Banking New England July/August 2013 by The Warren Group

0011010101010111000111000 NEW ENGLAND 0101001100001000011010101 1110001110000001101010101 1000111000001010100110001 0110101010101110001110000 10100110000 1000011010101 1110001110000010101001100 0000110101010101110001110 01010100110000 1000011010 0101110001110000010101001 00 1000011010101010111000 000001010100110000 100001 0101010111000111000001010 What’s Your IT IQ? 110000 100001101010101011 0111000001010100110000 TAXES AND HOW TO GET YOUR THE 60 PERCENT 10 SEQUESTRATION STAFF TO LEARN TO LOVE MYTH OF DISABILITY 1101010101011100011100000 TECHNOLOGY INSURANCE 0100110000 10000110101010 1100011100000101010011000 0000110101010101110001110 01010100110000 1000011010 0101110001110000010101001 JULY/AUGUST 2013

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LETTER FROM THE EDITOR

Technology and the Human Factor The concept of technology makes we of a certain age think of the Beloit College Mindset List. Every August since 1998, the list serves as a reminder of the changing mindset and sets of assumptions on the part of entering college freshmen around the globe. Christina P. O’Neill Editor, Banking New England

o cite some examples: The entering class of 2013, born in 1991, has never used a card catalog to find a book. Text has always been hyper. They have always been able to read books on an electronic screen. Everyone has always known what the evening news was before the Evening News goes on the air. There has always been a computer in the Oval Office. There has always been blue Jell-o. None of this automatically implies mastery of technology – just that this generation has been swimming in it since birth, and like the fish, might just ask “Water? What water?” But for financial institution leadership and their boards, that water is very real, and bank regulators now expect financial institution leadership to be competent swimmers.

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Our focus on technology in this issue addresses several important issues. The main feature tells how to evaluate technology in ways that lead to good purchasing decisions and how to interact competently with vendors. Roxanne Emmerich’s article outlines the way to help staff adjust to rapid technological change. And Barry Libert’s article explores the economic and marketing power unleashed by technology, that innovative companies have used to their advantage. Technology isn’t just marching along – it’s hurtling at warp speed. We must do our best to understand and adapt it to gain mastery of our economic future. Luckily, those who don’t like blue Jell-o will get to pass up that dessert with impunity. BNE

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travelers.com ©2013 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. The Travelers Indemnity Company and its property casualty affiliates. One Tower Square, Hartford, CT 06183

A PUBL ICAT ION OF T HE WA RRE N G ROUP

CONTENTS

NEW ENGLAND

GUARDING THE GATE

CAPITOL DECISIONS

MANAGING RAPID CHANGE

OFF BASE

TECH FOCUS

PERSONNEL FILE

COMMUNITY GOOD WORKS

IN CASE YOU MISSED IT

In Search of Trust

Decisions on Capitol Hill Affect all of Banking Industry

Five Steps to Keep Staff Happy and Engaged

The 60 Percent Myth

Responsibility for Today’s Technologies Starts in the Board Room

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

COVER FEATURE

100001101010 101011100011 100000101010 011000010000 110101010101 110001110000 001101010101 011100011100 000101010011 000100001101 010101011010 16

WHAT’S YOUR IT IQ?

TWG STAFF CEO & PUBLISHER PRESIDENT

SALES Timothy M. Warren Jr.

David B. Lovins

DIRECTOR OF MEDIA SOLUTIONS

George Chateauneuf

ADVERTISING ACCOUNT MANAGERS GROUP SALES MANAGER Rich

Claire Merritt and Kelsey Bell

Ofsthun

EDITORIAL EDITORIAL DIRECTOR

David Harris

EDITORIAL OPERATIONS MANAGER

www.thewarrengroup.com

CUSTOM PUBLICATIONS EDITOR ASSOCIATE EDITOR

Cassidy Norton Murphy

Christina P. O’Neill

James Cronin

Interested in receiving additional copies

of Banking New England? Call 617-396-5322

recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising,

or email custompubs@thewarrengroup.com

CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John

Bottini Scott Ellison Michelle Laczkoski GRAPHIC DESIGNER Amanda Martocchio and Tom Agostino

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MARKETING COMMUNICATIONS MANAGER

of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210

BANKING NEW ENGLAND

GUARDING THE GATE

In Search of Trust BY ROBERT BESSEL Robert Bessel is an account executive for Avon, Conn.-based COCC Inc., a 45-year-old firm that specializes in advanced core technology and support for banks.

error has returned. Not just in Boston, but throughout the great communications networks that power the world’s commerce and infrastructure. Large global services are constantly under siege by criminals looking to accomplish a variety of missions – knocking services offline, disrupting the financial ecosystem, theft, and political motives just to name a few. In America, criminals have launched Distributed Denial of Service (DDoS) attacks against major companies like NBC and Charles Schwab. They even

hacked the Associated Press’s Twitter account and announced explosions at the White House. The stock market fell 100 points before recovering a few minutes later. The DDoS epidemic has resulted in more than 200 attacks on U.S. financial institutions since September. As investigators dig into these attacks, they have uncovered “botnets” – swarms of infected computers that do whatever their criminal masters command. The criminals load an attack script to their army of infected computers, and at the appointed time, command

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their computer troops to log into the same website, rendering it inaccessible to actual customers. Blocking these attacks used to be simpler, when one attack came from one computer. Today’s DDoS attacks enlist so many attacking computers that it’s nearly impossible to stop them. A recent DDoS attack involved nearly 50,000 Internet addresses, generated more than 17 million login attempts measured in gigabytes per second (gbps). Attacks above 10 gbps and even 20 gbps now occur multiple times per day, according to Arbor Networks’ first quarter ATLAS report. These complex, synchronized attacks rely on compromised hosts collected using well-known flaws in our use of the Internet – most frequently related to poorly secured services, unpatched workstations, limited application of best practices, and lack of attention to system logs. The targets may change, but the tactics remain largely the same. Unfortunately, we make these attacks easy. Many home users have a tendency to keep using the same passwords over and over. In fact, a recent survey of security professionals revealed that 60 percent reused their passwords. For the criminal, that means cracking one user ID/password combination can open access to dozens of websites, servers and databases. Another chink in our security armor is our willingness to spill the details of our lives on social media. A clever criminal need only Continued on page 29

BANKING NEW ENGLAND

CAPITOL DECISIONS

Decisions on Capitol Hill Affect all of the Banking Industry BY RICK BALINE Rick Baline is the principal in charge of McGladrey’s Washington National Tax Office, and leads the Washington National Tax Corporate Tax and Transactions team.

