Banking New England March/April 2014 by The Warren Group

MARCH/APRIL 2014

INSIDE: CUTTING THROUGH THE NOISE

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

Community Banks Banks Community

Strength find find

Numbers in

TODAY’S M&A LANDSCAPE IS A MORE LEVEL FIELD

SPECIAL FOCUS: THE FUTURE OF BANK BRANCHES

A PUBL I C ATI O N O F TH E WAR R E N G R O U P

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LETTER FROM THE EDITOR

Combining Forces in the New Banking Age Christina P. O’Neill Editor, Banking New England

his issue’s cover story outlines the new reality of bank mergers. The landscape has changed from the big-bank territorial conquests of the early 1990s, to the tactical, smaller combinations of today. Interestingly, while big banks wanted to achieve economies of scale by combining territories that often overlapped, today’s merger partners are looking for acquisitions that increase the footprint of the combined entity. Increased regulatory costs and the age of existing management are markers driving mergers. Today’s bank mergers can involve specialty skills that are valued, rather than being abandoned in the flurry of a big buyout. For more discussion of change, see our special section on the future of retail banking. Brent Biernat calls for the role of the branch office to expand to a teaching opportunity,

to help tech-wary customers become more comfortable with new technologies. Mary Buffett also calls for branches to embrace a teaching opportunity, but on a more holistic level for customers. That’s something from which many bank management teams have historically shied away (with the exception of wealth management teams, of course), but Buffett warns that they continue to do so at their peril. Both of these subjects herald the new age of banking in terms of what customers expect from their financial institutions. Convenience without compromising security. Technology without sacrificing connectedness. Stability, but not at the expense of innovation. Customers may have changed over the last century, but innately, they still want what they always did. BNE

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

CONTENTS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

SPECIAL FOCUS

COVER FEATURE

The Branch is Dead; Long Live the Branch

BRANCH BANKING

FULLY WIRED BRANCH

New Technologies Enhance the Banking Experience

BANK OF THE FUTURE

Retail Banking Down, but Not Yet Out

STAFFING THE BRANCH

The BayCoast Bank Story

WELCOME TO THE BANKING CAFÉ

TODAY’S MERGER LANDSCAPE: NOT YOUR FATHER’S OLDSMOBILE

Community Banks Banks Community

Strength find find

Numbers in

TODAY’S M&A LANDSCAPE IS A MORE LEVEL FIELD

South Shore Bank’s Hingham Branch a Test Lab for Efficiency

LEADING IN CRISIS

When a Crisis Hits, Will You Be Ready?

DATA DUMP

Cutting Through ‘Noisy’ Credit Data – and Helping Banks in the Process

COMMUNITY GOOD WORKS

TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins EDITORIAL EDITORIAL OPERATIONS MANAGER Cassidy Norton Murphy CUSTOM PUBLICATIONS EDITOR Christina P. O’Neill

www.thewarrengroup.com ©2014 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,

BANK PROFILE

Passumpsic Savings Bank – a Community Rock

PERSONNEL FILE

IN CASE YOU MISSED IT

electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210

Interested in receiving additional copies of Banking New England? Call 617-396-5322 or email custompubs@thewarrengroup.com

SALES DIRECTOR OF MEDIA SOLUTIONS George Chateauneuf PUBLISHING GROUP SALES MANAGER Rich Ofsthun ADVERTISING ACCOUNT MANAGERS Claire Merritt, Bob Holzhacker and Mike Lydon CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini MARKETING COMMUNICATIONS MANAGER Nicole Patti DESIGN PRODUCTION MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Tom Agostino and Tyler Grazio

BANKING NEW ENGLAND

BRANCH BANKING

The Branch is Dead; Long Live the Branch BY ROBERT BESSEL Robert Bessel is public relations director for COCC Inc.

ould it be? Your institution’s greatest producer of revenue might just be the physical branch? I’m not kidding. The muchmaligned, written-off, and buried physical branch could be the channel that restores banking to its rightful position as a pillar of our modern local economies. Sure, I’ve read hundreds of articles calling branches obsolete. I’ve heard pundit after pundit predict the apocalypse of mobile banking and the second coming of Internet banking. So far, none of these miracles has replaced the physical branch.

In fact, JP Morgan Chase added 91 physical branches last year, and several others (Citibank and Wells Fargo) are holding steady. Only Bank of America dropped their count significantly. What’s going on? Bank customers are learning that Siri doesn’t know nearly enough about mortgages, checking accounts and retirement plans. Mary Buffet wrote in her May 2013 article, “What’s the Future of Retail Banking,” that “complex personal and financial relationships still need a banker to guide them through the minefields of life.”

Bank customers are learning that Siri doesn’t know nearly enough about mortgages, checking accounts and retirement plans. The following articles provide fresh perspectives on branches – the first from Brent Biernat, first vice president of network services, the second from Buffet. BNE

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FULLY WIRED BRANCH

New Technologies Enhance the Banking Experience Long-Range Planning Has its Rewards

BY BRENT BIERNAT Brent Biernat is first vice president of network services at COCC Inc.

BANKING NEW ENGLAND

hysical branches certainly don’t serve the same level of traffic they once did, but we find that the branch is far from dead. Why? Older accountholders have yet to embrace the new banking channels and have doubts about their safety. Our younger accountholders are finding that mobile and Internet banking can’t entirely replace the in-person experience. To put it bluntly, Siri doesn’t know which account best meets your customers’ needs. There’s a common thread to both young and old accountholders – neither group seems to know the full range of services offered by banks and credit unions. What a terrific opportunity to train them! The bottom line? Your physical branches are still part of your service mix. Many institutions are adapting their branches to the reduced volume of check-based services (cashing checks, depositing checks, etc.) and the increased need to consult with accountholders and to train them in new services and technologies. New branches tend to be smaller, use fewer staff members and focus on cross-selling. Appropriate technologies can help deliver greater value to your accountholders while freshening your brand and strengthening your bottom line. Here are a few technologies to consider: Tablets: These all-in-one devices can help you project a clean, modern image, similar to the Apple Store. Tablets can replace workstations, pamphlets, even signature pads. If your institution provides video conferencing to experts at the main office, the tablet can serve as a video conferencing terminal. One note – there are lots of tablet options beyond the iPad – some for as little as $250. So don’t let the price of tablets derail your branch of the future strategies. Large touch-screens and kiosks: Size matters, especially when you are trying to

attract attention to your branch and brand. Large screens are also helpful for customers or members who prefer to serve themselves with a banking expert close by. Some institutions use large screens through their store front windows to show prospective accountholders that this institution is relevant and connected. They’re great training tools, too! Personal teller or video ATMs: These sophisticated ATMs are almost like having a human teller, because they are really a remote device for human tellers. This extends the reach of your physical branch, offering ID verification, digital signature capture and video conferencing to greatly enhance the interaction and capabilities for the customer or member. Integration options are still developing, so work closely with your vendor. Cash recyclers: If anything characterizes a branch of the future, it’s cash recyclers. These machines remove the barriers between the customer and the teller. They can be deployed in the open and are rarely more than waist high. Staff can use them to process standard banking transactions without worrying about security.

