in customers, community bank utilization typically protected them from losing deposit share to the massive online systems of the big banks. Whether or not to play in mobile banking is now old news; mobile is now a necessary product offering. Designing the perfect mobile banking application is the next market dis12 | Banking New York

ruptor threatening community banks. Ranging from mobile payments and money transfer applications, technology companies are encroaching on mobile banking and offering more complex services, including small business lending and personal financial management (see sidebar for a list of the most popular competitors). These applications utilize detailed and clear images and provide the customer with budgeting tools and tips, as well as insight into his or her spending patterns and spending history. Applications developed by technology companies are capturing community banksâ&#x20AC;&#x2122; customers because they provide a more interactive and user-friendly experience.

The introduction of Apple Pay, a mobile payment platform which links a consumerâ&#x20AC;&#x2122;s credit/debit cards to his or her mobile devices, and Mint, a web-based personal financial management tool, have sent shockwaves throughout the banking industry. With the development of more complex banking functions on mobile applications and online, technology companies have become increasingly prevalent throughout the banking industry. Community banks must evaluate their position in the mobile banking space and determine how they can compete with established technology companies that have greater resources, reach and expertise on the mobile platform than most community banks. Like the initial adoption of mobile banking itself, it is imperative that community banks provide their customers with these services before their customers find alternatives. Most mobile banking applications created by community banks have been designed with simple functions in mind, such as monitoring accounts and paying bill. Consumers are becoming more interested in money management tools on mobile devices, a feature readily available on applications created by technology companies. For example, Mint provides the customer with a simple, interactive process that allows the customer to budget, track spending patterns and view his or her credit score, along with more complex features.

A MISSED OPPORTUNITY In a recent study conducted by the Aite Group, 86 percent of banks surveyed had the ability to complete bill pay from their mobile platform, while only 49 percent had the tools to help customers with budgeting. Only 48

percent had the ability to categorize expenses. This is a missed opportunity for community banks, as a consumer who values budgeting tools might download one of the many applications available, as opposed to his or her own bank’s app. A 2013 Cisco Customer Experience Report that focused on retail banking showed that customers in the United States are willing to provide more of their private information in exchange for customized banking services. In this case, the bank will miss out on valuable information about a customer’s spending habits, and thus the opportunity to further their relationship with that customer. Mobile money transfer applications have become popular as a way to connect individuals who bank with different companies for the purposes of mobile payments. Applications such as Venmo that use social networks to connect individuals have become increasingly popular among the younger generations as a more convenient and reliable way to repay others. While many money transfer applications do not allow users to transfer money between their own personal accounts (a function most mobile banking applications provide), it fills a need that mobile banking applications cannot - peer-to-peer transfers, regardless of one’s bank affiliation. Mobile money transfer apps have become a threat to traditional banks, as they provide convenient banking services to a larger network of people. Community banks can compete with technology companies by implementing new technology and mobile app add-ons. There is a distinct difference in generational values regarding banking. Generation Y (born in the 1980s and 1990s) and Millennials (born between 1990s and early 2000s)

value convenience and speed over relationships, while older generations often appreciate the personal touch that is associated with community banks. Banks can make their mobile applications more inclusive to all demographics by utilizing add-ons that incorporate videoconferencing into their existing mobile app. These addons, such as Linqto’s Personal Banker app, give the customer the option to videoconference with a bank employee face-to-face rather than using the traditional help window. Innovative products like this can help bankers bridge the gap between impersonal and relationship banking, ultimately leaving the choice to the consumer.

If consumers are unable to find what they need from their bank’s mobile application, it is exceedingly simple to find alternative solutions. Banks need to determine the most pertinent needs of their customers and implement them into their mobile applications so that they can capture valuable information and strengthen customer loyalty - both which will build value for the institution. ■ Nicole Rovi and Ryan Whalen are financial analysts in FinPro’s Consulting Division. For more information, contact Nicole or Ryan at (908)-604-9336 or nrovi@finpro. us and rwhalen@finpro.us, respectively. charlebois@dhgllp.com.

WE U NDE RSTAND

GROWTH Well-managed growth is a cornerstone of success. That’s why we are continuously building our practice so that we can deliver the highest quality service and never leave our clients seeking more.

Accounting & Auditing • Loan Review • Tax • Compliance • IT Risk Assessment CONNECT WITH US 877.917.3077 Bonadio.com

Third Quarter 2015 | 13

A DIFFERENT SIDE OF SALES | By John McGee

New Approach to Social Media Could Be a Game Changer

More than 15 million businesses and organizations are now part of Facebook. Many corporations also have company Twitter pages. In the financial world, these pages are typically followed or liked by customers and employees. Major financial institutions with large customer bases and thousands of employees might have impressive numbers of likes or follows, but all too often, posts or tweets are stagnant, void of real interaction and results. One of the main goals many companies share in regards to social media is solving how to monetize the various mediums. Currently, most corporate social media accounts function more as a customer service or brand awareness tool than a sales tool. The explanation for this is simple. Social media at its core is about relationships on an interpersonal level. By definition, a person cannot have a relationship with a corporate social media account. At the corporate level, posts and tweets are too broad and out of touch with individuals’ needs 14 | Banking New York