hatever happens on Capitol Hill has an impact throughout the business world. Because banks touch such a significant portion of the business community, they can be both directly and indirectly impacted. Any change in the tax rules that affects how a bank computes its taxes has a direct impact; a change to the tax rules that affects how a manufacturer computes its taxes may have an indirect impact on banks by either increasing or decreasing loan

demand or deposit base. An example of this is the American Taxpayer Relief Act of 2012. The act contains little in the way of business taxes; it primarily focuses on individual taxation. That does not mean businesses will not be impacted. Over the past 25 years, there has been dramatic growth in the number of businesses taxed as individuals. These businesses are typically referred to as “pass-throughs” (partnerships and Subchapter S Corporations), because

the business entity does not pay a tax, and business profits are considered to be earned by the business owners, typically individuals. Today, pass-through entities earn approximately 45 cents of every dollar earned by an American business. Because the act contains numerous provisions specific to individual taxation, it also has an impact on roughly 45 percent of all business revenue. Community banks should be particularly mindful of Continued on page 10

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CAPITOL DECISIONS Decisions on Capitol Hill Continued from page 8

the foregoing because these institutions typically act as the bankers for these pass-through businesses. Effective Jan. 1, 2013, the act increases taxes on many of these business owners in several ways. There is a new top individual tax rate of 39.6 percent, the tax on capital gains and qualified dividends has increased to 20 percent, and certain income may also be subject to the new 3.8 percent Medicare tax. In addition, these same taxpayers will see a reduction in their allowable personal exemptions and their itemized deductions. The overall impact is a greater tax burden on many business owners, and this will likely influence their decisions to hire and reinvest resources in their businesses. This in turn can have an effect on their business partners, such as their bankers.

Sequestration now our reality

In addition to the act, we are all now learning to live with sequestration. There has been a good deal of misinformation disseminated about sequestration. See sidebar for four points to consider when

gauging the potential impact of these spending cuts. As of mid-April, we have a political picture that has shown us three separate budget proposals: one by the House, one by the Senate, and one by the president. Consistent with the political landscape of the past few years, each proposed budget seems partisan and not likely to be passed. For instance, one proposal repeals Obamacare, while another ends sequestration. The good news is that even without a budget, Congress has already agreed to a funding deal that will allow our government to continue to function through the remainder of 2013. This summer we will again see Congress face difficult negotiations. At least two items likely will cause Congress to try to reach some conclusions: both parties have been pushing for comprehensive tax reform, and this summer, the United States will once again reach its debt ceiling, and the president and the Treasury Department will need renewed approval from Congress to continue borrowing. The banking community certainly should keep its focus on comprehensive tax reform. In any major tax reform, there

are winners and losers. Given the importance of such items as the Dodd-Frank, the issuance of regulations by the Consumer Financial Protection Bureau,

and the potential reorganization of Fannie Mae and Freddie Mac, it is important for the banking community to remain vigilant. BNE

SEQUESTRATION BY THE NUMBERS • For the federal government’s fiscal year 2013 (Oct. 1, 2012, through Sept. 30, 2013), the dollar amount cut from federal government spending by sequestration according to the Office of Management and Budget should be about $44 billion. Typically, $88 billion has been the projected spending cut for sequestration in its first year. That may be true, but sequestration did not become law until March 2013, about halfway through FY 2013. Thus, the real impact this year should be closer to $44 billion. • In FY 2013, the federal government will spend about $3.4 trillion, making sequestration about 1.3 percent of FY 2013 spending. • In FY 2013, the federal government will spend more than it did in FY 2012, despite the impact of sequestration. • Assuming sequestration runs for 10 years, the total dollar impact of sequestration would be about $1.2 trillion. In that same time period, the federal government is projected to spend about $44 trillion, with sequestration resulting in about a 2.8 percent overall cut.

NEW ENGLAND

REACH YOUR TARGETED BUSINESS AUDIENCE WITH ACCURACY. Banking New England magazine will now be delivered in both print & digital formats. Banking New England reaches more than 9,000 banking industry professionals in 350 financial institutions in the region. Financial leaders in New England turn to this bimonthly magazine to gather information and move their business forward. Connect with the leaders of the banking community, increase your market share and grow your business – just by consistently marketing in Banking New England. Visibility and repetition within your sales and marketing efforts will establish stronger relationships within this vital market. Banking New England offers advertising and sponsorship opportunities in three targeted marketing programs – digital, print and live events – reaching readers on multiple platforms.

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Scan this QR code to order a free white paper on Recognizing the Opportunities for Growth Discover how much fee income your institution can earn. To learn more about us visit ceterafinancialinstitutions.com or contact Sean Casey at 1.800.245.0467, ext. 65014.

Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC, member FINRA/SIPC. Securities and insurance products are offered through Cetera Investment Services (doing insurance business in CA as CFGIS Insurance Agency), which is not affiliated with the bank/credit union where investment services are offered. Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency. ©2013 Cetera Financial Group, Inc. 13-0299 04/13

MANAGING RAPID CHANGE

Five Steps to Keep Staff Happy and Engaged BY ROXANNE EMMERICH Roxanne Emmerich is the CEO of The Emmerich Group Inc.

12 BANKING NEW ENGLAND

ew technology is flooding into the workplace at an incredible rate. Data and connectivity are at all-time highs. What an opportunity – but it doesn’t always feel like one. This technology revolution also brings some real problems. All of that information and connectedness is being pushed into the same number of hours each day. Employees are squeezed between the promise of all that technology and the reality of their own human limits. It can quickly feel like drinking from a fire hose that never, ever shuts off. And it’s not just the new tech that’s doing it. You know that regulatory expectations and the burdens they bring are not lessening one bit. If anything, they’re on the rise. So how do you keep your staff from saying, “Enough already! Don’t ask me to keep up. Haven’t

you noticed I have a day job?” Leading employees to change is critical. Here are a few essential items to contemplate to help your employees better accept technology and embrace the constant changes that come with it.

1. Always explain the why. When you introduce a new technology, regulation, policy, or procedure, never just say, “Ladies and gentlemen, starting today we’re doing X, Steve will walk you through the implementation, have a nice day.” Explain why it’s being introduced, and just as important, what would happen if you didn’t introduce it. Sometimes it’s a matter of remaining competitive – “If we don’t do this, the competition will eat us for lunch.” Sometimes it’s about keeping the regulators

from breathing down your necks. And sometimes, after an initial adjustment, it will make their life and work easier. Don’t assume these things are obvious. Always take a minute to explain.

2. Break everything down, step by step.

We’ve all been through the conversion from hell – you bought the moon, they installed, trained a few folks for a few days, and BAM, the nightmare begins. Nobody knows exactly what to do. Okay, that’s not exactly right. About 10 percent know exactly what to do, and 80 percent are doing some version of some parts, but not consistently. Then there are the 10 percent who begin the countdown: “Only 1,853 days left to retirement – maybe they won’t catch on that I’m just not doing it.”

The result is a living nightmare. A confused mind cannot execute, so you’re in worse shape than before you bought the new software – and you’re out a boatload of money. People learn best step by step. Break down each element into small, graspable steps, and do the same at every scale.