What’s coming

Equipment manufacturers have a full pipeline of devices designed to improve the banking experience. Google Glass will enable staff to keep their eyes on the person while calling up account details. Natural voice and facial recognition systems will enable the branch itself to respond to an accountholder’s profile without a card swipe or a teller transaction. Imagine the “next best product” appearing on the large screen beside the customer/member within seconds of entering the branch! Key your ATM transaction into your cell phone, then receive a QR code to activate that transaction on the ATM.

The average ‘free’ checking account costs you $200. TABLETS What they can do: Replace paper brochures Open access to new media – like video! E-signatures Video conference Capture photo documentation Requires: Wireless connectivity Full security A private space for consultation LARGE TOUCH-SCREENS & KIOSKS What they can do: Raise awareness of your services Host training sessions Increase your self-service options Replace paper brochures Video conference Change your message quickly

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Requires: State-of-the-art ATM equipment Enhanced connectivity CASH RECYCLERS What they can do: Tear down barriers between staff and customers Promotes an open floor plan Introduces customers to the branch of the future Requires: Connectivity Full security ON THE HORIZON Google Glass Natural voice recognition Facial recognition Virtual humans Transactions activated by QR codes

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BANKING NEW ENGLAND

BANK OF THE FUTURE

Retail Banking Down, but Not Yet Out BY MARY BUFFETT Mary Buffett is an author, international speaker, entrepreneur, political and environmental activist. Her web site is marybuffett.com.

MARY BUFFETT

10 BANKING NEW ENGLAND

recently found myself sitting with a number of bank executives over lunch and I asked them about future trends within retail banking, particularly what goes on inside a branch, because it’s the public face of so many financial institutions. These days, retail banking is going through an uncertain period. Some banks, like Citigroup, are talking layoffs and branch closures, while other banks are doubling down and building new locations. The layouts for new Bank of America branches look more like a Starbucks, while floor plans for other institutions look like the main bridge of the starship Enterprise. The comment that Academy Award-winning screenwriter William Goldman hung on Hollywood rings true for banking; “Nobody knows anything.” When you look beyond the bland quotes coming from senior management, you realize there is a lot of spaghetti being thrown against the wall, hoping that something will stick. But the real question is this: With the rise in technology and the changing nature of how people shop for financial products, has your local bank branch become irrelevant? That certainly got the conversation started. When my parents were starting out in Chicago, they had an account relationship with LaSalle Bank. Back then, people walked their paycheck into the bank, wrote a check at the teller window if they wanted to withdraw money, and all of the tellers seemed to take a certain pleasure stamping the passbooks whenever a deposit was made. Bank branches were more than mere buildings; they anchored

the brand within communities. When Bank of America was only a California institution, strategic planners placed branches three to five miles apart in densely populated areas to ensure that there was always a branch located nearby. What made founder A.P. Giannini unique was he believed everybody – not just the wealthy – should have a banking relationship. He made a fortune. When Californians moved to the suburbs, a whole new generation of Bank of America locations were built to reflect the relaxed nature of life amongst the cul-de-sacs. To put it another way, walking into a Bank of America or LaSalle Bank branch was like walking into the Grand Central Station of financial products. Wise bankers acted as ambassadors, guiding customers through a maze of products, including checking, savings, CDs, debit cards, retirement accounts and safe deposit boxes. They also referred customers to branded lines not normally found in retail banking, including investments, business services, home mortgages and other lines that fell outside the teller’s role. And everything always took place during business hours.

Sudden changes

Then technology changed everything. The first ATMs emerged in the late 1960s and became commonplace by the early 1980s. Within a decade, debit and electronic funds transfer at point of sale (EFTPOS) networks wired the globe, and cards once used to withdraw cash could now purchase a pair of shoes in Rome. The first computer banking programs began to emerge in the late 1980s (as people began

buying PCs) but online banking did not explode until the advent of broadband. Within a short period of time, banks introduced smarter versions of online billpay, which allowed customers to pay their bills through their laptops. However, smartphone apps was the great game changer; it allowed customers to make their deposits online by taking a digital image while sitting in their backyard, lounging among their plants, or even in the middle of Thailand. Today, people can pay their bills, move money around, get a real time update of balances, receive email alerts, or connect with their e-wallet through their iPhone 24-7, and I have no real reason to walk into a branch anymore. Or do I? What terrifies bank executives is that their core customer is doing more and more of their business outside the bank. As a result, it’s getting much harder to cross-sell them new products to build a lifetime relationship. That means customer loyalty is increasingly up for grabs. How do you retain a profitable customer who you may never have met? How do you build new relationships when customers may open an account online and handle their finances at home on their iPads? Technology has allowed banks to cut costs while giving customers 24-7 access and control over the banking relationship. Banks have trained customers to handle their simple transactions outside of the branch, via online chat, live conversation, or by managing it themselves through online banking. When it comes to customer acquisition, major banks have

made the mistake of confusing marketing with sales. I receive mail from Chase offering me $250 if I open up a checking account. These mailers address nothing of value – their pitch runs to the dollar amount. If I’d leave my current bank for $250, I could just as easily leave Chase for half that amount.

Portals of knowledge

Capturing operational accounts of small to mediumsized businesses still remains the Holy Grail of retail banking. Bankers can expand that business relationship with new products. They can also reach out to the employees of those businesses and sell other banking products to those employees. Banks walk a fine line – the current economics of retail banking make it challenging to sustain retail branches and ATM networks for the long term. However, bank executives believe that they need a branch presence to create new relationships or else they’re doomed. Here are my two cents on the issue.

I believe that major financial institutions could gradually reduce their branch network by 40 percent over a five- to seven-year period with minimal customer interruptions if executed correctly. However, like any decision, it’s making sure that you reduce the right 40 percent. Merely taking an ax to your branch network is the shortsighted approach. Customers with complex personal and financial relationships still need a banker to guide them through the minefields of life. If you run a small or medium-sized business, you’ll need the help of a financial professional. If you have language challenges, having bilingual assistance at the teller line is critical. However, most large banks still have huge outlays in square footage, with staff levels that could either be reduced or repositioned to better serve customers. There are some who believe that once you plant a flag by opening a branch, it should never be closed. That strikes me as leadership which is both insecure and blind to the changing nature

of banking; it should also raise a red flag at the board level. So what should be the role of retail branches in the 21st century? Attract new clients by consistently educating and informing them. In today’s world, people looking for banking services are not fools. There is little difference between the mega brands. Banks are not going to attract lifelong customers on a mailer that promises $250 only after customers jump through a series of hoops. Branches should be positioned as portals of knowledge. Tomorrow’s banks will be all about building financial literacy. They should be about teaching their customers how to filter out the noise and focus on building plans that will carry them from their first checking account until their funeral. Each location should be its own learning annex, and should have weekly lunchtime or evening classes addressing building a financial nest egg, opening a business, preparing for a longoff college tuition, or simply living within one’s own means. Then banks should leverage the

technology in which they’ve invested billions of dollars to push that information outward – not unlike what Khan Academy does for academic courses. Assume you live in a mediumsized city of 150,000, and it has four to five Bank of America locations. If to the footprint is reduced to two Bank of America money centers, branches that primarily cater to the needs of business clients, complex personal transactions, and serve to anchor your community for other personal needs, Bank of America will have maximized their branch outreach with more focused resources. It is the missing consultative piece that contributes in a significant fashion to the bank’s value proposition. That is also how you can build relationships as opposed to merely signing up checking accounts. A bank’s retail branch should focus should be squarely on teaching their customers how to fish, because that’s how you build lifelong relationships in the 21st century. This article previously appeared on the Huffington Post. This is an edited version. BNE

