Banking New England SEPT/OCT 2014 by The Warren Group

SEPT/OCT 2014

INSIDE: FLORENCE SAVINGS BANK REBRANDS WITH ASSISTANCE FROM LIFE-LONG CUSTOMERS

NEW ENGLAND

THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS

Climate Change: The Great Equalizer AS THE REGION’S WEATHER PATTERNS CHANGE, NIMBLE BANKS ARE QUICK TO ADAPT

PLUS: CROWDFUNDING THREATENS THE FUTURE OF SMALL BUSINESS LOANS SUBURBAN POVERTY DAMAGES LIVES, LIVELIHOODS FDIC AND CFPB DEVELOP SPANISH-LANGUAGE TOOL FOR OLDER ADULTS

A P UBLICATI O N O F TH E WAR R E N G R O U P

LETTER FROM THE EDITOR

When Finance and Science Intersect Christina P. O’Neill Editor, Banking New England

Thomas J. O’Connor, CPA Vice President & Director of Financial Institution Services

ot too many years ago, an article on banks and climate change would have had New England readers thinking we’d lost our minds. But banks in regions hardest hit by bad weather know firsthand the vital role they can play in the communities they serve. Our cover story details how banks in Vermont helped their customers recover from disaster, while banks in Massachusetts are preparing for the next big one. For at least a century, property-damaging storms and tornadoes were mostly something that happened hundreds of miles south or west of New England. Exceptions were few and far between – the unnamed hurricane that ripped through Massachusetts in 1938 and Hurricane Carla, which battered the Massachusetts coast in 1955. But in the last three years New England has seen a tropical storm – in landlocked Vermont, no less – a coastal storm surge that hit high-density populated areas, and tornados. As evidence of climate change mounts, and storms come so frequently that there’s hardly time to recover

David J. Keyo Jr., CPA

Vice President & Director, Financial Institution Advisory & Assurance Services

between them, banks are doing what they can to help consumers and businesses rebuild, and to foster preparedness for future disruptions. Banks’ learning curve on working with the Federal Emergency Management Agency and with commercial insurers was pretty steep in Vermont. Bankers in Massachusetts felt they got a reprieve from Hurricane Sandy. As news comes in recent weeks of FEMA seeking repayment of money that had been disbursed either in error or to individuals who should not have applied for Sandy relief funds, we got a chance to see the critical importance of doing it right the first time when the pressure is on to find shelter and continuity for hundreds, if not thousands, of displaced people and disrupted businesses. Regardless of one’s thoughts on the origin of climate change, the effects of severe weather are incontrovertible. New England banks know the true cost of business interruption and loss of shelter, and they’re trying to mitigate its effects both in retrospect and in the future. BNE

Giuseppe “Joe” Femia, CPA Director, Financial Institution Advisory & Assurance Services

Jayme F. Moore, CPA Accounting & Auditing Manager

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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

Crowdfunding and the Banks

ECONOMIC OUTLOOK

KICKSTARTER MOVEMENT

COVER STORY

Study: Suburban Poverty Is Hidden but Real

BANK PROFILE

Florence Savings Bank Rebrands, Builds on Strength

INDUSTRY NEWS

CLIMATE CHANGE HITS HOME

Global Economic Issues, Local Business Disruption

PERSONNEL FILE

COMMUNITY GOOD WORKS

IN CASE YOU MISSED IT TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins

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

Interested in receiving additional copies of Banking New England? Call 617-896-5307 or email custompubs@thewarrengroup.com

EDITORIAL EDITORIAL DIRECTOR Cassidy Murphy CUSTOM PUBLICATIONS EDITOR Christina P. O’Neill ASSOCIATE EDITOR Anna Sims SALES DIRECTOR OF BUSINESS MEDIA George Chateauneuf PUBLISHING GROUP SALES MANAGER Rich Ofsthun ADVERTISING ACCOUNT MANAGERS Claire Merritt, Bob Holzhacker and Michael 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

KICKSTARTER MOVEMENT

Crowdfunding and the Banks Is Internet-Age Fundraising a Threat or an Opportunity?

BY LAURA ALIX Laura Alix is a staff writer for The Warren Group, publisher of Banking New England. She may be reached at lalix@thewarrengroup.com.

Joe Lyons (left) and Joe Prew, co-founders of the Kickstarter-funded Boston Boot Co.

hen Joe Lyons and Joe Prew decided they wanted to go into business together on a venture they called Boston Boot Co., they knew they would need capital. Rather than apply for a traditional bank loan or make their pitch to a venture capitalist or angel investor, they turned to the crowd, specifically Kickstarter. They walked away with $250,000 – 10 times what they asked for. Their tale, along with questions and concerns about crowdfunding, dominated a breakout discussion at a recent Small Business Administration event in Cambridge, Mass., hosted in honor of National Small Business Week. While options like angels and venture capital were also part of the discussion about finding capital for a business, the audience was most captivated by the Boston Boot’s story of raising $250,000 from prospective customers. 6