3. Roll out one piece at a time.

You can install everything on Day One – just don’t expect everyone to understand everything right away. Just as you’ve broken down each component into steps, you’ll need to roll out each component separately. Take one part, train to an

extreme, measure compliance to it, then celebrate and award those in compliance visibly and often. You can even do team competitions to see who does the best job of entering data in the new CRM using your 10-point checklist.

4. Expect compliance on one piece before introducing the next.

This is crucial, and it’s too often ignored. DO NOT move ahead in your rollouts until each component is locked down and wrapped up with a bow on top. In most cases this will mean at least three weeks to make sure everyone has a full understanding and is in full compliance on a

given component. Rushing ahead means sketchy compliance – and nobody wants that. Follow the proven pattern: introduce with a bang, train massively, document simply and step-by-step, then measure compliance weekly with audits. And always, always, always make it fun, fun, fun.

5. Build systems to perpetuate the application to complete specifications.

If you don’t have a system to continually ensure compliance to the new process, you WILL experience entropy and every week will have a lesser result. That means your own internal

audits, whether by checklist or full audit, to ensure that the plates you put spinning up in the air with the previous four steps stay up in the air and that you don’t lose traction. Change is the new constant, and a constant flow of new procedures and technologies are a permanent part of that change. By making change fun and giving people bite-sized pieces, you can make the burden of every day feel like a wild adventure instead of a waking nightmare. New requirements go down easier and even become exciting and fun. Best of all, you will get compliance to new procedures and technologies faster, better, and with greater staying power. BNE

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BANKING NEW ENGLAND

OFF BASE

The 60 Percent Myth Bank Executives and Disability Insurance

BY GARY F. TERRY Gary F. Terry is executive vice president and managing director of The Westport Group and has more than 30 years of corporate planning expertise associated with executive benefits.

hen discussing disability insurance, particularly as it refers to highly compensated employees and professionals, there appears to be a distinct lack of understanding of the mechanics of disability income insurance coverage. Whether it’s an office worker or an executive, almost everyone says, “I didn’t realize that.” Bank executives, business owners, money managers, lawyers and others firmly believe that they are adequately protected and that their company’s disability income plan provides them with 60 percent coverage. In other words, they are firmly convinced that should they become disabled, they will receive 60 percent of their annual compensation. That is the perception they hold. Unfortunately, in the world of disability benefits for highly compensated individuals, perception is definitely not reality. Recently I met with the head of the human resources

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department of a bank, and soon the conversation turned to a discussion about their disability insurance coverage. “So,” I asked, “how much disability insurance does the bank provide for its employees?” She replied, “We offer 60 percent income replacement to a maximum of $15,000 per month of benefit. So, our employees earning up to $300,000 are fully protected.” I thought about her response for a moment, and then asked, “So, if I earn $200,000 of base salary and $100,000 in bonuses for a combined total of $300,000, I would be protected at 60 percent. Correct?” She thought about my question and answered, “No, actually, only base salary is covered under our group disability plan.” Her response further solidified what I’ve discovered after talking with a number of banks. This is the disturbing fact that for many banks: group disability coverage usually only provides 60 percent of base salary, with no protection for bonus income. In reality, an employee has significantly less coverage than they think because they are receiving only 60 percent of their base salary, not their total income (including bonuses). This is a major problem, because the structure of most employee compensation has change dramatically over the past 15 years. It used to be that base salary was the main driver and just a few members of senior management received large bonuses. Now base pay

has been reduced, and it’s not unusual to see a large number of employees receiving 30 percent to 40 percent of their total compensation as bonus income, and management frequently more than 50 percent. The problem is that most bank group long term disability (GLTD) plans only protect 60 percent of base salary, leaving all bonus income exposed to financial loss in the event of a disability.

Sixty percent of what?

Let’s look at a hypothetical example. The EVP of a bank makes $300,000 per year, which includes a base salary of $200,000 and a bonus of $100,000. She is suddenly hospitalized for complications from diabetes and she goes out on long term disability. It’s her belief that her monthly disability income will be $15,000 per month ($300,000 x 60 percent divided by 12 months). Think of her surprise when a monthly check shows up in the amount of $10,000 ($200,000 x 60 percent divided by 12). In this case, the key question that employees need to get answered is: “Sixty percent of what?” • Is it 60 percent of base salary? • Is it 60 percent of base salary, plus the annual bonus? • Is it 60 percent of base salary, plus annual bonus and long-term bonus? • Are the benefits taxable or tax free? • What is the monthly benefit cap?

There are many different ways benefits are calculated, so this can be complex and confusing. Some employees are covered at 60 percent of compensation, while others are actually covered for as little as 20 percent to 30 percent of their net takehome pay after taxes. For example: The bank EVP earns $200,000 base salary and a $100,000 bonus ($25,000 gross monthly income). The group benefit provides 60 percent base salary only, to a maximum $10,000 of monthly benefit. This means only 40 percent of her income is protected. The IDI will provide $5,000 of additional coverage to adequately protect 60 percent of total compensation (see chart, left). Letâ&#x20AC;&#x2122;s look at another scenario. Bob is the vice president of market development at a bank, earning a $200,000 annual salary and $100,000 bonus, and suffers a stroke. The bankâ&#x20AC;&#x2122;s group plan provides 60 percent of annual salary and the benefit is taxable. His original, pre-disability, after-taxes take-home pay was $16,250 per month, or $195,000 ($200,000 + $100,000 minus 35 percent tax). Now his disability after-tax benefit is $10,833 ($16,667 minus 35 percent tax) or $130,000 annually. Bob must now live on 67 percent of his pre-disability take-home pay.

Supplemental insurance

When a bank offers this program, there are some major advantages: the policies can be guaranteed issue with no medical underwriting required and rate discounts can be up to 30 percent. This is available for both bank-paid and voluntary options. Otherwise, if an individual tries to purchase this coverage on their own, it is subject to full medical underwriting and frequently gets a rate surcharge, benefit exclusions or outright declined.

Fortunately, there are supplemental disability insurance products available to solve the problem, and they can either be firm paid or voluntary. This coverage is known in the insurance industry as individual disability insurance (IDI). It is designed to provide comprehensive benefits in the event of partial or total disability with monthly income and own occupation protection to age 65.