Get Introduced To Your Best Prospects. And start building stronger business relationships today. Banking New England magazine covers all the news, information and analysis vital to bankers across New England. Bankers, industry experts, legislators, government agencies, and service providers contribute to each issue to ensure that executives and managers across the region have what they need to serve their customers, run their institutions and grow in a challenging economy. Banking New England offers advertising and spwonsorship opportunities in three targeted marketing programs – digital, print and live events – reaching readers on multiple platforms.

NEW ENGLAND

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BANKING NEW ENGLAND

STAFFING THE BRANCH

The BayCoast Bank Story BY NICHOLAS M. CHRIST Nicholas M. Christ is president and CEO of BayCoast Bank, with offices in Massachusetts and Rhode Island.

t BayCoast Bank, the rise of e-banking has not fundamentally changed the branch’s role in generating growth and profitability. Our highest value customer interactions continue to occur in our branches. In our experience, brick and mortar branches are the right places to discuss lending options, business services and non-core banking products, such as insurance and investment services. Branches are where we deliver the consultative experiences that build profitable long-term relationships. Our strategy is to open storefronts, while actively managing our staffing, so that we grow our business and control our greatest expense at the same time. To help us, we partnered with

It’s very clear that we don’t want to create an understaffed situation for the sake of efficiency. Instead, we want to improve our overall effectiveness as a banking institution.

two companies – COCC for the most advanced core platform and The Long Group for their product StaffingLab. Their recommendations are estimated to result in a 1,600 percent return on our investment in StaffingLab. COCC and The Long Group helped us collect the detail we needed to make fact-based decisions about branch staffing. All of our branch personnel participated in the process by completing an operational duties task sheet. The Long Group incorporated our staff ’s responses with COCC’s daily transaction reports and security tape data to discover how long it actually takes to perform the various processes in our branches. 12 BANKING NEW ENGLAND

This information has given us deeper insights into the nuances of our business. We now have a holistic view of our retail franchise – not just the platform and teller staff, but our retail management, too. We can see how our customers interact with our bank and which sales opportunities we missed. This level of detail gives us a factual basis to talk about staffing targets. Our goal is to reach 85 percent productivity at each branch; that has left sufficient capacity for other duties, such as building relationships. It is our desire to improve sales activity by as much as 60 percent in identified branch markets. Our model allows us to staff the branch to accommodate this increase in sales volume. It’s very clear that we don’t want to create an understaffed situation for the sake of efficiency. Instead, we want to improve our overall effectiveness as a banking institution. An important part of branch staffing plans involves redeploying staff to our new branch locations. There’s no substitute for putting experienced staff into our new branches. We have a culture of people who know our bank and its procedures. Through cross-training and smart placement, we are building the flexibility to execute our sales and service model. Going forward, we also have the benchmarks and ongoing feedback from COCC to drive our staffing model. We now schedule teller and platform personnel by day, and parts of day, at each branch, because we have the insight to anticipate and meet peak customer service demand. Like most banks, we continually wrestle with capital investment. We watch how the mix of ecommerce and brick and mortar activity is changing, and we develop plans to adapt accordingly. Today, tablets, smartphones, the Internet and debit cards have yet to replace the branch as a high-value banking channel. Tomorrow might be different. Our continued attention to branch staffing and the market at large is guiding us through the many changes we face in the banking industry. As branchbased transaction volumes continue to decline industry-wide, while salary and benefit expenses escalate, I can’t imagine why any bank wouldn’t want to deploy an advanced, knowledge-based solution to the challenge of branch staffing. BNE

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WELCOME TO THE BANKING CAFÉ

South Shore Bank’s Hingham Branch a Test Lab for Efficiency BY CHRISTINA P. O’NEILL

14 BANKING NEW ENGLAND

ohn Boucher says the thought behind South Shore Bank’s newly opened Financial Center in Hingham was that if the bank didn’t get out ahead of the curve, it would be following everyone else. South Shore Bank’s 14th branch opened in Hingham, Mass., just before Christmas 2013. Designed to be a test lab, it will be evaluated and then rolled out into the bank’s branch platform. The interior space seems huge, but Boucher, president and CEO of the $1 billion bank, says that the space footprint for this branch is actually 1,200 square feet, far smaller than the bank’s 13 other branches, which average 13,000 square feet of space, much of that needed for teller lines. Where did the teller lines go? First of all, into the teller “pods,” in which specially trained staff help guide customers in the use of new technology such as personal teller machines. Staff match the technology the customer has to the bank’s system and instructs customers in how to access the technology online. The personal teller machine provides live teller service via video screen from 7 a.m. to 7 p.m. Customers may cash checks – up to 40 at a time – while a live teller is on duty. The branch also has computer-supported teller transaction capability, providing interaction with bank personnel already known to the customers, who have the customer’s information at hand. That’s complemented by a 24-hour ATM. In addition, the Hingham offices of South Shore Bank’s lending subsidiary, Cambridge Mortgage Group, is moving to the new Financial Center. The essence of the new branch, Boucher says, is to have less people serving more people, during expanded hours. The branch is set up to support educational classes and events; instructors can be wired with headsets to be heard throughout the building. High-top tables provide a café-like setting, complete with gourmet coffee bar, in which staff can engage customers in a general conversation about their banking needs. “It’s homey and friendly,” Boucher says. “We’ve had people say, ‘This doesn’t even feel like a bank.’” For financial discussions that require more privacy, there are several individual offices where staff can confidentially advise customers. “If it’s done right and people are trained right, when people leave, they’re saying, ‘Wow, that is not your typical bank.’” Boucher says. “We’ve had branch mangers saying, ‘Can you do my branch next?’” BNE

COVER STORY

Strength

Numbers in

TODAY’S MERGER LANDSCAPE: NOT YOUR FATHER’S OLDSMOBILE

Merger mania is sweeping New England’s vibrant community banking sector, with an uptick of acquisitions as local bankers seek safety in (larger) numbers. The trend has reduced the number of community banks to a quarter of what it was 25 years ago.