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Contributed photo

Kickstarter is an online service where an artist or entrepreneur makes a video pitch to potential backers and promises rewards for various degrees of donation. A $50 donation to back a craft brewery, for instance, might net you a free T-shirt and your name on the wall. That might sound like small potatoes, but the service has grown quickly, funneling millions of dollars to video game headsets, comic books, footwear and independent films. Earlier this year, Kickstarter boasted that it surpassed $1 billion in pledges from more than 5 million donors. Rewards- and charity-based services like Kickstarter are the most common among all types of crowdfunding, but it’s worth also mentioning lending-based and equity-based crowdfunding, which individuals or small businesses can use to borrow loans or raise capital, respectively. Presently, lending- and equity-based

crowdfunding are regulated, the latter being restricted to accredited investors. Equity-based crowdfunding has been slower to grow than its cousins, but recent federal legislation aimed at easing online fundraising for small businesses is expected to accelerate that line of business. Opinions are mixed as to whether crowdfunding could crowd out traditional bank lending, or ultimately complement it by giving more small businesses a chance to launch in the first place.

Potential for Partnerships

A report released in the second quarter of last year by global firm BBVA Research argued that “lending and equity-based crowdfunding are disruptive technologies for the banking industry with the potential to displace banks as the primary source of funding for personal and small business loans.” The report cited data from the consulting firm Massolution showing that $2.7 billion was raised worldwide in 2012, with just over half of that money coming from donation- or rewards-based sites, and 59 percent of those funds raised in North America. Banks should take heed of crowdfunding because it could pose a real threat to their core business, the report’s authors say, adding that banks should invest resources in these disruptive models so they can better understand the needs of markets they haven’t been able to serve.

Chris Gaginis, director of congressional relations for the Consumer Bankers Association, suggested something CHRIS GAGINIS similar. He gave the example of a small business that needs some short-term liquidity faster than the bank can provide. That customer can turn to a crowdfunding site to close the gap faster and meet payroll. It’s not dissimilar to the partnership between BBVA Compass, a $65 billion commercial bank headquartered in

Alabama, and On Deck, an online lending platform that uses a proprietary data analysis system to judge credit worthiness and make small business loans with investor dollars, Gaginis said. “If you’re a bank and you can partner up with somebody like that, you have a faster deployment of capital and you can meet the needs of your small business customer in a new way that’s innovative and a little more efficient,” he said. “I think you’ll see more of these [partnerships] pop up as banks look for more efficient ways of deploying capital to those small business customers.” Others think crowdfunding platforms may complement traditional bank lending in a less direct way, in effect launching a business into bankability. “They should certainly be paying

attention to it, but I don’t see it as being an either-or scenario,” said Scott Goodwin, a member of Wolf & Co. and leader of the firm’s technology practice. “Banking earlystage tech companies has never been the sweet spot for small business lenders.” Boston Boot’s Lyons likened his Kickstarter campaign to a pre-qualification of sorts. A successful crowdfunding campaign can demonstrate demand for a particular product or service, as well as that company’s ability to build a following. “I think they’re more compatible than they are competitive,” Goodwin said. “I think Kickstarter can get a company to a place where they might be more traditionally bankable when they’ve got a product, a revenue stream and customer relationships.” BNE

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ECONOMIC OUTLOOK

Study: Suburban Poverty Is Hidden but Real It Can’t Happen Here? It Already Has

BY CHRISTINA P. O’NEILL Christina P. O’Neill is editor of Banking New England, and may be reached at coneill@thewarrengroup.com.

recently-issued study by the Federal Reserve Bank of Boston shows that poverty in the suburbs is far more pervasive in higher-income census tracts than previously thought. The Fed’s most recent Community Outlook Survey spanned the six New England states, but the report’s authors chose to focus on two Connecticut tracts, New Haven and Hartford; results could be extrapolated across New England. The lack of public transportation in the suburbs requires car ownership for each jobholder. The study’s authors pegged the cost of operation for one car at about $3,500 a year, or up to 56 cents a mile, representing 9 percent of the median moderate family income, which in Connecticut is $40,000 to $50,000. Multiply that $3,500 figure by the number of jobholders in a household and transportation represents a significant cost drag, taking resources away from other longterm goals such as emergency, college and retirement savings, and building home equity. Lack of affordable housing and the high cost of child care, pitted against the lack of highpaying jobs in the suburbs within economical commuting distance, is the study’s takeaway lesson. An example: 68 percent of Hartford’s workforce commutes from outlying towns, and despite the existence of an extensive, economical bus network in Greater Hartford, most commuters must drive daily to their jobs.

Survey Said

In April of this year, a total of 175 service providers from the economic development, affordable housing, community action, human services and workforce development sectors in the six New England states responded to 24 multiple-choice and fill-in questions. The Fed asked respondents to comment on the changes in conditions over the previous six months of the polling period and to project changes over the next six months. The Fed cautioned that data collected represent the opinions of service providers who completed the survey. In April, survey participants were asked three new questions: What proportion of 8

BANKING NEW ENGLAND

their service communities are suburban; what are the top challenges facing lower-income suburban communities; and an open-ended question solicited input about other challenges these communities face. The responses serve as the primary sources of information for the report, the Fed said. Kaili Mauricio, senior policy analyst for the Federal Reserve Bank of Boston, one of the report’s authors, says that challenges faced by lower income people in rich suburbs included lack of access to services, lack of political representation and perceptions of racism. The concern over lack of political representation came as a surprise; 57 percent of respondents ranked this concern as at least slightly important.