Supplemental disability income protection has a strong appeal today, particularly with the unpredictability of the economy that results in employment uncertainty. Employers should review their disability programs to determine how best to solve the problem and they should be educated in the limitations of their current disability programs, as well as the supplemental products and strategies available to fill the gaps in coverage. BNE

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16 BANKING NEW ENGLAND

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BY SCOTT VAN VOORHIS It’s a guilty pleasure that New England banks can no longer afford in today’s hyper-regulated financial world.There was a time when bank boards and executives were not expected to be experts in things like core processing systems and mobile platforms, or at the most, to be knowledgeable enough to be conversant on the technology. That’s what the IT guy down the hall was for – not to mention the multiple vendors running the bank’s sometimes clashing assortment of various technologies and gizmos. o more. Federal regulators have made it very clear that upper management can longer let the techies handle the details while focusing on bigger issues, such as core deposits and interest rates. Yet even as demands mount from regulators and ever more complicated technologies, bank boards and executives need to resist getting pulled down into the swamp of technological minutia and vendor speak, bank technology consultants and experts say. Instead, banks and boards need to pull – and pull hard – in the direction of more simplicity, transparency and systems that work in seamless coordination, as opposed to a rough patchwork of different and potentially unsynchronized parts. “We are presenting ourselves in more board rooms than we have in the past,” said Leo Mallamaci, a top sales executive at Jack Henry Banking, which provides core processing and other technology platforms for financial institutions. “Boards are feeling a little more pressure these days because the regulators want to make sure they are responsibly managing their vendors.”

Business plan comes first

Federal regulators want hard proof of knowledgeable oversight. The Federal Financial Institutions Examination Council last fall issued revised guidelines for the oversight of technology vendors that spells out the role of bank boards and executives. Regulatory agencies even have a separate system for tracking how banks manage their various systems – the Uniform Rating System for Information Technology (URSIT). In a press release announcing the revised guidelines, the council noted, “The TSP Book-

let stresses that a financial institution’s board of directors and management has the ultimate responsibility for ensuring outsourced activities are conducted in a safe and sound manner and in compliance with applicable laws and regulations.” Yet that can all be easier said than done. Sorting through bank technology issues can be a thankless task for bank board members and executives, who already have their hands full running a financial institution in challenging times. There is a bewildering array of competing bank technology vendors out there, each pitching the various merits of their various products or insisting that their new platform is the next big thing.

“BOARDS ARE FEELING A LITTLE MORE PRESSURE THESE DAYS BECAUSE THE REGULATORS WANT TO MAKE SURE THEY ARE RESPONSIBLY MANAGING THEIR VENDORS.” LEO MALLAMACI, JACK HENRY BANKING But falling for the next big thing – and playing to the tune of various vendors – is a trap that banks and their directors need to avoid. One antidote is crafting a strategic plan for upgrading and acquiring new technology, said Robert Bessel, public relations chief for Connecticut-based COCC, a longtime technology provider for community banks. This involves looking beyond the technol-

Continued on next page

BANKING NEW ENGLAND

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ogy needs of the moment to what the institution may need over the next three years, a fairly significant leap given the pace of change. Banks with a firm road map for the future are less likely to be blown off course by snappy sales pitches by technology vendors. But that technology plan should first and foremost be a business plan, laying out where the bank wants to go and acquiring a new technology or platform will help achieve those goals, Bessel said. For example, with mobile banking, it’s not enough to hop on the bandwagon just because technology types are insisting that is where the world is going. Bessel recalls a cover of a respected trade magazine announcing mobile banking had finally arrived in the mainstream – way back in 2006. Of course, it hadn’t; there weren’t enough smartphones back then to make it viable. Adopting mobile banking might make sense, but only if it stems from a business goal, such as increasing the number of customers under 30, he said. And bank board members and executives need to understand not just their own micro needs going forward, but the macro trends that may transform how and everyone else

ROBERT BESSEL, COCC

Vetting the vendors

does business, said Tom McBride, of Fiserv’s Cleartouch, Bank Solutions. More and more banking is being done outside the branch, on mobile devices, on a laptop, and increasingly on tablets as well. Banks board and executives, for example, need to anticipate and plan for rapid changes, with the rise of the tablet just the latest. Moreover, these plans also need to take into account how technology may transform how bank employees spend their time and even the purposed of branches, according to McBride. As more and more transactions become automated or our done online, branch employ-

18 BANKING NEW ENGLAND

ees will become specialists, ready to give advice on various rather than conduct transactions, he said. And the same technology that is freeing bank customers to check account balances, pay bills and transfer money remotely will also free up bank employees to meet potential customers at local coffees, restaurants or at home to fill out account paperwork and sign them up, McBride said. Banks should also include a degree of flexibility in their planning as well essential given the rapid changes in technology, he added. “In the past, we didn’t have the introduction of technology as quickly as we do today,” McBride said. “Because we don’t know when the next tablet-like device is coming out, banks are becoming more nimble and willing to look at things quicker than they had in the past.” But along with carefully evaluating the potential of a new technology, bank boards also have to be careful about ferreting out some of the pitfalls as well, COCC’s Bessel noted. There was euphoria when Check 21 technology came out, allowing tellers to scan checks. It seemed like a big leap forward at the time, he said. But the new technology came with its share of wrinkles, with the scanned checks often hard to read, especially if there were decorated by sailboats, ducks or other fancy and hard to scan images. At first, bank systems for reconciling accounts and internal bookkeeping weren’t able to keep up with the speedier processing. “With very good technology that banks have found to be beneficial, in the early days there are a lot of things that are not really known about it,” Bessel said. Along with sketching out a clear vision for future technology upgrades and acquisitions, bank boards and upper management also need to have a system for vetting potential vendors. One key area for board members to examine is the financial strength and stability of the vendor, Jack Henry’s Mallamaci said. That’s key, given that rolling out a new platform is likely to require ongoing help and support. If your new partner goes under or is struggling to stay afloat, that could make for a rocky implementation of that highly touted new core system or mobile banking platform, no matter what kinds of bells and whistles it comes with, he said. Paula Chesbrough, CIO at Eagle Bank

1000011010101010 0010101001100001 “BANK BOARD MEMBERS AND EXECUTIVES NEED TO UNDERSTAND NOT JUST THEIR 0101110001110000 OWN MICRO NEEDS GOING FORWARD, BUT THE MACRO TRENDS THAT MAY 0111000111000001 TRANSFORM HOW EVERYONE ELSE 0000110101010101 DOES BUSINESS.” 01010100110000 10 0101110001110000 00 10000110101010 0000101010011000 1010101110001110 10000 10000110101 1110000010101001 Expanding your 1010101010111000 bank’s services. 100110000 1000011 By putting 1000111000001010 you first. 0001101010101011 1010100110000 100 1011100011100000 0 100001101010101 0000101010011000 1010101110001110

in Everett, Mass., offers a look at how one local bank successfully changed vendors and upgraded what had become a series of cumbersome and dated systems. The bank extensively quizzed vendors, using a 26-page questionnaire. The questions ranged from how often customer statements would be churned out to the number and range of transactions a teller could expect to do in a typical day. A dozen executives at the bank were part of team that spent months interviewing various vendors pitching core processing systems. However, the clincher was the committee’s visit to another bank, which was a customer of the vendor, in this case Jack Henry. “They could see the software in action in the same setting and environment where we would be using it,” she recalled. Agreed, said COCC’s Bessel, who contends there is no better way of sizing up a vendor than sitting down face-to-face with a customer. And banks should also get vendors to explain how they would handle a worse-case scenario, whether it’s a natural disaster like Hurricane

TOM MCBRIDE, FISERV

Sandy or a manmade mess or glitch. How do they handle customer communications in crises? And do they have the capacity and commitment to see the emergency through and get bank operations back online as soon as possible? “Did you have a disaster, and how did you deal with it?” is a good place to start, Bessel said. BNE

When you’re looking for correspondent banking services, you need a partner that puts you first. Your customers count on you. That’s why you can count on Eastern Bank. We have the financial strength, the correspondent capabilities and the one-on-one attention you deserve. Reasons why, at Eastern Bank, you’re first.