and interests to function as effective sales methods. Corporate media accounts should not be done away with, but it is time for executives at financial institutions to change expectations and develop a new, more effective approach to social media. The role of the corporate account should remain what it always has been; a necessity of the times. An institution’s Facebook or Twitter can be a public face of the company, but not one that is used to drive sales of new products or services. Instead, this function of social media should be pushed down to the employee level. Personal bankers, loan officers, branch managers, financial advisors – customers have one-on-one relationships with the individuals they interact with on a regular basis. They are the people who customers trust, and the people who to customers are the essence of the financial institution they choose for their business. This trust provides employees with an open door to make connections with their custom-

ers on social media and deliver tailored, educational messaging that also sells. In an employee-centric social media strategy, financial institutions are able to reach customers through channels that are more effective while simultaneously exposing more potential customers to their products and services at the same time. Employees should be empowered with brand and legal compliant messaging they can post to their individual Facebook, Twitter and LinkedIn accounts by their employer. The messaging should be relevant, not pushy, relatable, and solve a problem for current and potential customers. If this method is utilized, financial institutions will be able to touch more people through social media and experience greater success at creating opportunities for sales. ■ John McGee is CEO of OptifiNow, an industry leader in SaaS solutions designed to optimize the effectiveness of the sales force.

They’ve always been the quietest. Now they’re the smartest.

The quietest self-service coin machines are now driven by our new Version 5 Software. USER FRIENDLY

Intuitive 7” touch screen display enhances balancing, bag removal and reporting functionality

CUSTOMIZABLE BRANDING

Add your logo onscreen and to receipt headers and footers

ACCURATE

Advanced alloy count sensor detects coins by 16 different parameters.

LIMITED TIME OFFER

Introductory Rebate

In the

Cybersecurity Wars, We are All Targets

16 | Banking New York

"There are legimate liability issues and it is important that we protect the liability concerns of companies that want to share information." By Steve Viuker

dating website that helps married people cheat has been hit by hackers. Ashley Madison, which uses the advertising slogan, “Life is short. Have an affair,” said it had been attacked and some user data stolen. Adult FriendFinder matches people for sexual encounters. The site claims to have “helped millions of people find traditional partners, swinger groups, threesomes and a variety of other alternative partners.” That site now has new friends and partners after being hacked. A trend sure to make folks ill is the hacking of numerous health websites. And “Say It Ain’t So, Joe!!” – the St. Louis Cardinals have been accused of hacking files of the Houston Astros. The above hacks might seem somewhat harmless, and perhaps even humorous. And though hacking has gone beyond the breach of Target stores, finance is still on the top of the charts on the hacking hit parade. A report by the New York State Department of Financial Services in May 2014 found that most financial institutions experienced “intrusions or attempted intrusions into their IT systems” in the previous three years. PwC reports that there were 42.8 million cyber incidents around the world in 2014, a 48 percent increase over the previous year. The FBI estimates that over 500 million financial records were stolen in 2014, the vast majority by cyber means. Target reported that its 2013 data breach, in which the credit card data of 40 million people was stolen, cost the company almost $250 million. Estimates of the cost to payment card companies from fraud range from $240 million to $2.2 billion, per a report from the Center for Strategic and International Stud

ies, “The Evolution of Cybersecurity Requirements for the U.S. Financial Industry.”

HACKING THE GOVERNMENT However, the April breach of the Office of Personnel Management (OPM) broke the alarm bells and sent shockwaves across a broad spectrum of thought leaders. Though the attack on the OPM was originally estimated to have affected 4.2 million people, compromised personal data for possibly 21.5 million current, former and prospective government employees and contractors was the final total. Director of National Intelligence James Clapper suggested the intrusion likely was carried out by Chinese hackers. That charge was dismissed by Chinese officials. “OPM was wakeup call for corporate America,” said Paul Ferrillo of Weil, Gotshal & Manges. “OPM had signature-based intrusion detection hardware in place called Einstein 3. But Einstein 3 only works if there was a previous hack attempt that was recorded and thus placed into its alert systems. It appears the Chinese attack escaped Einstein 3 in the first instance. Hackers are too good for normal perimeter defenses. The United States needs to think hard and fast about big data analytical tools to detect network anomalies far earlier in the process so these large scale exfiltrations can be stopped and remediated earlier in the process. The seriousness of this attack cannot be underestimated.” According to a report in the Wall Street Journal, Donna Seymour, CIO of the U.S. Office of Personnel Management, faces a lawsuit. “We are gocontinued on page 18 