A Greater Urban Reach

Urban services, by contrast, are less expensive because they can serve a larger constituency within a smaller geographic area. “You don’t even realize those [urban] discounts exist,” Mauricio said. Urban commuters are nine times more likely to take public transportation than suburban jobholders. “Their income doesn’t change if they move, and a cost goes up,” he said. “They have to make some sort of sacrifice [to compensate].” Study authors didn’t use the federal poverty level unless no other measures were available. “The federal poverty level is so low, it doesn’t reflect everyone that’s struggling,” Mauricio said. Instead, they used moderate family income, which in Connecticut is $40,000 to $50,000. A total of 181,000 Connecticut families are lower income, with 100,000 living in officially designated lower to moderate income (LMI) tracts; 81,000 families live outside LMI tracts on less than $40,000 a year – this, in a state where 35 percent of census tracts have median family incomes exceeding $100,000, according to the report. On the flip side, many tracts have more than 10 percent of families with incomes under the moderate family income figure of $40,000. This creates a sort of vestpocket poverty, which may escape the purview of service providers which could provide some financial relief. An example: in Greater New Haven, about 23,600 families with children earn too much

to qualify for government assistance, but too little to afford quality childcare. About 45 percent of these families live in one of New Haven’s three inner-ring suburbs, 30 percent in the Valley area and the remainder in the outer-ring suburbs. In Hartford, more than 46,000 families earn less than $40,000 annually, and 28,000 are in the non-LMI suburbs. Median income in the state is $87,000, skewed by the state’s many high-income census tracts. “Many people think that [$40,000 to $50,000 income] is good, but when we break down [living] costs, it actually strikes you what it costs to live in the suburbs,” Mauricio said. The old saw that it’s not so much what one makes, but how much one gets to keep, has never been more apparent than here. The chart represents purchasing power. The report doesn’t propose a solution, Mauricio said; it’s meant to be a conversationstarter about inequalities that will likely have downstream effects on the economic power of all the census tracts affected. BNE

Hartford Metropolitan Statistical Area Estimated Monthly Budget ANNUAL

MONTHLY

PERCENT OF INCOME

Starting income

$40,000

$3,333

100%

Federal taxes

$10,000

$833

25%

Social Security/Medicare

$2,400

$200

State taxes

$2,000

$167

Thrifty food plan (family of four)

$6,733

$561

17%

Fair market rent in Hartford

$12,444

$1,037

31%

Cost of transportation

$3,500

$292

Balance of income remaining for daycare, etc.

$2,923

$244

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BANK PROFILE

Florence Savings Bank Rebrands, Builds on Strength BY LINDA GOODSPEED

Florence Savings Bank President and CEO John Heaps

fter years of being “partners in your hometown,” Florence Savings Bank, headquartered in Florence, Mass., decided it was time for an update. “Everybody’s hanging their hat on being local,” said Monica Curhan, senior vice president and marketing director. “We wanted to differentiate ourselves.” The bank began surveying customers to find out what they liked about the bank. One customer summed it up best, saying, “I was born a Florence Savings Bank customer.” Based on that research and feedback, FSB in June unveiled its new brand: “Always, Florence Bank.” The bank promoted its new brand and look through a highly targeted media campaign that included TV, print and digital outlets. The response has been overwhelming. “We’ve got over 5,000 views on YouTube,” Curhan said. “I’ve never had more people come up to me and say they’ve seen our ads,” added John F. Heaps Jr., president and CEO. “We’re not spending any more money, we’re just utilizing it better.” The re-branding campaign has even raised the bank’s profile beyond its current 10 BANKING NEW ENGLAND

footprint. “It’s created a lot of opportunity for us.” he said. The Naismith Memorial Basketball Hall of Fame in Springfield, Mass., is a prime example. Although outside the bank’s market area, the hoop shrine has inked a seven-figure refinance deal with FSB. “We shopped around,” said John Doleva, president and CEO of the Hall of Fame. “It was a bunch of things that brought us to Florence – the people, the deal, their desire to really make this deal work.” Florence Savings Bank will soon open a basketball-themed ATM at the 150,000-squarefoot complex, which attracts some 220,000 visitors a year. The bank will also sponsor events at the hall. “It’s so gratifying to see them be such a great partner,” Doleva said. Florence Savings Bank (the bank has not changed its legal name) was founded in 1873. The mutually owned bank has total assets of about $1.1 billion, and its nine branches are spread throughout the rural region of western Massachusetts known as the Pioneer Valley. The Valley’s economy is a unique blend of higher education (five colleges, including the enormous UMass-Amherst campus), agriculture – Hadley is world-famous for its asparagus, the region grows tobacco and other agricultural products – and health care is the region’s largest employer (counting the university hospital as part of Boston’s Mass. General Hospital network and including Northampton-based Cooley Dickinson Hospital). “I wouldn’t say we’re recession-proof, but the colleges and hospital have contributed to a very solid economy,” Heaps said. “Our unemployment rate was about half the state’s throughout the entire recession.” Heaps, a 42-year banking veteran, took over the top job at FSB in 1995. At the time, the bank had $25 million in capital and three branches. Today, the bank has $111 million in capital and nine branches. “The timing couldn’t have been better,” he said. Thanks to bank mergers, FSB steadily picked up Continued on page 12