To find out how we put you first, call us at 781-598-7354.

Member FDIC

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TECH FOCUS

Responsibility for Today’s Technologies Starts in the Board Room Four Steps to Mitigating Risks and Generating Returns

BY BARRY LIBERT Barry Libert, CEO of OpenMatters, is a technology investor, corporate director, and strategic advisor to boards and their leaders seeking to make the most of social, mobile, and bigdata technologies.

• SOCIAL: 1.5 billion people are using social media to communicate and collaborate. • MOBILE: 5 billion people use phones and smart devices to transact and interact. • CLOUD: Hundreds of millions of people store personal and financial data there. • BIG DATA: 2.5 quintillion bytes of new data are created every day.

20 BANKING NEW ENGLAND

igital technologies, including social media, smartphones, the cloud and big data, have transformed our personal lives. They have enabled all of us to connect and communicate with our friends and family, manage our savings, invest and share advice no matter where we are and what device we are using. The bottom line: It’s time to turn those technologies into business benefits, particularly when it comes to corporate governance, organizational strategy and capital allocation. And the responsibility for driving that digital adoption starts (and ends) with the board. Let’s start with the facts. Every corporation, including commercial and investment banks, is today a digital corporation. Digital isn’t just about connecting employees and customers to improve collaboration regardless of location or device, nor is it about making investor transactions more efficient and effective. At its core, becoming a digital corporation is about delivering real value to all stakeholders – value that adds up to some $1.3 trillion annually, according to the McKinsey Global Institute. This massive opportunity exists because of four key digital technologies (see sidebar, left). The result: It’s time for board members and leaders of all organizations, and especially those that handle the finance of individuals, business and government, to reconsider and reinvent their business models as digital enterprises. Commercial

boards and leaders that try to avoid a digital transformation risk having their organizations fall prey to the speed and might of companies that make the most of today’s social and mobile networks and the big data they create. The graveyard is growing: Just ask the boards and leaders of Best Buy, Blockbuster, Kodak and the presidents of the countries revolutionized in the Arab Spring. So what are the four rules for becoming a digital corporation in the banking sector (which applies to all businesses)?

Today’s digital power and potential

The facts speak for themselves. Corporations that actively deploy social and mobile technologies produce 9 percent more revenues, 26 percent more profits, and a 12 percent higher market valuation than their peers, according to research by the Massachusetts Institute of Technology and Cap Gemini. Despite these facts, fewer than 30 percent of CEOs use social media, according to CEO.com. In addition, The Conference Board and the Rock Center for Corporate Governance at Stanford University report that only 7 percent of corporate directors use big data from social or mobile interactions in the course of making decisions. Finally, research from both the University of California at Berkeley and MIT reveals that social media is a leading indicator of stock-price movement, as exemplified by the recent ruling by the U.S. Securities and Exchange Commission legitimizing the use of social media for investor

communications and the recent false tweet by The Associated Press, which cost the financial markets $200 billion in less than six seconds. On Jan. 10, 2013, Kenneth I. Chenault, the CEO of American Express, announced that the company would change its travel-service business strategy and investment in technologies, cutting 5,400 people as it reallocated its capital to emphasize online initiatives. Chenault said that the travel industry had been “fundamentally reinvented” by technology. In support of this change, he noted that more than half of its corporate customers were booking flights online or via their mobile phones rather than calling an American Express representative. “Because customers are using tools directly online, we need less customerfacing people, such as travel counselors who take reservations and bookings,” said Kim Goodman, president of AmEx’s global business travel unit. Ask yourself: How aware are you and your board members and leaders of these fast-moving technologies and how are you using them?

What creates value

Boards and leaders have always known that their objective is to create value for their stakeholders, but those sources of value are changing. In the agricultural age, the amount of land owned and tilled was what mattered. In the industrial age, value was based on an organization’s physical assets and manufacturing capabilities.

In the services age, it was based on how many people an organization employed and their billable hours. In the information age, it was quantity and quality of the software code written. In the digital age, value is a function of the size and vitality of an organization’s social and mobile networks and their ability to co-create new products and services. Boards and leaders hold a number of historical and framing biases that make it a challenge for them to see and invest in today’s intangible and often unmeasured sources of value. This is especially critical, given that less than 25 years ago, physical and financial assets constituted some 80 percent of corporate market value. Today, that amount is less than 20 percent, according to research by Ocean Tomo. As such, leaders need to rethink their capital allocation strategies. Recent research from McKinsey shows that most companies invest in the same assets year after year. Question: What is your organization’s strategy to capture the value from its financial, physical, intellectual, customer, human, brand, and network assets? Do you know how much, and what the return is, for each category?

Revise your attitude about the wisdom of crowds

All leaders must fully understand and appreciate that an organization’s next big idea may come from anywhere or anyone – whether insider

or not. To insure that an organization’s attitude about this new way of thinking is aligned with today’s realities, corporate directors need to ask their management teams how they are leveraging the collective wisdom of not just their own employees, but also the organization’s crowds, which include customers, prospects, investors, suppliers, and partners. Programs in place at Starbucks and Dell look beyond their own people for innovative ideas. In addition, Red Hat has shaken up the software industry by partnering “with the world” (and not just its internal R&D department) to create new offerings. It even crowd-sourced its own strategy. Apple is another great example. It inspired 345,000 people to develop apps that deliver billions of dollars of revenues and market value. Question: How do your corporate directors and leaders feel when it comes to openand crowd-sourcing?