By Scott Van Voorhis The stereotypes from the wave of bank mergers in the 1990s, in which branches were shuttered and costs slashed to make big-bank shareholders happy, aren’t the norm today. The M&A scene today is more moderate and nuanced. Today, big banks aren’t the main players in the merger picture – it’s the smaller and midsized banks that are getting together. Eastern Bank moved beyond its Massachusetts base into New Hampshire with its $134 million deal, announced in early March, to acquire Centrix Bank & Trust, while North Shore Bank and Saugusbank recently announced their engagement. In Western Massachusetts, West Springfield-based United Financial Bancorp is forging ahead with a “merger of equals” with Connecticut-based Rockville Financial that will create a $4.8 billion bank.

Survival and the March of Father Time

As the federal regulatory burden grows and profit margins shrink, acquiring or combining with another institution can be a matter of basic survival, local banking leaders say. Then there’s the likelihood that a bank’s decision to sell may be tied to the rising age of its CEO and senior management. “I think for the last few years, we have been saying, ‘This is the year that merger and acquisition activity really takes off,’” said Damon DelMonte, senior vice president of equity research at Keefe, Bruyette & Woods, who follows a number of smaller New England banks. “I think we are starting to see more consistency in the pace of M&A.” The trend towards consolidation is a longstanding trend for banks in New England, with the total dropping to across Massachusetts dropping to 175, down from 338 in 1990, said Rich Holbrook, CEO of Eastern Bank, one of the merger players cited above. The decline has been even more dramatic across New England, with just 275 banks left today compared to 713 a quarter century ago. “It has been a steady consolidation within the industry,” said Holbrook. “We have done a merger or acquisition every two years or so for the last 20 years.”

Combining Institutional Strengths

Acquiring or combining with another institution helps local banks can spread their government paperwork costs over a wider asset base. “There has been an increase in the regulatory burden, which has translated into increased costs,” said Stephen Theroux, president and chief executive of Milford, N.H.-based Lake Sunapee Bank. “We needed to get bigger to produce the kind of income needed to run the bank.” Moreover, combining two banks can open the door to new opportunities, whether it’s a new region or a new line of business. While the economic downturn stanched loan activity, bankers see hope on the horizon. Some local markets are seeing increased construction activity and new demand by small and medium businesses for commercial financing as well, executives said. But some banks are also finding they can leverage their resources and more effectively compete for new business customers by teaming up, said Kevin Tierney, chief executive and president of Saugusbank, which recently agreed to merge with North Shore Bank. Local bankers often serve on boards together and share notes about lending activity and conditions in their hometown markets, he said. “Often when you are having those conversations it becomes apparent you can do more together than individually,” Tierney said.

Bulking up

In fact, Lake Sunapee has been one of the more active New England acquirers over the past few years. It has snapped up four local banks, including two in central Vermont and one in Nashua, N.H., on the Massachusetts border, said Stephen Theroux, the bank’s president and CEO. It also expanded the range of its business portfolio by acquiring a local insurance agency and Charter Trust Co., a wealth advisory firm with $1.5 billion under management. By buying smaller banks in Vermont and New Hampshire, Lake Sunapee expanded its geographic range into Vermont and the affluent and more densely-populated Southern New Hampshire. The bank’s total assets have grown to $1.5 billion over the past seven years, up from $800 million in 2007. Total number of offices and branches is now 45, compared to 27 seven years ago. “It was a very key, important move for us,” Theroux said. “We are now seeing pretty good loan demand in Southern New Hampshire, especially commercial lending.” The acquisitions of the insurance agency and the wealth management division help make Lake Sunapee less reliant on interest-based income in today’s rock-bottom rates. “We are literally rebranding ourselves and becoming truly a life cycle financial services organization,” Theroux said.

Recovery Via New Business Lines

Webster, Mass.-based Hometown Bank has also found a way to thrive during challenging times by hitting the acquisition trail. Hometown acquired Athol-Clinton Cooperative Bank in 2011, providing the bank an entry into North Central Massachusetts market, said Michael Hewitt, Hometown’s CEO. The deal came with its challenges; Athol-Clinton had been stuck under a pile of mortgages gone bad from the real estate market downturn. When Hometown took over, Athol-Clinton had 20 problem mortgages; that number is now down to two. “I had a rolling inventory of REO properties – it was two-in, two-out for a time,” Hewitt said. Hometown has used the Athol-Clinton acquisition to establish a base from which to chase commercial lending opportunities in the north central part of the state. New lines of business include lending to investors buying and rehabbing residential properties, among other commercial lending deals. The bank’s total assets now stand at $365 million, compared to $220 million before the deal. And through offerings like free checking, Hometown has grown deposits by nearly 11 percent, compared to just 6 percent at banks of a similar size. Hometown prides itself on taking extra effort to work with local businesses to make loan deals work in a way the big banks never would, Hewitt said. “If it makes common sense to do it and it looks viable, we will find a way to get it done,” he said. Three major community banking institutions, two north of Boston and the other on the South Shore, have also bought up smaller banks in a bid to expand their market range.

The Benefits of Specialization

RICH HOLBROOK

Boston-based Eastern Bank, which has a strong North Shore presence, unveiled a $134-million, all-cash deal to acquire Bedford, N.H.-based Centrix Bank & Trust in early March. While Eastern currently does indirect auto lending in the Granite State, the deal will give it

Continued on next page

BANKING NEW ENGLAND

COVER STORY

Strength in Numbers Continued from page 17

seven branches in Southern New Hampshire and a strong commercial lending portfolio to build from. In addition, Centrix’ specialty niche is financing the purchase of corporate jets and other aircraft, a specialized business Eastern would have had difficulty cracking on its own. But the real meat and potatoes is Centrix’s thriving business lending to small and mid-sized businesses. “We have competed against them, so it will be great to have them on our side,” Holbrook said. North Shore Bank announced a deal that will reinforce and expand its position in the market north of Boston – its acquisition of SaugusBank. Both banks are mutually owned. North Shore stood at nearly $470 million in assets at yearend 2013, while SaugusBank stood at about $200 million. Their combination will create a nearly $700 million institution with 11 branches. But the merger, despite the size differential, has little of the feel of a traditional takeover, with the operations of the two banks mostly complementing each other rather than overlapping. All Saugusbank employees and executives will be retained, according to a press statement put out by the two banks. David LaFlamme, North Shore’s president and chief executive, will serve as the CEO of North Shore Bank and its parent company, North Shore Bancorp. Kevin Tierney, SaugusBank’s president and chief executive, will be the president and COO of the bank and bancorp. “It is certainly a merger of two community institutions that share similar cultures and similar DAVID J. LAFLAMME visions,” LaFlamme said. “We don’t look at it as North Shore taking over SaugusBank by any means.” Tierney offered a similar assessment. “We sit on a couple of boards together and we see each other often,” he said. “Often when you are having those conversations it becomes apparent you can do more together than individually.” “Even with the difference in size, we share the same basic strategic goals and objectives to grow the banks in similar marketplaces,” Tierney said.