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Florence Savings Bank Rebrands Continued from page 10

market share, growing deposits and expanding its branch network to seven over Heaps’ first 10 years. “We spent my first 10 years building our retail platform,” Heaps said. “Our model is a three-legged stool: Customers, community and being fiscally sound. Everything has to balance. When we look at doing something, we look at how it affects the model. It’s amazing how that model has worked for us.” After 10 years building FSB’s retail side, Heaps has turned his attention to lending. From a primarily mortgage lender, FSB has slowly increased its commercial loan portfolio. “It’s nice to have a commercial lending side, as well as a mortgage side, contribute to our growth,” Heaps said. As the region’s banking industry continues to shrink, with FSB one of just three remaining locally headquartered banks, Heaps sees more opportunity ahead. “We’re still taking advantage of consolidation,” he said. “It’s a great opportunity for us to pick up people from other banks, both employees and customers.” In addition to its re-branding campaign this year, FSB also broke ground in May on a new, 3,150-square-foot branch to replace an older branch in Hadley.

“Branches are absolutely critical to being who we are in the community,” Heaps said. “I see fewer branches nationwide, but I see branches in our future. They’ll be a different model, smaller, a nice mix of self-service and full-service. We’ll be doing more branches. We haven’t figured out where yet. The re-branding has opened up a lot of opportunity and awareness for us.” Also this year, Florence announced it will increase its annual contributions to its Customers’ Choice Community Grants Program to $100,000. FSB started the innovative community giving program 12 years ago. We were really struggling whether we were giving to the right people, if we were having an impact,” Heaps explained. So the bank has let customers decide. Over the last 12 years, FSB has donated $650,000 to local nonprofits through the Customer Choice program. In 2013, a record 11,567 customers voted for their favorite charities, up 21 percent over 2012. Curhan noted the program not only shifts some of the community giving decisions to customers, it engages them in marketing the bank – a triple win for the bank, the customer and the community. BNE

Groundbreaking for a new branch in Hadley.

“We’re not spending any more money, we’re just utilizing it better.” —– John Heaps, president and CEO, Florence Savings Bank The staff rallies around the new brand campaign.

12 BANKING NEW ENGLAND

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INDUSTRY NEWS

FDIC and CFPB Develop Spanish-Language Tool for Older Adults The Federal Deposit Insurance Corporation (FDIC) and Consumer Financial Protection Bureau (CFPB) recently launched a Spanish-language version of their joint financial education program, Money Smart for Older Adults. The free financial resource tool is designed to help aid older adults (age 62 and older), and their caregivers, prevent, identify and respond to elder financial exploitation, which affects millions of senior citizens each year, with only a fraction of incidents reported. “We know that senior citizens are increasingly targeted for financial exploitation,” FDIC Chairman Martin Gruenberg said in a statement. “With nearly 4 million Spanish-speaking older adults across the country, this tool adds a new resource to help Spanish-speaking seniors.” “We must do all we can to prevent financial exploitation of older Americans,” CFPB Director Richard Cordray said in the statement. “By providing these resources in Spanish, we will be better able to educate and empower seniors to avoid becoming victims of financial abuse.” The Spanish-language version is the companion to the English-language program jointly developed last year by the two agencies. The instructor-led module includes practical information that can be put to use right away, and is designed to be delivered to older adults and their caregivers by representatives of financial institutions, adult protective service agencies, senior advocacy organizations, law enforcement and others that serve this population. For more information and to download resources, visit the FDIC’s website, www.fdic.gov.

New Liquidity Requirement May Harm Municipal Bonds A recent report from the Washington Examiner finds that the liquidity coverage rule may make it more costly for cities and states to fund projects. The rule, finalized by regulators in early September, requires banks to hold enough assets, liquid enough to be safely sold even in a crisis, to cover operation expenses for 30 days. However, municipal bonds are excluded from the definition of “safe” assets, and as a result banks may not choose to hold them, raising the costs of repair and renovations for state and local governments. “If there’s less demand for bonds, obviously 14 BANKING NEW ENGLAND

you end up paying higher interest rates,” Richard Ellis, state treasurer for Utah and president of the National Association of State Treasurers, said in the Examiner. “I don’t know if you can quantify the impact” of the rule, Ellis said, “but it will mean less projects to fund.” Fed Governor Daniel Tarullo said at the time the rule was finalized that the Fed may consider amending it. The rule goes into effect in January for the biggest banks, and will be completed by 2017.