Kenneth Citarella

Lisa Clark

Paul Ferrillo

Melinda McLellan Third Quarter 2015 | 17

CYBERSECURITY WARS | continued from page 17

Smart with your Phone By Steve Viuker “In terms of payment systems, smart phones are still an emerging technology,” said Ken Citarella of Guidepost Solutions LLC. “Unless security is built into the technology, there is a tremendous opportunity for misuse. Pay attention to the app you are using. If it is an app prepared by your bank, odds are it is probably safe. As for liability, courts have held that if a customer has been breached, it is not the fault of the bank if money is transferred out of that account. However, a recent case had the court saying that a bank should be aware of funds that are transferred to a location overseas in unusual amounts.” Jon Trafimow, a partner at Moritt Hock & Hamroff focusing on employment law, said there must be “procedures for encrypting sensitive information on smart phones or laptops that are used outside of the office. There should training that focuses on reporting any problems as soon as possible; including destroying any data on a device if needed.” Explained Steve Rubin, a partner at Moritt Hock & Hamroff focusing on cybersecurity: “Many employees do not need USB access and perhaps they should be shut down on many computers. Lower level employees do not need that access; there should tiered access, where certain people access certain data and others can’t access any data. Employees should be limited to access data that involves only their job responsibilities.” Richard A. McGrath, president and CEO of Sturbridge-based McGrath Insurance Group, said there are “state and federal regulations in place that require banks to purchase cyber security liability insurance. Any industry that obtains the personal information of others takes on the ultimate responsibility of having to protect that information. With the right coverage, financial institutions can be better protected from the costs associated with a cyber breach, such as liability, remediation efforts, and fines or penalties.” “Employees now have the power to access the Internet at work in the palm of their hands through personal mobile devices,” he continued. “Because of this, employers need to be proactive in managing this increasing risk by developing a ‘bring your own device’ policy, and then working to educate employees on best practices when using personal devices in the workplace. Although it is your legal responsibility to protect the private information of your customers, it is also their responsibility to take additional precautions towards protecting their own identity. It can be as simple as adding identity theft coverage onto your existing home insurance policy for a nominal fee.”

18 | Banking New York

ing to see more CIOs taking the fall and ultimately being named in lawsuits,” Matthew Karlyn, a partner at Foley & Lardner LLP told the WSJ. A group led by the AFGE union sued OPM director Katherine Archuleta and Seymour. The suit accuses them of negligence and privacy violations. Archuleta eventually did resign. Jim Noble, faculty member for New York Institute of Finance and co-founder of TAC-Int and former CIO for Merrill Lynch and BP, explained that “the problem with threat intelligence-based systems is the ‘zero day’ attack using techniques that have never been seen before. That is really quite rare, and almost always state sponsored. In that event, it is really not at all difficult to encrypt sensitive data, such as the data stored in the OPM system.” At a breakfast sponsored by the Long Island Business News, Rep. Steve Israel, who serves on the Defense Subcommittee, said that “everyone in Washington knows that the likelyhood of a cyberattack on our citical infrasturcture is massive. There has been 680 percent increase regarding attacks on federal systems since 2010. Recently, the House of Representatives passed the Protective CyberNetworks Act. This will facilitate the sharing of information between private entities and the federal government.” Said Rep. Lee Zeldin, who serves on the Subcommittee on Terrorism, Nonproliferation and Trade, “There are legitimate liability issues and it is important that we protect the liability concerns of companies that want to share information.” Melinda McLellan, counsel at BakerHostetler’s New York office, agrees with Zeldin. “I think there is reasonable concern that certain cybersecurity proposals could give companies immunity regarding sharing data with the government. There is also a proposal for a breach notification law at the federal level in an attempt to harmonize the various laws in the states. Most companies will share information with the government if required to.” In March of this year, Davis Polk partner and former FTC Chairman Jon Leibowitz testified at a hearing before the House of Representatives Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade regarding the Data Security and Breach Notification Act of 2015. Leibowitz serves as co-chair of the 21st Century Privacy Coalition, which represents the nation’s leading communications providers to advocate for modernizing U.S. privacy and data security laws. They came out in support of a single federal law. “We believe that national data security legislation should also preempt state common law,” said Leibowitz. “Once Congress enacts robust national data security requirements, companies’ focus should be on compliance with these requirements. The uniform national framework that is the objective of this legislation would be undermined if class accontinued on page 20 

Our Difference: A 70+ year legacy built serving as a retirement plan fiduciary. Your Advantage: Successful retirement plan outcomes for you and your employees.

At Pentegra Retirement Services, our difference is your advantage. As one of the nationâ&#x20AC;&#x2122;s longest-serving and most experienced retirement plan fiduciaries, we know that expert governance focused on plan and participant success leads to better results. Get better retirement plan results. Learn more about our unique retirement plan solutions and benefits financing strategies using BOLI. Contact us at 800-872-3473, or visit us at www.pentegra.com.

CYBERSECURITY WARS | continued from page 18

Day at the Breach By Steve Viuker Just like a day at the beach can turn nasty without warning, so too can a data breach hit. At a recent cyber event, Lisa Clark, a partner in the Philadelphia-based firm of Duane Morris, explained what to do when a company suspects a breach. “The [questions] I ask [are], ‘What’s the basis for the suspicion? Could it just be a security incident, or does it really meet the definition of a breach under applicable federal (e.g. HIPAA) or state law? Who discovered it and when?’ These are all important questions in order to position the company to fulfill its legal obligations with respect to a breach.” Assuming it is a true breach, then the company should follow its incident response plan. This includes consulting a lawyer to preserve attorney client privilege; continuing to investigate the situation, and hiring outside forensics; notifying the insurance carrier; and contacting the government, depending on whether the breach could constitute a crime, such as a suspected theft of data. “Once the breach is defined, next steps will include notifying affected individuals and federal and state government agencies depending on what law applies,” Clark said. “The media may have to be contacted as well, and credit monitoring may need to be offered.” The incident response plan should also lay out who will do what. “One of the biggest problems we see in breach response is the lack of coordination among different members of the workforce during a breach response: said Clark. “The CIO may call in forensics, the CEO may call the lawyer and someone else may begin to write the notice letter. The response needs to be carefully coordinated at every level.” “We work with tech companies to find solutions for our clients,” explained Steve Rubin, a partner at Moritt Hock & Hamroff focusing on cybersecurity. “We might point out a password problem and the tech firm will have a solution. We also document the solutions so as to lessen the legal responsibilities of a company. The biggest mistake we see is companies that have cybersecurity issues call in a tech firm, and if the tech firm generates a report saying this is what we found and if you get sued, that report now has to be handed over to the side that sued you. It’s far better if you hire a lawyer first, who can then hire the tech firm. That report is then privileged and can be kept from the other side.” Incident vs. breach is an important distinction, said Ben Goodman of 4A Security. “A computer security incident is a violation or imminent threat of violation of computer security policies, acceptable use policies, or standard security practices,” he explained. “A breach is an unauthorized acquisition, access, use or disclosure of protected information which compromises the security or privacy of such information.”