Implement digital business best practices

Yesterday, companies focused on internal processes to improve efficiency. That insideout focus worked in a world in which customers had few choices. But today, consumers can buy from anyone and everyone, both online and off, and employees can work for anyone anywhere, storing their knowledge and relationships in the cloud. As such, boards need to ask management how they are shifting their focus from inside-out to outside-in and implementing digital best practices, regardless of where they originated – be it in their

industry or not. Based on the increasing size and power of social networks, Nike reoriented its marketing processes to outsidein to capture the capabilities and insights of its fans and followers. To do this, Nike built Nike Digital Sport to develop products that allow the company to be with and where its customers are 24/7/365. This became the focal point of transforming Nike into a social company that has dramatically increased its revenues, while significantly cutting advertising costs. Fortune magazine reports that the strategy has generated a large increase in earnings before interest, taxes, depreciation, and amortization. Question: Where are you applying digital best practices to ensure that you will reap the benefits enjoyed by companies in other industries? Here are the three places that every corporation seeking to become a digital enterprise needs to adopt: Strategy: Corporate strategy in the banking sector is no longer about products and services. Digital is a strategic imperative for all industries and all job functions. Boards need to play an active role in ensuring that their leadership teams consider these issues and opportunities and present plans about how they are investing in social, mobile, cloud, and big-data technologies. Research from Cap Gemini shows that social enterprises shift market and operating risk to other less-

digitally savvy companies. Leadership: The concept of management as we all know it is quickly losing its power in a world in which everyone has a voice – including customers, employees, partners, and investors. Social technologies allow people to say and publicly share whatever they want about an organization, its leaders, and culture. In the context of increasing demand for accountability, transparency and open approaches involving all stakeholders, corporate directors need to think anew about their board composition and competencies. Although many have done a good job embracing diversity, most still lack members with today’s technology and strategy skills – this according to research by Spencer Stuart. Governance: The future for boards is less about traditional governance and regulatory compliance, and more about network alignment, capital reallocation to new sources of value and technology, and new strategies. Looking in the rear-view mirror of financial reporting will only go so far. Today, boards and CFOs must understand and rely on social intelligence about the future desires and needs of their stakeholders. The bottom line: Boards and leaders of all banks (regardless of size and client base) need to join the ranks of Amazon, American Express, Google, and Nike and become winners in their industry by becoming digital corporations. BNE BANKING NEW ENGLAND

PERSONNEL FILE

Career achievers in banks across New England are constantly on the move, with their professional journeys reflecting a combination of mobility and longstanding service. We acknowledge them, and welcome readers to submit news of their own staff. For submission information, see page 23.

Appointments and Elections Bay State Savings Bank

Featured Banks • Bay State Savings Bank • Bristol County Savings Bank • Camden National Bank • Commerce Bank • Connecticut River Bank • Kennebunk Savings • Mechanic Savings Bank • Merchants Bank • Rockland Trust • Saugusbank

Lynch, general manager, Mount Pleasant Country Club; Christopher D. Metzger, partner, Alexandrov, Metzger & Flannagan; and Thomas J. Oliveri, restaurateur.

Massachusetts-based Bay State Savings Bank corporator Timothy M. Jarry, chief investment officer , College of the Holy Cross, has been named a director of the bank. The following have been named corporators: Desiree Awiszio, consulting engineer; Robert Blute Jr., Sullivan, Garrity & Donnelly Insurance; Audrey Kurlan-Marcy, philanthropist; Timothy Lahey, associate, Colliers International; Brian Lynch, general manager, Mount Pleasant Country Club; Christopher D. Metzger, partner, Alexandrov, Metzger & Flannagan; and Thomas J. Oliveri, restaurateur.

Mechanic Savings Bank The Maine Bankers Association has elected a 35-year veteran of the state’s banking

sector as its new chairman. At the organization’s 120th annual meeting, the member banks elected Richard J. Vail, president and CEO of Auburn-based Mechanics Savings Bank, as its chairman. The chairmanship is a one-year appointment. Vail is a Portland native who received a bachelor’s degree in mathematics from the University of Southern Maine. He began his banking career with Northeast Bank of Westbrook in 1977, and subsequently worked at Peoples Heritage Bank, A.G. Edwards & Sons, and Gorham Savings Bank before being named to his current position in January 2006. Vail is chairman of the board of Central Maine Community College Foundation, vice chair of the University of Southern Maine Foundation, an advisory board member at Lewiston-Auburn College, a board member of the Lewiston Auburn Economic Growth Council, a committee member of the Auburn-Lewiston YMCA Investment Committee and a board member at St. Mary’s Health System.

Merchants Bank Merchants Bank in South Burlington, VT, has named its first chief operating officer. Geoffrey Hesslink, an executive vice president, was promoted to the newly created post for the $1.7 billion-asset company. Hesslink joined the bank in 1995, and has held several roles in commercial banking and credit operations.

New Arrivals Commerce Bank

Robert Barnhard has joined Worcester, Mass.-based Commerce Bank as senior vice president and director of corporate lending. In his new position, Barnhard is responsible for leading Commerce Bank’s commercial Robert Barnhard lending group, including the growth and management of the commercial loan portfolio and related deposits.

22 BANKING NEW ENGLAND

Connecticut River Bank

Raymond Dionne has joined the bank as a regional vice president and commercial lender for the Northern Region based out of Littleton, NH. Dionne brings an extensive banking and commercial lending career that Raymond Dionne spans over 26 years. He began his career as a commercial loan officer trainee and progressed to vice president and market manager before joining Connecticut River Bank.

Kennebunk Savings

James M. Carrigan has joined Maine-based Kennebunk Savings as vice president and banking office manager of the bank’s newest branch in Hampton, NH. Carrigan will work closely with his team to promote the bank as a leader in financial services and a strong community partner. With extensive knowledge of the seacoast New Hampshire market, Carrigan has a comprehensive banking background that includes commercial and mortgage lending. He previously worked as a vice president and branch manager for another New Hampshire bank. Prior to that, he worked as an executive vice president originating commercial loans in seacoast New Hampshire and as a sales manager and loan officer.

Rockland Trust

Christopher Falzone has joined the investment management group of Boston-based Rockland Trust as vice president and relationship manager. Serving the bank’s recently expanded Greater Boston and Metro North footprint, Falzone will be responsible for account administration and financial planning for personal account relationships, trusts, and estates. He brings more than 10 years of trusts and estates experience to Rockland Trust. Falzone earned his JD from Suffolk University School of Law in 2002 and his LLM in taxation from Boston University School of Law in 2008. Previously, he graduated with a bachelor’s degree in business administration from the Whittemore School of Business and Economics at the University of New Hampshire. Falzone, an Attleboro resident, is a member of the Massachusetts Bar, several bar associations, and the Boston Estate Planning Council.

Saugusbank

Richard E. Felteau, vice president of commercial real estate and construction financing, and Joanne Donovan, vice president of residential and consumer lending, have joined Massachusetts-based Saugusbank. With over 30 years of lending experience in the banking industry, Felteau most recently worked for People’s United Bank Richard E. Felteau and Danversbank, where he was a senior vice president of commercial real estate. Specializing in construction and development lending, including condominium, apartment building, retail strip mall as well as single- and multifamily construction projects, Richard has routinely managed commercial real estate portfolios in excess of $80 million. At Saugusbank, Felteau will be responsible Joanne Donovan for building new real estate relationships throughout eastern Massachusetts as well as Southern New Hampshire and Maine. With more than 20 years of experience in mortgage banking, Donovan joins Saugusbank after stints at Salem Five, Cambridge Savings Bank and North Shore Bank. While with these organizations, she assisted with the development of growth strategies, supervised lending teams of varying sizes and successfully managed all areas of the residential lending function. At Saugusbank, Donovan will oversee the bank’s residential and consumer loan department, including the development of new products and processes as well as the ongoing management of the bank’s mortgage portfolio. She will also function as Saugusbank’s Community Reinvestment Act officer.