SNL Financial: Credit Quality Improves, but How Much Better Can It Get? Credit quality metrics continued to improve during the second quarter across the banking industry and will likely show further improvement as banks begin reporting third-quarter earnings, business metrics firm SNL Financial said in a recent release. But even as many banks have moved past the last credit crisis, industry observers say that many smaller institutions are still struggling with legacy problems, while some of their competitors are aggressively lending on terms that may lead to problems down the line. The largest institutions in the industry have for the most part seen continued declines in levels of problem assets and net charge-offs as a percentage of average loans, according to SNL data. Bank of America NA, the main subsidiary of Bank of America Corp., saw nonperforming assets fall by 16 basis points as a percentage of total assets during the second quarter, and Wells Fargo Bank NA saw a 12-basis-point decline in the same metric compared to the linked quarter. Both banks also reported declines in net charge-offs as a percentage of average loans. Still, David Ruffin, a founder and managing member with Credit Risk Management LLC, said the aggregate numbers and improvements at the largest banks are masking some remaining problems at smaller institutions. He said that a number of key credit metrics that his firm analyzes, including NPAs, have not fallen industry-wide the way they have at larger companies. “The other side of the coin is disproportionately more difficult for community banks,” Ruffin said. Some of those smaller institutions still face “significant structural impediments, and many of those small banks are unable to work off that dead weight because they can’t take the capital hit,” Ruffin told SNL. BNE

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COVER STORY

Wash Us Away BANKS DEAL WITH NORTHEAST CLIMATE CHANGE – OR NOT

By Scott Van Voorhis As if regulatory demands weren’t enough, add climate change to the list of urgent issues with which bankers across New England wrestle. Some are responding, and some have back-burnered the issue. Freak storms and weather events, from Tropical Storm Irene and the deadly Springfield, Mass. tornado to Superstorm Sandy, have incurred significant infrastructure damage across the region, driving home the threat posed by global warming. Some of New England’s banks are now grappling with how to respond, with executives spending hours at workshops and seminars poring over flood zone maps and sea level charts.

New Awareness in Vermont

In the Green Mountain State, the banking and business community in the Green Mountain State got a front-row seat on the potential impact of climate change back in 2011 when Tropical Storm Irene hit, said Christopher D’Elia, president of the Vermont Bankers Association. The storm tore through the state, wrecking roads and bridges, leaving some communities temporarily cut off from highway access. The savage storm made a lasting impression on Vermont’s banks, which got a crash course in doing business amid a disaster area. “The issue in general is not foreign to us because of the direct impact of Tropical Storm Irene,” D’Elia said. “Banks have a sense of some of the damage that can occur as a result of a storm like that.” Vermont banks stepped up to the plate to provide funding to help rebuild roads and other infrastructure wiped out during the storm. Banks across the state also worked with the thousands of homeowners who experienced severe property damage, in some cases incurring a total loss. Unlike a typical house disaster, loan officers had to learn fast how to work with the Federal Emergency Management Agency, which was at the center of relief efforts, D’Elia said. That meant first trying to figure out what, if any, assistance FEMA would be providing to homeowners, given that money could be used to pay off the portions of the mortgage. Banks also had to learn how to work more closely with their colleagues in the insurance business than ever before, the VBA chief noted. In more than a few cases, banks simply had to write off the mortgage altogether, with the lot swept clean of what had been someone’s home, D’Elia said. In the cases where “properties were wiped out and there is no home, where there is literally no home or business left on the property, banks had to adjust their thinking on how there were going Continued on next page

BANKING NEW ENGLAND

COVER STORY

Banks Deal With Climate Change Continued from page 17

to deal with those properties … how to restructure loans and, in some cases, to forgive loans,” he said.

Boston Braces for the Worst

Boston is another area where bankers are paying close attention to the perils of climate change. While Vermont’s bankers got their wakeup call in 2011, Superstorm Sandy in 2013 sent a jolt through the world of Boston development and the bankers who help finance it. It didn’t take long for the Boston Harbor Association to release a report with maps showing the kind of devastation a Sandy-like storm might wreak in Boston, putting large tracts of downtown under water. And while bankers have not been at the forefront of those discussions, they are also clearly paying attention to the issues, showing up at climate change seminars detailing the potential impact rising seas will have on Boston, noted Vivien Li, executive director of the Boston Harbor Association. “The financial services industry is following the whole issue of sea level rise and climate change carefully,” Li said. Boston officials have taken the lead in urging builders planning new projects to consider putting mechanical systems on upper floors, out of the way of potential flooding. That said, developers and their lenders don’t need to be told by

january 23, 2015 | mohegan sun

city or state government that the climate is changing and that some projects may face greater risks in the future, said Gregory Vasil, CEO of the Greater Boston Real Estate Board. “The people involved in these deals are looking at the risks,” he said.

Bankrolling Renewables

Still, while many bankers are starting to pay close attention to the climate change issue, there is no sign yet that they are revamping loan procedures or getting tough on lending to waterfront projects. The building boom along Boston’s waterfront has continued unabated, despite concerns over rising sea levels, Li said. In fact, some of the sense of urgency for immediate action has dissipated after a couple of key bills dealing with climate change and renewable energy failed to make it off Beacon Hill this year, said David Floreen, executive vice president and chief operating officer of the Massachusetts Bankers Association. One bill would have provided a major boost to efforts to develop solar power and other renewable energy sources, while the other would have examined the impact of rising sea levels and other elements of climate change on the Massachusetts economy. At the moment, the MBA has no plans to start doing seminars on climate change issues.