Dreams of Retirement

Lake Sunapee’s chief executive, Theroux, 64, acknowledge that age can trigger succession questions. For some chief executives, “they have just run out of steam,” he said. “Banking has changed. It has become a much tougher industry.” But in a likely disappointment to potential suitors, that’s not the situation Sunapee now faces, with a succession plan in place for when he retires, Theroux said. Hometown’s Hewitt, now 63, just took over the helm of the bank he worked decades at a year ago. He also says he has no plans to step down anytime soon. “I am loving this – it’s a dream come true,” he said. Still, age can be a great predictor, with small-town bank chiefs increasingly considering transition plans as they approach their mid-60s, said DelMonte, the Keefe, Bruyette & Woods bank analyst. Younger bank chiefs should take note. If they want to acquire smaller banks and expand, they would do well to get to know their older counterparts, DelMonte said. “If I was a young bank executive in New England, I would be having lunch with every CEO who is approaching his 60s,” he said. “As they say, banks are sold, not bought.” BNE 18 BANKING NEW ENGLAND

James Conlon (left), president and CEO, with his successor-elect, Robert Montgomery-Rice.

The Long Runway Every bank needs a good succession plan. For a roadmap, check out Bangor Savings Bank’s recent announcement of the “pending retirement” of its long-time chief executive. Bangor Savings announced Feb. 26 that James Conlon, its president and chief executive, would be retiring, with Robert Montgomery-Rice stepping up as his “successor-elect” – effective June 1, 2015. The bank has managed to both take care of succession and provide a long runway for the new bank’s chief executive-in-waiting. Conlon noted in a press statement that he and his successor have a strong working relationship with similar respect for the stewardship responsibility of the role. Conlon’s decision to retire was not made hastily. He alerted the bank’s board of his plans 18 months ago, according to Robert Strong, Bangor Savings’ chairman. By the time Conlon steps officially steps down, the bank will have had three years to plan for the big transition at the top. Conlon has been a major force driving the bank forward, overseeing a major expansion that has made Bangor the state’s largest homegrown bank. His career with Bangor Savings began back in 1996, when he came on board as senior lender. This coming June will mark his 10th anniversary as chief executive, with Conlon having taken the reins in June 2005. During his tenure, Bangor Savings nearly doubled its assets to more than $3 billion, and its branch network expanded by more than 30 percent, boosting the number of locations to 57, growth that included a successful move into the Southern Maine market. Conlon, who will turn 60 when he officially retires in June 2015, plans to remain on the bank’s board. His successor, Montgomery-Rice, joined Bangor Savings in 2004 after stints in senior management at Cambridgeport Bank, Fidelity Investments and the former BankBoston. Montgomery-Rice is steeped in the Maine bank’s day to day operations, overseeing several bank departments, including IT, consumer banking and real estate.

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LEADING IN CRISIS

When a Crisis Hits, Will You Be Ready? Avoiding the Four Traps of Decision-Making BY LUCIEN CANTON Lucien G. Canton, CEM, is a consultant specializing in preparing managers to lead better in crisis by understanding the human factors often overlooked in crisis planning. For more information, email info@ luciencanton.com.

uring the second day’s fighting at Gettysburg on July 2, 1863, Col. Strong Vincent, a brigade commander in the Army of the Potomac, learned that the Union left flank was undefended and that the Confederates were advancing on Little Round Top. Seizing this position would allow the Confederates to fire on the entire Union line and force the retreat of Union forces, opening the road to Washington. Recognizing the tactical significance of the position, Vincent, without waiting for orders, moved his brigade into a blocking position. What followed was one of the most dramatic and pivotal engagements of the war, one that decided the battle of Gettysburg and most probably the war itself. Though Vincent fell in the battle, his ability to recognize the crisis, to make critical decisions under pressure, and to deploy his resources inspired his brigade to hold the vital position on the Little Round Top. Leadership in crisis is ultimately about decision-making. Other critical steps, such as recognizing and isolating the crisis, prepare you to make decisions, while the deployment of resources are based on the decisions made by the leader. The pivotal point in any crisis is the making of the decision about how one will deal with the crisis. Unfortunately, without recognizing the four traps of decision-making, it is too easy to make the wrong decision. One of the major problems in leading in a crisis is the psychological tendency to do nothing. There is a tendency to normalize events – to see what we expect to see. It is easy to miss cues or indicators. If there are no consequences for doing, there is no n=eed to make a decision. Unfortunately, this is the default mode for many decision makers. Assuming that there are consequences for inaction, the next consideration is whether there is a risk in taking action. If there is no perceived risk in taking a specific action, there is really no need to make a decision or to consider alternative courses of action.

Giving up

When available courses of action all carry risks, the tendency is to search for a better solution. The trap here is that it if there is a perception that no low risk solutions are available, the decision maker may become fatalistic or apathetic, exhibit behaviors such as ignoring or selective interpreting information, or attempt to pass the responsibility for decisionmaking to someone else. 20 BANKING NEW ENGLAND

Running out the clock

Hesitation is not uncommon among decision-makers in a crisis. Information is incomplete or contradictory and there is usually little time to wait for better solutions. This is the fourth trap of decision-making: continuing to seek solutions rather than deciding on the best available alternative, even if it carries considerable risk. Under heavy time constraints, this can even led to panic and bad decisionmaking. So how does one avoid the four traps of decision-making in a crisis? The first step is recognizing that these four traps exist and understanding that they are heavily influenced by time and the availability of good information. Failing to see the risks of inaction or accepting low-risk actions are both linked to a failure to recognize that a crisis is occurring and to put it into the context of the potential impact on your organization. This, in turn, is usually the result of failing to take the time to gather and assess information related to the crisis. Consider, for example, the classic case study on supply chain management involving Nokia and Ericsson in 2000. The crisis was precipitated by a fire in the clean room of the manufacturer of the chips used in each company’s phones. Nokia recognized and reacted to the potential crisis; Ericsson did not. The resulting losses cost Ericsson millions in lost revenue and market share and put the company into a financial crisis that lasted almost five years. Understanding the nature of the crisis can also help avoid the bad decisions caused when considering high-risk alternatives. Knowing how much time you have to make a decision and the potential availability of alternative actions are precious commodities in a crisis. Time allows you to weigh risks versus alternatives or consult with advisors and subject matter experts. Knowing you have limited time can help you to focus on what you know and bring clarity of thought. It is easy to avoid decisions in a crisis. The four traps are always there, and they all lead to the same place: failure due to non-existent or poor decision-making. The hardest part of managing in crisis is having the willingness to accept responsibility for decisions made with limited information in too short a time and the courage to follow through on those decisions without second-guessing yourself. It’s what makes a leader truly effective in a crisis. BNE

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DATA COVERDUMP STORY

Cutting Through ‘Noisy’ Credit Data, and Helping Banks in the Process MIT Professor is Laser-Focused on Improving Data BY CHRISTINA P. O’NEILL Christina P. O’Neill is editor of Banking New England. She may be reached at coneill@ thewarrengroup.com.