Goodman listed the steps that should taken prior to an incident: • • • • •

Have you identified your most valuable/critical information assets? Have you conducted a risk assessment lately Do you have an incident response team? Are you monitoring your logs and alerts? Do you have an incident response plan?

20 | Banking New York

tions can still be brought pursuant to state law. The result would be a continuation of the patchwork of state requirements that provide inconsistent protections for consumers across the United States.” One aspect of the bill says that every company must have adequate data security.

THE BIGGEST INTERNATIONAL THREATS Babak Pasdar, president and CEO of Bat Blue Networks, told Banking New York that “one of the objectives of ISIS and other terror groups is to embarrass nations. They have cyber armies that leverage social media and realize the importance of being able to wage a cyber war. They don’t have the advanced capabilities at present, but it is only a matter of time before they develop them. The Internet is the great equalizer.” Also at the LIBN breakfast, Israel said “there are two countries in the world that are capable of inflicting massive damage on the United States via the cyber attack: China and Russia. They are doing industrial espionage, not because they want to destroy the United States, but as a tool and tactic. The bad news is there are two counties that have the will to use a cyberattack to destroy the United States: Iran and North Korea. They have the will, but not the way, but eventually will have both.” “China poses the greatest threat to the United States,” said Pasdar. “They are the most resourceful and have the most to gain. And they are effective since they have been doing this longer than any other country, including the United States. The Chinese don’t always do damage. They also collect data and intelligence. And the idea that there is a ‘lone wolf’ hacker in a dingy apartment drinking energy drinks isn’t true. It is more on the level of an ‘Ocean’s 12’ scenario.” Ken Citarella, senior managing director of investigations at Guidepost Solutions LLC, said an organization “must understand two things: what their network is and how it operates. Data exists in layers of importance. Third-party vendors creates risk as we share the digital highway with them. When a vendor supplies services they might be the equivalent of a driver who appears to be okay and unexpectedly becomes a risk.”

IN THE AFTERMATH And reputation is vital. After a breach, is your firm or bank still trustworthy? Explained Jason Maloni, senior vice president chair of the litigation practice at Levick: “Many times it is perception versus reality. The perception is that your competition is an option; the reality is there is a universal risk. No matter how many breaches we read about, it always happens to someone for the first time. A good entity appreciates and shares the sensitivity to that.” Maloni explained that Target compounded the error of their attack because they didn’t have a handle on the facts and the number of customer accounts that were breached kept

changing. The three questions are: ‘What happened; What are you doing for me; Am I still at risk?’ If you’re a retailer, you can’t announce a breach until you can say it was fixed.” “The high-profile breaches that wipe out data are mostly done by rookies,” Pasder said. “The more sophisticated organizations want sustained access and data. In addition, there are third-party entities going out on what is known as the darker net and buying vulnerabilities and the selling them for millions of dollars to various governments. Terror groups are bidding for these just as the United States is.” Said consultant Bob Bigman, a featured speaker at a recent Billington Cybersecurity Summit: “Companies talk about cyber issues and they read more and go to conferences, but I don’t see them changing their network configurations or making their systems attack-proof. The government asking for cooperation doesn’t faze the hackers. That’s just a feel-good solution.”

POLITICS AS USUAL And even cybersecurity gets caught in the web of politics. Despite pressure from The Financial Services Round-

table (FSR), American Bankers Association (ABA) and Securities Industry and Financial Markets Association (SIFMA), attempts to pass CISA failed after lawmakers failed to strike a deal on amendments. Republican Sen. John McCain accused Democrats of intentionally “putting this nation in danger by not allowing the Senate of the United States to act against a very real threat to our very existence.” Retiring Nevada Sen. Harry Reid said that if Republicans were so concerned about the urgency, they shouldn’t have put cybersecurity on the back burner “while they tried to defund Planned Parenthood.” Dave Oxner, managing director of federal government relations at SIFMA, told Banking New York: “We continue to believe that this bipartisan information sharing legislation is a critical piece of the effort to help the financial services industry better protect its systems and data as well as the privacy of its customers. We are encouraged by the Senate’s recent agreement on a process to complete consideration of CISA in the fall and would urge an expedited conference between the House and Senate to send a bill to the president.” ■

Assisting Community Banks in

Charting a Path to Success Since 1989

Consulting Services Implemented by Experienced Lenders and Risk Managers: LOAN REVIEW PROGRAMS • General Loan Review

• Portfolio Acquisition Review (Due Diligence) • Specialty/Structured Finance Review