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“All of this is probably a little bit down the road for us,” Floreen said. “That can has been kicked into next year, probably into the hands of a new governor and a new Legislature.” So far, the most visible way local bankers are taking on climate change is through special loan programs aimed at encouraging homeowners and companies to embrace energy conservation and green energy, he said. The MBA has worked with the Massachusetts Department of Energy Resources to craft a loan program for homebuyers and businesses interested in buying their own solar panels. The program, now being hammered out, would allow borrowers to take out up to $20,000 to $25,000 over 20 years, at 4 to 5 percent rate, to pay for the panels, Floreen said. The current timetable calls for a rollout of these solar loans by late fall, he said. And banks across the state are heavily involved in providing interest-free loans of up to $25,000 to homeowners interested in a range of improvements aimed at cutting their electric and heating bills, from weatherization to installing high efficiency heating and hot water systems, Floreen said. A total of 50 Massachusetts banks and credit units are on track to make up to $100 million in these loans by the end of 2014, he said.

“Bankers do want to be supportive of good lending and good business, and hopefully energy conservation,” Floreen said.

Competing Demands

However, some bankers say their plates are already so full dealing with regulatory issues, climate change simply isn’t on the radar. That’s true of most bankers in Maine right now, said Christopher Pinkham, president of the Maine Bankers Association. “Given every other issue that is on their plate, it has not come up at all,” he noted. That doesn’t mean some individual banks aren’t taking on some interesting projects related to energy efficiency – Pinkham points to a local bank that just installed a new geo-thermal energy system at two of its branches. Yet of much more immediate concern to Maine banks is complying with increasingly aggressive federal efforts to crack down on money laundering, which requires major investments of time and resources into various compliance programs. And that’s just the tip of the regulatory iceberg. Such efforts take a toll on the bottom line and make it harder to offer attractive savings accounts and other products, according to Pinkham. “In some ways, banks have become the law enforcement branch of the federal government,” he said.” BNE

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CLIMATE CHANGE HITS HOME

Global Economic Issues, Local Business Disruption BY CHRISTINA P. O’NEILL Christina P. O’Neill is editor of Banking New England, and may be reached at coneill@thewarrengroup.com.

20 BANKING NEW ENGLAND

fter an active storm season in 2013, followed by a tenacious cold snap last winter that paralyzed much of the country, New England’s economy has begun to see price tags for climate change. Add to that, the significant changes in the nation’s energy market, as vast supplies of natural gas are making the United States more energyindependent (and in the process, creating a new generation of boom towns in middle America). Our region faces many environmental stressors. New Hampshire is becoming warmer and wetter, with fewer snow-cover days, earlier ice-melt days and resultant changes in spring runoff. Vermont faces much of the same dynamic, particularly in the Lake Champlain region. Rhode Island’s predominantly coastal economy will face rising water levels and increased shore erosion and flooding. Massachusetts has many of the same problems, as evidenced by the rapidly changing coastline on its National Seashore, with difficult implications for coastal real estate. Massachusetts has seen firsthand the disruptions created by climate change and the energy market. Two liquid natural gas

terminals in Everett, built in anticipation of the need to import foreign supplies, sit idle. And global competition from China decimated the business of once-promising Evergreen Solar, heavily funded by the state. Both of these developments have had significant local impact on their host communities. Climate change and the energy markets need a new set of risk-establishing standards that move away from historicallybased models – in other words, what got you here won’t get you there. Boston Common Asset Management, a national investment firm that specializes in sustainable and responsible global equity strategies, recently released a report titled “Financing Climate Change: Carbon Risk in the Banking Sector,” taking a comprehensive look at these market forces as experienced by the world’s biggest banks, and giving pointers on how to reduce the attendant risks. Big banks in the U.S. have largely been disintermediated from the finance process for high-carbon industries, with those loans taking the form of corporate bonds or securitized bank loans; they are more involved in the process in emerging markets elsewhere. But much of the report’s decision-making

pointers can also be utilized by small and mid-sized banks for their more local lending activities. Among the studyâ&#x20AC;&#x2122;s pointers are environmental risk factors: Credit risk assessment and loan pricing that do not take into account the effects of unpredictable or extreme weather. Conversely, weather extremes can also present climate-related business opportunities. Changing regulatory environments. The report notes that in 2013 alone, more than 30 countries passed new national legislation to regulate or restrict carbon emissions. Current estimates of an energy companyâ&#x20AC;&#x2122;s value are based on the assumption that most of its reserves will be fully used. If we transition to a low carbon economy, these fuel assets will become stranded, impairing the ability of companies to repay loans. Legal risks. The tobacco and asbestos industries have been made to pay for longstanding public-health problems linked to their products. The report suggests the possibility that highcarbon industries may have exposure to a similar legal action in the future. Reputational risk arising from shifts in consumer sentiment. Global, multigenerational protest campaigns that

cut across socioeconomic and cultural divides can lead to account closures and declines in new business, and can undercut employee morale. Uncertain demand for high-carbon fuels. Declining prices for renewable energy relative to fossil fuels will make the field of energy provision more competitive, complex and uncertain, the report notes; such market forces are unlikely to have been properly factored into historically-based loan loss models. Misalignment of banker incentives. Banker compensation needs to be aligned with long-term goals, not just the shortterm rewards from origination fees and transaction revenues. Environmental risk assessment should be conducted before, not after, the crafting of a deal, the report advises, and the bank should determine whether a particular client relationship is in line with its long-term strategy. The report urges banks to conduct regular stress tests to model the effects of bad weather; to rebalance their portfolios in view of risks from climate change; consider legal and reputational implications of investments; and reassess loan pricing to correlate to changes in consumer behavior, including potential shifts in demand for high-carbon fuels.â&#x20AC;? BNE

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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. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Christina P. O’Neill at coneill@ thewarrengroup.com.