ROGER M. STEIN

ccurate forecasts about loan performance are becoming a top priority, especially when banks merge or acquire and when they must combine their loan performance data sets. But “noisy” data corruption, particularly that of missing or mislabeled records, presents a challenge to develop default models with any hope of accuracy. MIT professor Roger M. Stein, a senior lecturer in finance, has developed an analytical model to adjust for the corruption of test data. His paper, titled “Validating Default Models when the Validation Data are Corrupted: Analytic Results and

Bias Corrections,” was recently published by the MIT Laboratory for Financial Engineering. If there’s an idea of how noisy the data is, the statistical result can be adjusted to filter the corrupted data, almost as if it weren’t corrupted – or, at least, be able to estimate how far off the data results might be. In the draft of the paper, he includes a very down-to-earth quote from Yogi Berra: “In theory, theory and practice are the same. In practice they are different.” Stein’s paper draws from research in the fields of engineering and medicine. “In the early days of radar detection

people tried to determine whether what they saw on the screen was real or just noise,” Stein said. “The radar would blip, and they would question whether it was really a plane.” Radar-detection researchers developed techniques to compare different radar operators’ performance and to optimize for the numbers of false positives relative to false negatives. The same science applies to diseasescreening diagnostics, in which a generally reliable test may sometimes produce both false positives and false negatives. By plotting the percentage of each kind of error on a graph, researchers can determine the

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most effective way to interpret test results. Over the past 15 years, these same techniques have been applied to evaluating the performance of the credit default models that banks use, according to Stein. The challenge: how to balance false positives and false negatives and to evaluate the performance of a credit model when the data are known to be corrupted. “For a bank that is in the business of lending, there’s clearly a cost to making a loan to someone who then defaults,” Stein said. “But there’s also a cost to not lending money to someone who doesn’t default. The goal is to figure out how you can make such tradeoffs efficiently.” Stein’s paper addresses two types of data corruption: those arising from missing records and those arising from mislabeled records. Missing data can involve cases where non-performing loans have been moved off the

balance sheet because they’ve been referred to a specialized division that deals only with problem loans, and which focuses on asset recovery. Mislabeled default records occur when there’s a mismatch between a borrower’s financial statements and its loan delinquency status. It’s typical to join financial statements in one database to performance in another database, but because it’s difficult to merge such databases, un-matches and mismatches can occur, particularly in a merger/ acquisition scenario. That’s when default records can go missing – typically called the ‘hidden default’ in banking, Stein notes. Then, there are instances of discrepancies between indicators when banks merge. A nondefaulting firm’s records may contain an indicator that in a database from Merging Bank A is tagged as a default, but in Merging Bank B’s database, is not. For example, Bank A’s

definition equates a single missed payment as a default, whereas Bank B’s definition may flag payments no less than 120 to 180 days past due. Stein notes that if the mechanism causing the mislabeling is known with a high specificity level (record by record), then the disparity between probability and actual is likely trivial. But if the labeling mechanism is sensitive but less specific, noting that 1 in 105 records in database are mislabeled but that it’s not certain which ones, it’s no longer trivial. Stein’s paper focuses on the latter. His research revealed that different models perform very differently when given corrupted data. Better models are affected more severely by flawed data, he found. “For many years the common wisdom among some analysts was that corrupted or missing data ‘cancelled out’ across different models since they were all at the same disadvantage,”

Stein said. “But this research shows that this is not true. … as data get noisier, it becomes harder to tell the difference between a nearly random model and a good one that is being compared using noisy benchmarks.” One of the beneficial results of the analysis is that most of the corrections can be implemented as slight adjustments to the output of the current generation statistical software in use by most institutions, Stein says. This can be done with a few (e.g., two or three) lines of scripting in the current software, or in an Excel spreadsheet. Although the derivations are more involved, the final results are typically (single) simple equations. For example, one of the main equation results can be implemented in a few cells of a spreadsheet. The white paper can be accessed at: www.rogermstein. com/wp-content/uploads/steindatanoise1307131.pdf. BNE

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.

Featured Banks • Bay State Savings Bank • Bridgewater Savings Bank • Bristol County Savings Bank • Eastern Bank • Meredith Village Savings Bank • Merrimack County Savings Bank • Rollstone Bank & Trust • Skowhegan Savings Bank

Bay State Savings Bank

Bridgewater Savings Bank

Diane Giampa, senior vice president of human resources and marketing, (left), and Peter Alden, president and CEO, Bay State Savings Bank (right), present Dr. Alan Picarillo, NICU Department of Pediatrics/UMassMemorial Healthcare (center), with a check for $1,200 to purchase a camera for the UMass Memorial Neonatal Intensive Care Unit.

From left: Bruce Fuller, president, East Bridgewater Music Parents Association; Jenn Connelly, East Bridgewater Music Parents Association member; Bonnie McArthur, East Bridgewater Music Parents Association member; Trish Fuller, vice president, East Bridgewater Music Parents Association; Suzanne Catraio, Bridgewater Savings marketing officer; and Kathleen Pitts, Bridgewater Savings assistant branch manager.

Worcester, Mass.-based Bay State Savings Bank raised $1,200 to fund a web camera for the Neonatal Intensive Care Unit (NICU) at UMass Memorial Campus, a 49-bed unit which provides care for medically fragile newborns who are not ready to go home after birth. The goal of the NICView Project is to have video cameras present at each bed in the unit to allow for families to view their infants when they cannot be physically available at the bedside. Prior to the onset of this project, the NICU shared six cameras that moved on IV poles from bed to bed for periodic viewing by families.

Mass.-based Bridgewater Savings Bank, through the Bridgewater Savings Charitable Foundation, donated $5,000 to the East Bridgewater Music Parents Association. The association conducts several fundraisers to help raise money for the East Bridgewater School District Music Program. The funds raised help purchase much needed instruments and help various bands and groups participate in festivals and parades.

Bristol County Savings Bank

Rhode Island-based Bristol County Savings Bank (BCSB), through its charitable foundation, presented five grants totaling $28,000 to Pawtucket-area nonprofits. From left: Susanna Beckwith, executive director, Reach Out & Read RI; David Caprio, president, Children’s Friend; Matthew Davis, finance and administration manager, Old Slater Mill Association; Ken Riley, Bristol County Savings Charitable Foundation Pawtucket Advisory Board (BCSCF-PAB) member, and assistant vice president, BCSB; Keith Fayan, interim executive director, Old Slater Mill Association; Daniel Sullivan, president, Collette Vacations, BCSCF-PAB member, and corporator, BCSB; Patrick Murray, president, BCSCF, and president and CEO, BCSB; Dennis Kelly, chairman, BCSCF; Jack Partridge, senior counsel, Partridge, Snow & Hahn, BCSCF-PAB member, and corporator, BCSB; Merry Caswell, administrative director, First Star URI Academy; Jeannie Castillo, afterschool program director, The Learning Community Charter School; Julie Silva, Americorp VISTA, First Star URI Academy; Jerauld Adams, president, Old Slater Mill Association; and Derek Collamati, director of development, The Learning Community Charter School. 24 BANKING NEW ENGLAND

Eastern Bank

Merrimack County Savings Bank

From left: Eastern Bank Chairman and CEO Richard E. Holbrook, Beverly Morgan-Welch, Diane Patrick, Gov. Deval Patrick, and Boston Mayor Martin J. Walsh. Boston-based Eastern Bank honored Massachusetts Gov. Deval Patrick and First Lady Diane Patrick each with the 2014 Community Advocacy Award, which annually recognizes the region’s best community leaders

and their contributions to improve the quality of life in eastern Massachusetts communities. The ceremony was held in February in honor of Black History Month at the Museum of African American History in Boston.