LOAN LOSS RESERVE METHODOLOGY • Methodology Validation • Methodology Refinement

LOAN PORTFOLIO STRESS TESTING • Bottom Up Loan Level Approach

• Top Down Capital Adequacy Assessment

CEIS REVIEW CONSULTING • Credit Risk Process Review • Loan Policy Maintenance • Loan and Credit Seminars

888-967-7380 • www.ceisreview.com

Third Quarter 2015 | 21

BANKING NAPA STYLE | By Achim Griesel

Surprising Similarities Between Banking and Winemaking

admit it: I love wine. Napa cabernets in particular. On a recent trip to Napa, it dawned on me that the wine and banking industries have some similarities. The facilities: It is very expensive to build a bank branch, but compared to building a Napa winery it’s a drop in the bucket. Napa wineries have beautiful locations, great hospitality and interesting buildings. Plus, wineries are working facilities. The product: Achim Griesel Large wineries can make good wines, but it is almost impossible for them to consistently make exceptional products. Average wine is a commodity, just like an average bank. At small wineries winemaking is a labor of love. Grapes are sorted by hand and some crush them without presses. The winemaker may taste as many as 100 barrels to choose the best four for a special select wine. To stand apart, the smaller wineries have to make exceptional product. Doing that takes a lot more attention and labor. Their products actually become part of the customer experience. The customer experience: Financial professionals should go to Napa. No matter where you go in the Napa Valley, the service you receive is exceptional. As much as I love wine, I love great service too. Just to give you some examples: • I’m not just a wine snob, I’m also a wine glass snob. The right wine glass is an important part of the experience. At our hotel, we did not just have nice glassware, we had three sets of the right glassware: one pair for champagne, one pair for whites and one pair for reds. They 22 | Banking New York

know their audience. How about bankers? Do they know their audience, and treat them this well? • Our room had a wood-burning fireplace. Each morning the stack of wood was rebuilt, so all I had to do was light a match and start the fire. Do banks anticipate consumers’ needs? Do financial institutions go out of their way to make banking easier and more enjoyable? • One of my favorite vineyards is Anomaly Vineyards in St. Helena. They produce less than 1,000 cases, compared to several hundred thousand at mid-level producers or several million at the large producers. I have been a loyal customer of Anomaly for quite some time. When I called them this year, they recommended other places we should visit. Then they went a step further and set up our appointments. • Part of the experience is the private and beautiful setting some of these smaller wineries have for their tasting rooms. When you buy wine from them, part of what you’re getting is a recreation of the experience you’ll have every time you open one of their bottles.

HOW DOES THIS ALL RELATE TO BANKING?

large wineries, have a different business model compared to smaller financial institutions. If you’re a smaller organization, you have to distinguish your brand by doing all the little things right. You must differentiate. If the small wineries tried to be just like the big ones, they couldn’t survive. Just like many of them can make exceptional wines, you have the opportunity to differentiate yourself through better product, better service, better experience, and anything unique you can offer to your customers. Provide a product your customers and employees love. It was amazing to see the employees in the smaller wineries refer to “we” and “us” when talking about their organization. One job the winery owners have done very well is to sell employees on their own products. Most people we met truly loved what they stood for, including the product. Achieving that takes training and a familiarity with the product. Train your employees all the time. Make them understand and use your product. Once you achieved that, make sure you have the tools in place to hold them accountable. They must create that customer experience, and do whatever else your can to take advantage of what is unique to your organization and you will grow and succeed. ■

Banks have expensive facilities. They need to be utilized, filled with customers and set up to generate the exceptional customer experience. We also have to understand that the large financial institutions, just like the

Achim Griesel is chief operating officer at Haberfeld Associates, a datadriven consulting firm specializing in marketing and training services for community financial institutions.

There are a multitude of other examples about the experience wineries create. Bottom line: going the extra mile – like wineries in Napa Valley do – is what creates an outstanding, memorable experience.

BUILD RELATIONSHIPS

With or Without Keeping Funds on Balance Sheet

REDUCE COLLATERAL BURDENS and Increase Asset Liquidity

DIVERSIFY FUNDING

in a Flexible, Cost-Effective Way

A Smart, Profit-Enhancing Solution To learn more, contact Kevin Hamilton, Regional Director, at (866) 776-6426, ext. 3329 or khamilton@promnetwork.com. Limits, terms, and conditions apply. ÂŠ 2015 Promontory Interfinancial Network, LLC.

BANK PROFILE | By Linda Goodspeed

Making Customers out of Friends, Amerasia Expands into Florida Market

New York-headquartered bank has recently expanded into Florida, where it intends to bring the same financial discipline that has made it one of the top performing community banks in the country. Amerasia Bank, rated a top 10 bank nationally by SNL Financial since 2010, is headquartered in Flushing. In 2013, the bank, which also has an office in ElmJames Huang hurst, expanded into CEO the Miami market with two branches, and in September will open its third Florida branch in Orlando. Amerasia was founded in 1988 by Taiwanese immigrant James Huang. Huang, who was educated as a civil engineer in Taiwan, emigrated to America in 1974. He has lived in New York City ever since. “As a first-generation immigrant, my goal was to start a new life and complete my dream in this new land,” Huang said. “But many immigrants like myself find it difficult to establish banking relationships with mainstream banks.” Huang’s solution was to start his own bank. With fellow Taiwanese immigrants, Huang spent three years scraping together the $5.5 million minimum capital required at the time, and opened Amerasia in 1988 in Flushing. “Our niche is catering to minority and immigrants, especially those of Asian descent, who often have a hard time communicating or working with larger banks,” Huang said. Huang’s vision was not unique. In the 1980s, two other banks founded by Taiwanese immigrants opened in Flushing, home to a large and growing Asian population and the sixth largest retail center in the city. The banking environment is 24 | Banking New York