Promotions Bristol County Savings Bank

Taunton, Mass.-based Bristol County Savings Bank (BCSB) announces that Joan E. Pilling, who possesses more than three decades of local banking experience, has been named to the position of branch manager of the bank’s new East Freetown, Mass., banking office located at 1 Chace Road in Crossroads Commons. As branch manager, Pilling is Joan Pilling responsible for the management of branch operations, customer relations and new business development.

Connecticut River Bank

Brian P. Donovan has been promoted to regional vice president, and will now oversee the staff and business development efforts of Walpole, Langdon and Keene, NH. Susan H. Silver has been promoted to vice president and relationship manager, and will work with small business customers to assist with both their personal and business cash management and lending needs.

SEND US YOUR PERSONNEL NEWS

Commerce Bank

John McKenna

John McKenna, who joined the bank in 2007 as senior vice president and director of commercial lending, has been named senior vice president and director of credit administration and workout, with responsibility for overseeing the bank’s commercial loan policy, regulatory guidelines, and Commercial Credit and Lending Trainee Program.

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

BANKING NEW ENGLAND

COMMUNITYGOOD GOODWORKS WORKS COMMUNITY

Financial institutions large and small have been making a difference in their communities for years. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors. For submission information, see page 28.

Featured Banks • Bridgewater Savings Bank • Bristol County Savings Bank • Commerce Bank • Kennebunk Savings Bank • Lake Sunapee Bank • Merchants Bank • Patriot Community Bank • Rockland Trust • Saco & Biddeford Savings Institution • Watertown Savings Bank

Bridgewater Savings Bank

Peter Dello Russo, Bridgewater Savings chief operating officer; James C. Lively, Bridgewater Savings president and CEO; Teri Bernert, DTF executive director; and Glenn Sherman, Bridgewater Savings assistant vice president and client relationship officer. The charitable foundation of Taunton, Mass.based Bridgewater Savings has made a donation of $2,000 to the Downtown Taunton Foundation. The Downtown Taunton Foundation (DTF) promotes the vitality and growth of Downtown Taunton through arts and cultural programs, community development projects, and sustainable mixed-use real estate projects. The DTF hosts several community cultural events including Taunton Creates; manages the Trescott Street Gallery which hosts several activities including exhibits, educational workshops, and community meetings and functions; and participates in renovating vacant buildings to create affordable housing in the Downtown Taunton area.

Suzanne Blom, Bridgewater Savings executive assistant; Katherine Carroll Day, Horizons for Homeless director of corporate and foundation relations; and Suzanne Catraio, Bridgewater Savings vice president and marketing officer. Raynham, Mass.-based Bridgewater Savings Bank’s charitable foundation has made a donation of $1,000 to Horizons for Homeless Children Playspace Program. Horizons improves the lives of young homeless children in Massachusetts and helps their families succeed by providing quality early education, opportunities for play, and comprehensive support services.

Bristol County Savings Bank

Members of the Bristol County Savings Charitable Foundation board at the grant awarding ceremony at McCoy Stadium in Pawtucket, RI. Taunton, Mass.-based Bristol County Savings Bank (BCSB), through its charitable arm the Bristol County Savings Charitable Foundation (BCSCF) – Pawtucket Advisory Board (PAB), awarded grants totaling $30,550 to eight Pawtucket, RI, nonprofit organizations during a ceremony at McCoy Stadium, home of the Pawtucket Red Sox. The foundation presented checks to the following organizations: Arts Marketplace Pawtucket/Pawtucket Arts Festival ($2,550), Pawtucket Backpackers ($5,000); Camp Ruggles, Inc. ($3,500); Pawtucket Citizens Development Corporation ($10,000); Pawtucket Soup Kitchen ($1,500); Rhode Island Community Food Bank ($1,500); St. Leo’s Conference of the St. Vincent de Paul Society ($1,500); and the Sandra Feinstein-Gamm Theatre ($5,000). “The foundation is very proud to support the respective missions of the local organizations recognized here today,” said Patrick J. Murray Jr., president of the BCSCF and president and CEO of BCSB. “Being a community bank, it is a core principle of ours to support the communities we serve so we look forward to seeing firsthand the positive impact these not-for-profits will continue to make throughout the greater Pawtucket region.”

Commerce Bank

Commerce Bank recently donated $5,000 to Habitat for Humanity–Metrowest/Greater Worcester toward the building of a new home under construction at 133 Plantation St. in Worcester, Mass., which will house two families in need. Continued on page 26

24 BANKING NEW ENGLAND

COMMUNITYGOOD GOODWORKS WORKS COMMUNITY Terhune, Mary M. Caffrey, Jennifer Gilmore, Dina Pitsas, Jessica Fish, Kayla Zsido, Andrew Burd, Danielle Tenney, Bridget M. Sherwin, Tyler Bathalon, Marc Findeisen, Luis Perez and Stevie Goodwin.

Merchants Bank

Commerce Bank Senior Vice President Michael Roy presented a check for $1,500 to Massachusetts Audubon Society Education Director Lisa Carlin to support the 2013 Neighborhood Nature program. Presented by Mass. Audubon’s Broad Meadow Brook Conservation Center and Wildlife Sanctuary, Neighborhood Nature is a free program that allows children and families to learn about the plants and animals that can be found in Worcester.

Kennebunk Savings

Kennebunk Savings President and CEO Bradford C. Paige, recently accepted the 2013 Governor’s Award for Corporate Volunteerism from Maine’s First Lady on behalf of the Maine Commission for Community Service. First Lady Ann LePage presided over the annual presentation of the Governor’s Awards for Service and Volunteerism honoring eight winners and eight honorees that have had an impact in communities across the state. The awards are presented each year during National Volunteer Week, the annual celebration of citizen volunteer action. The awards focus attention on businesses, organizations, and individuals whose service is considered a model for others. Winners are selected based on the impact their efforts and leadership have made on the quality of life for Maine residents. The Corporate Volunteerism Award recognizes Kennebunk Savings for its demonstrated volunteer leadership and for the dedication of its employees whose volunteer service significantly improves the quality of life in the community. The Maine Service Commission specifically cited Kennebunk Savings’ culture of giving and the support that it gives to employees to volunteer, while also providing financial support to nonprofit organizations in the communities it serves.