Featured Banks • Bridgewater Savings Bank • Bristol County Savings Bank • Centrix Bank • Commerce Bank • Eastern Bank • Meredith Village Savings Bank • Norway Savings Bank • Pentucket Bank • South Shore Bank • StonehamBank • Sugar River Bank • UniBank • Union Bank • Webster Five Savings Bank

22 BANKING NEW ENGLAND

Appointments and Elections Eastern Bank

StonehamBank

Boston-based Eastern Bank has appointed Frank Coccoluto as a senior vice president and relationship manager in the bank’s Commercial North Group. He joined Eastern from Frank Coccoluto Citizens Bank, where he worked as a senior vice president and relationship manager.

Assistant Treasurer Christine Murphy, former Montvale branch manager, has been appointed a business development officer. Murphy began her career at StonehamBank Christine Murphy as a part-time teller and night supervisor in 2003. She took on the role of branch manager in October 2006.

Pentucket Bank

Union Bank

Haverhill, Mass.-based Pentucket Bank has appointed Allison Field to the position of senior vice president of sales management and retail banking. Field joined the Pentucket Bank team earlier Allison Field this year, and has more than 20 years of experience.

Jerry D. Peterson is Morrisville, Vermontbased Union Bank’s new senior vice president and senior commercial loan officer. Peterson joined the bank in August and is responsible for leading the commercial lending team, growing and managing the commercial loan portfolio, coordinating commercial lending activities throughout northern Vermont and northwestern New Hampshire.

Promotions Bristol County Savings Bank

Taunton, Mass.-based Bristol County Savings Bank has promoted Alissa E. Hall, Stephen M. Hardy, Stacie A. Long, Elizabeth Pimentel, Bernadette S. Santos and Margaret O. Van Buren to officer positions. Hall is commercial loan officer in the commercial loan department for the Attleboro, Mass. area. Hardy is commercial loan Stephen M. Hardy Stacie A. Long Elizabeth Pimentel officer in the commercial loan department for the Rhode Island area. Previously, he served as an account executive with the Costar Group in both Bethesda, Maryland, and Boston, Mass., and a commercial real estate broker for MG Commercial Real Estate in Providence, Rhode Island. His professional organization affiliations include the Northern Rhode Island Chamber of Commerce, the Greater Providence Chamber of Commerce and the Rhode Island Manufacturers Association. Long is now government finance banking officer and is Bernadette S. Santos Margaret Van Buren responsible for assisting with the management of a centralized department for deposit and cash management options for the municipalities in the bank’s market area. Long’s professional memberships include the Massachusetts Collectors & Treasurers Association, the Bristol County Treasurers & Collectors Association, the Cape & Islands Collectors & Treasurers Association, the Plymouth County Treasurers & Collectors Association and the Norfolk County Municipal Finance Officers Association. Pimentel is responsible for the management of branch operations, customer relations and new business development. She previously served as assistant manager and banker for Citizens Bank.

Santos’ new position as consumer loan officer entails reviewing, underwriting and issuing credit decisions on installment loans and home equity requests. Santos is a member of the United Regional Young Professional Organization and is currently enrolled in the Massachusetts Bankers Association School for Financial Studies at Babson College, Wellesley, Mass. Van Buren was promoted to assistant trust officer for the bank’s Financial Advisory Services division located in Attleboro, Mass. Before Van Buren’s employment at BCSB, she served as a training administrator/registered representative at Merrill Lynch in Boston, and a certified sales specialist for Clarins USA.

Brendan Gallagher

Christopher Kalil

Daniel McElhinney

Dana Spooner

Commerce Bank

The following office managers have been promoted to assistant vice president: Howard Carney joined the bank in 2003 and was promoted to branch manager in 2012. He is a co-founder and treasurer of the Lincoln Street Business Howard Carney Mina Chebbani Association. Mina Chebbani joined the bank in 2013 as branch manager. She is a member of the Webster Chamber of Commerce and the WebsterDudley Business Alliance. She has 25 years’ banking experience.

Brendan Gallagher joined the bank in 2012 as branch manager. He is an ambassador for the North Central Chamber of Commerce, a member of the fundraising committee for the Leominster Boys & Girls Club and Treasurer for the Ayer North Central Habitat for Humanity. Christopher Kalil joined the bank in 2013 as branch manager. He is a member of the Corridor Nine Area Chamber of Commerce and the Lakeway Business District, and is co-founder and president of the Bay State

Young Professionals Group. Daniel McElhinney joined the bank in 2014 as branch manager. He has been in banking for 26 years and attended Franklin Pierce University. Dana Spooner joined the bank in 2013 as branch manager. He is a member of the Advisory Board of Mount Wachusett Community College and of the Worcester Chamber of Commerce.