Meredith Village Savings Bank

WOW Trail Board Members and event Co-Chairs Trish Laurent (left) and Darcy Peary (center) accept a $5,000 presenting sponsorship from Becky Reposa, Gilford branch manager, Meredith Village Savings Bank. Meredith Village Savings Bank (MVSB) will be the presenting Sponsor for the 2014 WOW Sweepstakes Ball. This will be MVSB’s fifth consecutive year as presenting sponsor for this event. The WOW Sweepstakes Ball is one of two key annual fundraisers for the WOW Trail and has helped raise more than $300,000 for construction and maintenance of the WOW Trail since it began in 2004. The WOW Trail is a multi-use recreational rail trail built alongside the active railroad line through the City of Laconia.

New Hampshire-based Merrimack County Savings Bank recently donated $50,000 to the New Hampshire Historical Society, which is currently expanding its mission delivery to include public Internet access to its collections and programs. Merrimack County Savings Bank’s support will be used to develop a new overview exhibition of the state’s history. This exhibition will be a central element in the society’s public offerings, visited annually by thousands of students throughout the state on their field trips to Concord, and will offer an interesting museum experience to adult audiences as well.

Rollstone Bank & Trust

Martin F. Connors Jr., president and CEO, RBT (left), and Phil Grzewinski, president, UWNCM. Mass.-based Rollstone Bank & Trust pledged $25,000 to the United Way of North Central MA, to be paid over five years. The funds are being used for the purchase and renovation of the organization’s new location on John Fitch Highway in Fitchburg, Mass. The United Way of North Central MA serves 23 communities and focuses on education, income and health.

Skowhegan Savings Bank

Michael Gallagher, board chair, SVH; John Witherspoon, president and CEO, Skowhegan Savings; Mac Cianchette, campaign chair, SVH; Terri Vieira, president and CEO, SVH; Renee Hawthorne, Pittsfield and Fairfield branch manager, Skowhegan Savings; Rick Whalen, vice president, market manager, Skowhegan Savings; and Jon Christensen, executive committee member, SVH. Maine-based Skowhegan Savings Charitable Foundation announced it has donated $5,000 to Sebasticook Valley Health’s capital campaign. The funds will be used to help finance facility expansions to provide better inpatient care to the community. The inpatient wing was part of The Campaign to Modernize SVH, which began in 2012. The expansion touched various areas throughout the hospital, from upgrading the hospital parking and walking areas, to much-needed upgrades to the hospital’s heating and cooling systems and various patient areas throughout the hospital. BANKING NEW ENGLAND

BANK PROFILE

Passumpsic Savings Bank – a Community Rock BY LINDA GOODSPEED

Peter Crosby, president and CEO, Passumpsic Savings Bank

26 BANKING NEW ENGLAND

estled in the heart of one of New England’s most idyllic – and remote – retreats is one of the region’s oldest financial institutions. Passumpsic Savings Bank, a mutual bank serving northern Vermont and New Hampshire, first opened its doors in 1853. But don’t be fooled by the bank’s age or remoteness – the 161-year-old bank, headquartered in St. Johnsbury, Vermont, has total assets of $575 million, 10 branches across two states, and a wealth management office. The three most northern and eastern counties in Vermont, known as the “Northeast Kingdom,” comprise almost one-fifth of the state’s land mass, yet less than one-tenth of its population (about 55,000). Despite its remoteness and rural character, the Northeast Kingdom has good highway access and a surprisingly diverse economy. St. Johnsbury, the largest town in the Kingdom (population: 7,500) is the birthplace of the platform scale. The region continues to host a strong manufacturing base, emerging biotech industry, medical/ educational institutions, logging, farming and tourism. Nearby Jay Peak and Burke Mountain ski resorts are in the midst of a multiyear $500 million expansion plan. “I think the rest of the state has an impression that we are somewhat antiquated up here,” said Darcie McCann, executive director of the Northeast Kingdom Chamber of Commerce. “But we have a very vibrant manufacturing base, a very strong creative artisan base, incredible educational institutions, and a backdrop that is unparalleled.”

Finding ways to say

Yes

PAS S U MP S IC

B A N C O R P, I N C.

Passumpsic Savings Bank Annual Report 2012 A N N U A L R E PO R T 2 012

Peter Crosby, president and CEO of Passumpsic, obviously agrees. A native of “St. J,” as it is called, Crosby started at Passumpsic as a management trainee on the teller line in 1973. At the time, the bank had $35 million in assets and two branches. Crosby, who has held virtually every job at the bank, has been president/CEO since 1999. His tenure has been marked by rapid changes within the industry and slow, steady growth at Passumpsic. In 1995, the bank formed Passumpsic Bancorp, a mutual holding company, and

opened a branch in Littleton, New Hampshire. The bank subsequently acquired two other small banks in the Granite State and now has four offices in northern New Hampshire to go along with six in Vermont. “Northern New Hampshire and northeastern Vermont are pretty similar markets – rural, slow growth,” Crosby said. “Northern New Hampshire is a little more dependent on tourism. Our Vermont markets are a little heavier on manufacturing.” He said both markets were hit hard by the recession, which was slow to arrive, and even slower to leave.

Passumpsic’s total loan portfolio is about $450 million, about 40 percent residential mortgages and home equity loans. In 2000, the bank started a mortgage banking company called Northeast Home Loans, which acquires mortgage loans, and repackages and sells or keeps them. Crosby noted that Passumpsic has always written mortgages to secondary mortgage market standards, and “even if we had written some of those exotic loans, people up here wouldn’t want them,” he said. As a result, Passumpsic emerged from the mortgage meltdown stronger than some. “We did not see a problem,” Crosby said. “They were all high-

quality loans. The foreclosures we’ve seen have been for traditional reasons – people lost their jobs, went through a divorce or something else that caused a financial problem – not people walking away because their home was underwater.” He said nonperforming loans make up less than 2 percent of the bank’s total loan portfolio. Passumpsic also does considerable indirect lending, mostly auto loans, and other consumer and commercial lending. Overall, Crosby said loan demand has been weak, although he expects that to pick up. One area of growth has been the bank’s wealth management services.