particularly competitive. But following recent mergers of the two other Asian banks, Amerasia will soon be the only domestic Taiwanese-American owned bank left in Flushing, and the only one in New York State. Over the years, Amerasia has received many awards for its financial management. It has been on SNL Financial’s “top 10” list of best performing banks under $500 million (among approximately 4,300 banks nationally) since 2010, rising to number one in 2011. In 2010 and 2011, Financial Management Consulting Group rated Amerasia the top bank in New York for best performance. BauerFinancial, Inc., an independent bank rating company, gives Amerasia a five star rating.

BOOMING IN BLEAK TIMES “We have always been very conservative in our outlook and that has helped us tremendously,” Huang said. He said Amerasia actually grew faster during the Great Recession. “When other banks struggled during this period, a conservative and healthy bank like us had the opportunity and the obligation to be more aggressive. Our growth was actually better during the recession.” Amerasia has $430 million in total assets (as of year-end 2014), up from $379 million in 2013. Deposits total $384 million, up from $339 million in 2013. Its loan portfolio of $370 million is primarily made up of commercial mortgages with an average loan size of $1 million. In 2007, nearly 20 years after its founding and after much internal discussion, Amerasia opened a second branch in Elmhurst, about five miles from Flushing, with another large Asian population. “From the beginning of the bank, my ideal was not expansion but to start a good, solid and profitable bank,” Huang said of the delay. “I never had aspirations for growth but rather aimed for stabil-

ity. After I felt our management and staff were matured enough and I was fully comfortable with the expansion, we decided to open a second location and diversify our service area because Flushing was becoming saturated and Elmhurst is another community that fits our customer base.” In April 2013, Amerasia diversified further when it merged with Great Eastern Bank of Florida, a small ($46 million in assets) Asian bank, and assumed their two branches in Miami. “We felt Florida was a good opportunity for us,” said Jimmy Tsai, Amerasia’s chief operating officer. “It had the same kind of market niche, board of directors and structure. We felt it was a good fit for us and was a size we could handle, and also gave us the potential to diversify our market.” With the merger, Amerasia is now the only Asian bank in Florida. Tsai said the bank will open a third branch in Orlando in September. “We are still looking for opportunities to explore other territories,” Tsai said. “Other territories” includes more than just geographical expansion. “We are looking to expand beyond the Asian community,” Huang said. He credits the bank’s employees, many of whom have been with Amerasia for 15 or more years, and some since its inception, for much of the bank’s success to date. “Our practice is to promote employees within our organization instead of hiring outside help,” Huang said. “We provide on-the-job training so they fit nicely into our business culture and marketing strategies. Our employees are our most valuable asset because they help us know and understand our customers. Our employees live, work and are involved in the communities we serve. Many of our friends become our customers, and many of our customers become our friends.” ■

MORTGAGE MARKETSHARE REPORTS See How You Compare.

Data Solutions | www.thewarrengroup.com

Monitor, Analyze And Track Lending Activity With Mortgage MarketShare Reports. The Warren Group gives you the ability to dissect and analyze the mortgage lending market as you define it: by time period, loan type, geography, mortgage type, mortgage amount, and more. Our flexible reports allow you to view market trends, monitor competitors and measure your own performance throughout NY, MA, CT, RI, NH and ME. Tell us your objectives and we’ll supply the comprehensive reports that tell you what you want to know.

The Information You Need And More:

New: Mortgage MarketShare Module

• Measure sales performance against competition and market activity

• Interactive web-based reporting

• Identify high-performing competitors

• On demand results

• Locate and target emerging markets

• Custom regions and sophisticated searching

• Determine sales territories and quotas

• Save select queries

• Benchmark the productivity of originators and offices • Track market share trends and rankings • Demonstrate compliance with the Community Reinvestment Act

Mortgage MarketShare Reports - See How You Compare! Call 617-896-5348 to speak with one of our data specialists or email dlovins@thewarrengroup.com.

INDUSTRY NEWS

MBA: COMMERCIAL MORTGAGE VOLUME UP 29%

PUTNAM-AREA BANK ROBBERIES REMAIN UNSOLVED

Commercial real estate borrowing and lending continued at a strong clip in the second quarter, according to data from the Mortgage Bankers Association. Commercial and multifamily mortgage loan originations rose 29 percent from the same period a year ago, the MBA said in a statement. Loans originated for Fannie Mae and Freddie Mac increased 113 percent from a year ago, along with loans for commercial bank portfolios (64 percent) and life insurance companies (14 percent). The dollar volume for loans placed in commercial mortgage-backed securities fell 17 percent.

Several banks throughout Putnam County have been robbed in the past few years, with the suspects making off with an undisclosed amount of cash, some of whom were never apprehended. Banks in Baldwin Place, Southeast, Carmel, Patterson and Westchester have been targeted. Most recently in Scarsdale, a man wearing dark glasses, long sleeves and a flat-rimmed hat is a suspect.