Lake Sunapee Bank

Each year, Newport, NH-based Lake Sunapee Bank recognizes a graduating student from 16 local high schools in its market area with its $500 Citizenship Award. Each student is chosen by his or her respective high schools for exemplary scholastic and community contributions during his/her tenure at the high school. Lake Sunapee Bank, and its Nashua Bank division, congratulate the following students on their receipt of the 2013 Citizenship Award: Annalise Williams, Morgan Danna, Rebekah Crowley, Conor

Some banks used to give away a toaster to those who opened a new account, but Merchants Bank took the idea a step further by giving away the almost 150-year-old bank. Officials at Merchants Bank announced in February that plans had been made to close branches in Bennington and North Bennington and replace them with a new site in Bennington. But while Merchants rented its space on Main Street in Bennington, it owned the building on Bank Street in North Bennington, leaving residents of the village wondering what would become of it. The question was answered when Michael Tuttle, Merchants’ president and CEO, announced that the bank had agreed to donate the building, which is valued at $350,000, to the Fund for North Bennington and the Preservation Trust of Vermont. Robert Woolmington, the president of the Fund for North Bennington’s board of directors, said that no decision had been made about how the building will be used. “What we hope to do is preserve the historic character of the building, in partnership with the Preservation Trust of Vermont, but also find ways that this building can stay part of the community, the way it’s been for so many years,” he said. Woolmington, who called it an “exceptionally generous gift,” said the building was expected to be used for commercial purposes but said officials at the fund would be “open to new uses.” He also said the building will remain on the tax rolls. Tuttle called it a “bittersweet” moment to deed over the building to the nonprofits. “In the end, we’re a business. We need to make decisions that are indicative of customer preferences and where we think we need to take our business to keep it relevant and to keep it vital over time and that does dictate some changes,” he said.

Patriot Community Bank

Woburn, Mass.-based Patriot Community Bank is now an approved lender of MassHousing’s “Get the Lead Out” lead paint removal loan program. MassHousing, a quasi-public agency, administers the Get the Lead Out program in partnership with the state Department of Public Health and Department of Housing and Community Development. MassHousing recently announced a major change in the “Get the Lead Out” program that now allows all qualified households with children under age six to obtain zero-percent financing to remove lead paint regardless of whether the child is lead poisoned. “We are pleased that Patriot Community Bank will be offering Get the Lead Out loans to its customers,” said MassHousing Executive Director Thomas R. Gleason. “We believe that lenders like Patriot Bank and the recent change in the program will allow for more families to qualify for zero-percent loans to remove lead paint from their homes and prevent young children in Massachusetts from being lead poisoned.” Zero-percent financing for lead paint removal is now available to income-eligible households in one- to four-family, owner-occupied dwellings, with children under age six. Eligible borrowers may not have to repay the loan until they sell or refinance their home. Continued on page 28

26 BANKING NEW ENGLAND

NEFMA membership. A great ROI for your financial institution. And for you.

NEFMA members are a dynamic group of marketing professionals representing banks, credit unions, and businesses who serve the needs of the industry. We hold three conferences a year at top Join today destinations throughout New England. and pay We bring in nationally known speakers no membership to address a wide variety of topics specifically fees until * January 2014. geared to help financial marketing professionals learn more about key issues. One of the best reasons to join is the camaraderie that comes from networking with your peers in an energetic and welcoming environment. Join NEFMA today and pay no membership fees until January, 2014. Register online at www.nefma.org. * Offer available for new financial services members only.

Fall Conference October 24 - 25, 2013 Wequassett Inn, Chatham, MA

www.nefma.org

COMMUNITY GOOD WORKS

Rockland Trust

Watertown Savings Bank

Rockland Trust granted $10,000 to the Plymouth Area Chamber of Commerce to support the chamber’s Business Education Center at 134 Court St., as well as its 2013 Legislative Breakfast. The chamber offers business networking opportunities, educational seminars, and special programs to its 750 members throughout the lower South Shore. “We are dedicated to helping businesses in our communities thrive, and the chamber is an invaluable resource for helping companies succeed,” said Paul Vickery, senior vice president of commercial lending at Rockland Trust. “We are pleased to support the Plymouth Area Chamber of Commerce in its efforts to serve local businesses through the Education Center and Legislative Breakfast.”

Saco & Biddeford Savings Institution

Saco & Biddeford Savings Institution has awarded $8,000 in scholarships to 11 Maine high school students. The 2013’s Community Commitment Award recipients are: Mae Toohey, Renee Lessard, Benedict Farino, Ryan Pelletier, Caitlin Waldron, Andrew Correa, Gabrielle Lodge, Jaymie Lappin, Elyse Oliver, Katherine Plante and Desiree Bastarache. “Saco & Biddeford Savings believes in the importance of showing support for graduating seniors choosing to go on to higher education,” said Kevin Savage, president of Saco & Biddeford Savings. “It’s a big step, both academically and financially.”

From left to right: Winners Paulina Romero, Vanessa Leroy, Molly Munger, Lili Zigo, Francesca Belli, Morgan Waite, Justine Silverman, Matt Lee, Jazi Charbit, Marvin Aramthip, and Molly Greeley. Not pictured: Ned Regan. Watertown, Mass.-based Watertown Savings Bank received 115 entries from local high school students for the bank’s 2014 calendar, and had quite a task narrowing it down to 12. The photos received nearly 5,000 “likes” on the bank’s Facebook page. Of those, the 25 with the most likes were chosen, and further winnowed to 12. The winning photos may be found on WSB’s Facebook page. BNE

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

28 BANKING NEW ENGLAND

In Search of Trust Continued from page 6

comb LinkedIn or Facebook to find many of the details they need to construct a spearphishing attack. After all – employer name, year of service, position held, recent triumphs – it’s all there to develop into a convincing ruse to breach a company’s security perimeter. More damaging than

features so annoying, they disable or disregard them. One of the best protections – system warnings that a website, or the author of an application, can’t be verified – gets bypassed every day. User education has become a critical component in protecting ourselves from cyber crime. How else can

action to protect themselves. For that to happen, the threat of cybercrime will have to rise to the consumers’ boiling

point. As we can see from the continuing stream of cyber attacks, it hasn’t happened yet. BNE

One of the best protections – system warnings that a website, or the author of an application, can’t be verified – gets bypassed every day.

any of this is the public’s willingness to answer suspicious emails. Far too many of us have unintentionally opened links or attachments contained in email with such subject lines as: • “Your account has been limited until we hear from you” • “LogMeIn Notification – Software update required” • “Online Alert: 2 suspicious login attempts!” With the click of a mouse, we can tear a hole into our carefully designed security perimeter and allow a computer virus to be installed. Even so, it’s possible to prevent the computer virus from doing maximum damage. There are many ways to protect computers – from web filters to automated software patching. Unfortunately, many computer users find these

we keep users aware of the threats, protections available, and best practices? One of the greatest mistakes we make in the security field is to assume that someone else will protect us from cybercrime. Instead, we need to see ourselves as integral nodes in a security network dedicated to promote and maintain security. When one node fails, the network fails. Organizations like FSISAC (Financial Services Information Sharing and Analysis Center) are promoting this concept by providing a forum for security professionals to share alerts, updates and countermeasures. This forum needs to be expanded to a much larger universe of computer users – the non-professionals who fall victim to these attacks. But more importantly, the non-professionals need to take their own security seriously enough to take BANKING NEW ENGLAND