“We are quite diversified for a rural area,” Crosby said. Continuing to grow and diversify is Passumpsic’s biggest challenge, he said: “We’re small, but you’ve got to grow, leverage your balance sheet. The regulatory environment is costing us money. You’ve got to deal with it and move on. But it’s a challenge.” The local banking environment is also challenging with many players, all touting service. Crosby said Passumpsic differentiates itself through its people. Although the bank was the first in Vermont to use image checking statements, and has a strong Internet banking and social media presence, Crosby

said, “We’ve never been on the leading edge of technology. “We embrace and use it to meet our customers’ needs,” he adds. “Our strength is our [staff ]. We spend a lot of time and investment in people, and making sure we have people to replace the baby boomers when they go away.” Crosby is part of that boomer generation, but says he has no plans to go away himself anytime soon. He noted that Passumpsic has participated in acquisitions in the past, and may do so again. The bank is also looking to expand its lending footprint. “They’ve been a real rock of this community for a very long time,” McCann said. BNE

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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.

Featured Banks • BankNewport • Berkshire Bank

Appointments and Elections Berkshire Bank Pittsfield, Mass.-based Berkshire Hills Bancorp Inc. has appointed Josephine Iannelli executive vice president and CFO. Iannelli has served as Berkshire’s senior vice president and principal accounting officer Josephine Iannelli and has participated in financial oversight since July 2013. She has 20 years of financial and banking experience beginning with KPMG Peat Marwick, LLP and then KeyCorp.

• Claremont Savings Bank

Northeast Bancorp

• Commerce Bank

Maine-based Northeast Bancorp has appointed Jeanne A. Hulit, formerly acting administrator of the Small Business Administration (SBA), president of its northeast community banking division. Hulit joins the

• Katahdin Trust Company • Kennebunk Savings Bank • Mansfield Bank • Marlborough Savings Bank • Northeast Bancorp • Reading Co-Operative Bank • Savers Bank • South Shore Bank • StonehamBank

Promotions BankNewport

BankNewport has promoted two senior members of its lending team. Executive Vice President Leland R. Merrill Jr. has been named chief lending officer. Merrill began his career with BankNewport in 2004 and has held various Leland R. Merrill Jr. positions, most recently serving as executive vice president, commercial lending. Senior Vice President Kenneth R. Burnett has been promoted to manager of commercial lending. Burnett joined BankNewport in 2012. He is responsible for directing all Kenneth R. Burnett aspects of commercial lending, along with the expansion of the bank’s commercial lending portfolio throughout Rhode Island and southeastern Massachusetts.

Berkshire Bank

Pittsfield, Mass.-based Berkshire Bank has promoted Lori Gazzillo to vice president and director of the Berkshire Bank Foundation. She 28 BANKING NEW ENGLAND

bank directly from the Obama administration, where she served as SBA acting administrator for five months. Previously, Hulit was the associate administrator of the SBA’s Office of Capital Access, Jeanne A. Hulit where she presided over record years in small business lending and worked to streamline and simplify the SBA’s loan programs and expand access to its lending programs. Prior to her Washington assignment, Hulit was appointed to serve as the SBA’s New England regional administrator in 2009. She spent 18 years in banking, and previously served as deputy director of the International Division at the Maine Department of Economic and Community Development. Hulit has also held a number of civic and economic leadership roles, including her tenure as a founder and chair of the Maine International Trade Center, and her service as chair for the University of Southern Maine Board of Visitors.

has served for the past year as the foundation’s assistant director. She will oversee the bank’s two foundations, which provide grants to nonprofit organizations in the communities the bank serves. Gazzillo joined Berkshire Bank in July 2011 from Legacy Bank, after the merger of Legacy Bank with Berkshire Bank, where she had served as vice president, community relations.

Katahdin Trust Company

Leslie M. Gardner has been promoted to vice president of retail lending at Leslie M. Gardner Kate Goodwin Katahdin Trust Company. Kate Goodwin has been promoted to Bank Secrecy Act (BSA) officer.

Mansfield Bank

Massachusetts-based Mansfield Bank has promoted four managers to the position of vice president. Jovan Cintron has been promoted to vice president of information

Kennebunk Savings

Jovan Cintron

John W. Wright

Mary L. Johnson

technology. John W. Wright and Mary L. Johnson have been promoted to vice presidents and commercial portfolio managers. Paula M. Fahlman has been promoted to vice president of business and municipal services.

Reading Co-Operative Bank

Reading Co-operative Bank recently promoted Jean Kirby to assistant vice president and residential lending officer. Prior to joining RCB in 2003, Kirby worked in a local law office for 18 years. Jean Kirby

Savers Bank

Elaine Stone

Savers Bank has promoted Elaine Stone to the position of human resources manager. She has been with the bank for seven years. Her responsibilities include employee relations, compensation and benefits administration, development and implementation of policies, and recruitment.

Rich Goodenough

Rich Goodenough has joined the bank as vice president, middle market lending, and will work out of its York office. He will be responsible for growing the bank’s commercial lending portfolio in southern York County and seacoast New Hampshire. During his 25-year career, he has worked in a variety of bank management roles for various Maine and New Hampshire banks and credit unions.

Marlborough Savings Bank

David McCabe and David Nicholson joined MSB’s commercial development and business lending teams at the end of 2013. McCabe has held various positions at RBS Citizens Bank over the last 13 years, from Business Banking, David McCabe David Nicholson to Commercial Real Estate, to RBS WorldPay, and Treasury Solutions. David Nicholson brings over 16 years of banking experience with him, starting at Fleet Bank in 1997. He has held business banking, middle market, and large corporate positions with Fleet Bank, Citizens Bank, TD Bank, and Santander Bank.

South Shore Bank

New Arrivals Claremont Savings Bank

A. Wayne Jones

New Hampshire-based Claremont Savings Bank has named A. Wayne Jones as the new vice president of commercial lending, working from its main office. He has 35 years of banking and 20 years of commercial lending experience with community banks. During his career in Georgia, he has been an active member of the Oconee County Civitan Club, the Brunswick Rotary Club and the Brunswick-Golden Isles Chamber of Commerce.

Gail Conley

Sullivan Financial Services in Norwell. James M. Dunphy has joined the bank as an executive vice president. He oversees commercial lending, credit and small business lending operations. A CPA and Certified Management Accountant, Dunphy began his career in 1987 as a tax preparer at Kennedy and Lehan CPAs in Quincy. From 2006 to 2012, he served as president and CEO of Hampshire First Bank.

StonehamBank

Commerce Bank

Nathan E. Pusey

Boston-based Commerce Bank has named Nathan E. Pusey as managing director, Boston corporate banking, in the Commerce Bank Fenway office. He is responsible for leading and growing Commerce Bank’s commercial and industrial and taxi medallion lending in the Greater Boston market. Pusey has more than 25 years of commercial banking experience, most recently with Citibank in Boston.

James M. Dunphy

Gail Conley has joined Mass.-based South Shore Bank as financial services manager for its new financial center in Hingham. She has more than 20 years of business sales development experience, most recently as assistant to the president at

Christopher Macomber has joined the staff of StonehamBank as vice president for business development. His career experience includes roles in business banking at Citibank and most recently vice president and small business banker at Bank of America. BNE

Christopher Macomber

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