NUMBER OF NEW U.S. BANKS DROPS TO ZERO There were no new commercial banks or savings institutions launched in the U.S. last year. Since 2010, four new commercial banks and one new savings institution have opened in the U.S., according to data from the FDIC. The data refers to entirely new banks, not new branches of previously existing ones. Ten years ago, 166 new commercial banks and 16 new saving institutions opened, and 20 years ago, 102 new commercial banks and nine new savings institutions launched. According to CNN Money, the problem could be due partly to low interest rates combined with new regulations.

SIGTARP REPORT NOTES HIGH REJECTION RATES FOR TROUBLED ASSETS RELIEF PROGRAM APPLICANTS The program was advertised as a lifeline to assist troubled borrowers, but a report shows that six years later 887,001 borrowers are participating in the Trouble Assets Relief Program’s loan modifications, according to a report from the special inspector general. The quarterly report to Congress noted that banks in the program have rejected 4 million borrowers’ requests for help, or 72 percent of their applications, since the process began. CitiMortgage rejected 87 percent of borrowers applying for a loan modification. JPMorgan Chase had a denial rate of 84 percent. Bank of America turned down 80 percent with Wells Fargo rejecting 60 percent. ■

Get Introduced To Your Best Prospects. And start building stronger business relationships today! New York is the banking and finance capital of the country, and one of the largest financial centers in the world. Its institutions host an impressive amount of deposits, assets, wealth and, as a result, power. Banking New York magazine is a highly focused publication for the array of executives and managers within every bank in New York state. You have the unique opportunity to promote your products, services and solutions within the pages of New York’s own banking publication. Banking New York has been educating bankers since 2007. Now in the second year partnership with the Independent Bankers Association of New York (IBANYS), the magazine’s reach and coverage is more expansive than ever before. Questions? To learn more about Banking New York or to customize a marketing program unique to your business needs, call 800-356-8805 ext. 344 or email advertising@thewarrengroup.com.

26 | Banking New York

70 million U.S. households have a life insurance gap 1

Ignoring the problem is not a solution.

Vantis Life can help fill an enormous gap in family protection among your core mass-affluent customers. We are: #1 provider of protection products to middle-income bank customers† #1 in providing a selection of simple products #1 in wholesaling and training support #1 in agent-facing technology To find out more contact John Richter, National Business Development Director, at 860-298-5477, or jrichter@vantislife.com We’re #1 Vantis Life® is the top provider of recurring premium life insurance products in the bank channel.† 1

www.vantislife.com/ABLE

Source: LIMRA Insurance Barometer Study 2013 † BISRA Life Insurance Survey (2014)

ACTING LIKE A PRO | By G.R. Forehand

Indentifying Behavioral Traits in High-Performance Bank CEOs Behavior Profiles of Top-Performing CEOs Dominance High

Average

Low

60.71%

7.14%

32.15%

Inluence High

Average

Low 60.71%

32.15%

7.14%

Steadiness High

Average

Low

32.15%

67.15%

Conscientiousness High

Average

Low

57.14%

7.15%

35.71%

Primary and Secondary Behavior Profiles Combined Dominance and Conscientiousness: 35.7% Dominance and Influence: 32.15% Steadiness and Conscientiousness: 28.57% Influence and Steadiness: 3.57%

n his new book “Average Is Over,” Tyler Cowen makes the credible argument that the economic structure that created community banking is largely obsolete. Today, the future focus is on technology and entrepreneurship – and on the collaboration between the two. How then is a CEO in today’s banking environment expected to marry the traditional business of banking with the leading-edge of the future economy? How does a CEO achieve high performance? Before we look at the traits of a high-performance CEO, however, we should define a high-performance bank. High performance has evolved over the past 25 years in banking, but never has the combination of financial performance measures of ROA, ROE, net interest margin and non-interest income been more critical. With the overdependence on fee income largely obsolete, thanks for increasing regulatory scrutiny on overdraft fees, banks are having to balance high performance among other streams of income. Having defined a group of high-performance banks over a five-year period, an impressive 56 percent of their executives (president or CEO) returned a personal profile survey for analysis.

PERSONAL PROFILE FACTORS The personal profile system is a four-factor behavioral model which identifies and rates the intensity of four ba28 | Banking New York

sic behaviors included in a sales and management environment. The model is published by Carlson Learning Co. and is based upon the work and writings of William Marston and John Geier. The behaviors are defined as: Dominance: Dominant behavior is a high-risk, taskoriented, independent behavior that operates best under crisis. It is driven by the bottom line, results-oriented and characterized by intense no-nonsense, let’s-get-it-done behavior. It is often seen as not caring about human resources as long as the job gets accomplished, but in fact it is more often driven by high accountability expectations. It is motivated primarily by challenges and results. This behavioral tendency seeks to meet its needs by controlling the environment through direct, forceful activity and often overcomes opposition in unfavorable or antagonistic situations. Influence: Influential behavior is also a high-risk behavior, but it is relationship or people-oriented and operates best under favorable conditions. It is highly focused on people and their interactions in doing business. This behavior seeks to meet its needs by persuading others to work with it to accomplish results. It is often seen as very sales- and marketing-driven behavior. This behavior avoids conflict or tends to downplay any negativity. Optimism is both its most powerful and destructive tool. It tends to see people in rose-colored glass-

es. However, this behavior brings people together in times of conflict and is able to facilitate change and growth. Steadiness: Steadiness behavior is also a relationshiporiented behavior, but it is much lower risk. This behavior tends to meet its needs by cooperating with others in a steady, consistent, process-oriented manner to carry out respective tasks. It is characterized by loyalty, honesty, hard work, security and stability. This behavior is slow to change and prefers to work in well-defined, predictable situations. It also works best in a supportive and favorable culture. Conflict is often avoided or denied in this behavioral trait. Conscientiousness: This behavior was originally known as compliance or cautious behavior. This behavior is focused on quality and accuracy. It is often seen as perfectionist in nature. This tendency towards precision and accuracy exists even under unfavorable conditions. It is low-risk behavior that works best when done independently, but it also likes to work cooperatively with others in a given task or project. This behavior is extremely detailed and analytical in nature.

PERSONAL PROFILE MEASURES The personal profile system ranks each of these behaviors in each individual on an intensity index ranging from 1 to 7. A segment score of 1 is the lowest possible score

and a segment score of 7 is the highest possible score. A segment score of 4 is considered average. A score of 5 or higher would be considered a high behavioral trait and a score of 3 or lower would be considered a low behavioral trait in this survey.

HIGH-PERFORMING SCORES What does this mean for CEOs today? Clearly leaders of any kind will fall into the “dominance” category, as those behavioral traits are much of what make a leader viable in any industry. Conscientiousness was the second-most noted high-scoring behavioral trait. So as a board looking for a CEO to lead your bank into the future, look for the holy grail of the high D/high C personality, one that will lead forcefully but also collaboratively and with detailed attention to numbers and analytics. The future of your bank may depend on the behavioral traits exhibited by its executive leadership. ■ Geri Forehand is a certified professional consultant to management and is president and CEO of Forehand Strategy Group, LLC. Forehand Strategy Group is dedicated to the financial services industry, focusing on process improvement, risk management, strategic planning, profit improvement, process enhancement, culture enhancement and market analysis. Forehand can be reached at grf6250@aol.com.

rePRINTS You can order a professional reprint of any article in the BANKING NEW YORK.

To learn more about rePRINTS click below: bit.ly/BANKINGNY

Third Quarter 2015 | 29

SMALL CHANGE | News Roundup

EVANS BANK ANNOUNCES NEW CHIEF CREDIT OFFICER Evans Bank has named Paul S. Ulrich senior vice president and chief credit officer. As chief credit officer at Evans, Ulrich will be responsible for overseeing the bank’s overall Paul S. Ulrich credit strategy, underwriting, loan operations, credit risk mitigation efforts and credit policies and portfolios.

HSBC EXECUTIVE JOINS FIRST NIAGARA Peggy Yankovich joined First Niagara Financial Group’s treasury management division to lead its commercial card and payments business. As head of commercial cards and payments, Yankovich will lead all aspects of First Niagara’s commercial payments including card-based solutions, product strategy, positioning, business management and sales enablement.

BANKUNITED SHIFTS EMPLOYEES TO ACCOMMODATE GROWTH BankUnited announced the relocation of several employees to accommodate the company’s growth throughout the New York region. Patricia Kelly will move from the 299 Park Ave. banking center to the Melville banking center at 445 Broadhollow Road. She retains her position as vice president and banking center manager, and will co-manage the center with Gil Curtin. Paige Homan, banking center manager, and Larry Marchini, business banker, retain their positions and relocate to 299 Park Ave. from the bank’s 136 East 57th St. location. Homan and Marchini will continue to develop the banking center’s deposit base while pursuing opportunities for increased business banking and lending. Frank Puccio assumes the role of banking center manager for the 136 East 57th St. location.

RIDGEWOOD SAVINGS BANK MARKS 10TH ANNIVERSARY OF MOBILE BRANCH

SIGNATURE BANK ADDS TWO PRIVATE CLIENT BANKING TEAMS Signature Bank announced the addition of two private client banking teams to its growing network. Mohammed Omar Kamil was named group director and senior vice president of a three-person team based from Signature Bank’s private client office in Brooklyn. Eric Shabat was appointed to the role of associate group director and vice president. Aviram Ohaion is the team’s senior client associate. Another team, headed by Avraham (Avi) Azuolay, who was named group director and senior vice president, joins Signature from Hudson Valley Bank, which recently merged with Sterling Bancorp. The five-person team, based at Signature Bank’s private client office at 261 Madison Ave. in Manhattan, includes Ronald J. Sylvestri and Arlene DeBenedictis, each of whom were named associate group director and vice president, along with Jenny Panora and Wilfred Rivera, both appointed senior client associates.

Ridgewood Savings Bank announced the 10th anniversary of its mobile branch, which was the first of its kind in New York state. The 40-footlong vehicle features a fully equipped bank office inside, enabling real-time transactions with cellular technology. The traveling branch is equipped with teller windows, ATM, private office and customer service desk. It travels to senior housing centers, classrooms and areas devastated by natural disasters to assist and teach in times of need. ■

SEND US YOUR NEWS! SUBMIT NEWS FROM YOUR BANK TO CASSIDY MURPHY, EDITORIAL DIRECTOR, AT CMURPHY@THEWARRENGROUP.COM

30 | Banking New York

Is it time for your Br anch Tr ansformaTion?

www.nes-group.com 508-339-6600

Bank Design • Branding & Merchandising Bank Equipment • Construction Branch Transformation