Continued on next page

BANKING NEW ENGLAND

PERSONNEL FILE

Meredith Village Savings Bank

Wendy Vittum has been promoted to assistant vice president, mortgage underwriting and processing. Vittum began her career with MVSB in 2005 as a mortgage processor, bringing with her seven years of experience in the lending industry as a mortgage credit analyst. MVSB and Merrimack County Savings Bank have promoted Angela Strozewski to senior vice president and operations officer. Wendy Vittum Angela Strozewski She oversees loan operations, deposit operations and collections for both banks, which operate under the same mutual holding company, New Hampshire Mutual Bancorp.

South Shore Bank

South Weymouth, Mass.-based South Shore Bank has promoted Darlene Woo to assistant vice president and manager of human resources. She joined the bank in 2012 as manager of human resources following 22 years of experience in the field. She is an active member of the Human Resources Advisory Group of the South Shore Chamber of Commerce.

Darlene Woo

StonehamBank

The following individuals have been promoted: Michael P. Connelly was promoted to executive vice president and serves as the chief lending officer. Jody E. Goodwin was promoted to vice Alex Devlin president as the commercial servicing officer. Mary Celli was promoted to assistant vice president in her role as retail services and business product manager. Cathy A. Desmarais was promoted to assistant vice president in her role as human resource director. Alex Devlin was promoted to assistant treasurer in his role as recently appointed branch manager of the Montvale branch.

Seated: Mary Celli and Jody Goodwin. Standing: Michael Connelly and Cathy Desmarais.

Sugar River Bank

• Webster Five Savings Bank

Christine Heath

Christine Heath has been promoted to mortgage loan originator. She has been with the bank since March 2014 and has five years of lending experience.

UniBank

Heather Warner

Webster Five Savings Bank

Jessica McGarry

Heather B. Warner, electronic banking manager at Whitinsville, Mass.-based UniBank, has been promoted to assistant vice president. She is responsible for management of the bank’s online banking, ATM, debit card, wire transfer, ACH and remote deposit processes.

Jessica McGarry has been named as assistant vice president and business lending officer. McGarry has 14 years of banking experience at Webster Five. She was promoted to lending officer of the Business Banking Division in 2012. McGarry is an active member of Corridor Nine and Worcester Chambers of Commerce, the Young Professional Women’s Association and Business Forward Females. McGarry also co-founded the Central MA Young Professionals, a casual networking group aimed at under-40 professionals in the financial services industries. Continued on page 26

24 BANKING NEW ENGLAND

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PERSONNEL FILE

Featured Banks • Bridgewater Savings Bank

Continued from previous page

New Arrivals Bridgewater Savings Bank

Liam Govostes has joined Raynham, Mass.-based Bridgewater Savings Bank as vice president and commercial loan officer. He has more than 12 years’ banking experience. Liam Govostes He previously served at Bank of America as the client development manager, Citizens Bank as vice president and commercial relationship manager, and First Trade Union Bank as vice president and commercial relationship manager.

• Bristol County Savings Bank • Centrix Bank • Commerce Bank • Eastern Bank • Meredith Village Savings Bank • Norway Savings Bank • Pentucket Bank • South Shore Bank

Centrix Bank

Matthew Sylvia has joined Bedford, N.H.-based Centrix Bank’s seacoast lending team as senior vice president and commercial loan officer, and will be based at the Dover office. Sylvia brings more than Matthew Sylvia a decade of experience in the banking industry with knowledge in commercial and industrial loan portfolio management, credit analysis and customer relationship management.

Commerce Bank

• StonehamBank • Sugar River Bank • UniBank • Union Bank • Webster Five Savings Bank

Paula Mello

Paula Mello has joined Boston, Mass.-based Commerce Bank as senior vice president of commercial real estate. She is responsible for new business development and growing the commercial real estate portfolio for the Greater

Boston and suburban markets. Mello has 25 years of banking experience, most recently as senior relationship manager for TD Bank.

Meredith Village Savings Bank

Dan Osetek of Conway was recently hired as vice president, commercial loan officer. He brings 12 years of commercial credit and commercial lending experience and most recently Dan Osetek served as assistant vice president, commercial relationship manager for Northway Bank. Osetek has experience working with a wide variety of businesses and looks forward to bringing his professional experience in commercial banking and straight forward approach to commercial financing needs to businesses across the Lakes Region. Osetek is a committed volunteer in his community and currently serves as president of the Mount Washington Valley Habitat for Humanity.

Norway Savings Bank

Mary Leavitt has joined Maine-based Norway Savings Bank in its Norway Savings Asset Management Group as vice president and senior trust officer. Leavitt has more than 30 years’ experience in Mary Leavitt trust and fiduciary services. She is a member of the Maine Estate Planning Council and the Maine Bankers Trust and Wealth Management Committee. 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.

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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 to Editor Christina P. O’Neill at coneill@thewarrengroup.com.

Continued from previous page

BayCoast Bank

Featured Banks • BayCoast Bank • Bristol County Savings Bank • Centrix Bank • Meredith Village Savings Bank • Milford National Bank and Trust Co. • MutualOne Bank • North Middlesex Savings Bank

Fall River, Mass.-based BayCoast Bank has contributed $5,000 to the endowment of Fall River Women’s Union, which promotes the welfare of women and children. Pictured, James Rice, senior vice president and chief marketing officer, BayCoast Bank, presents $5,000 to Donna Stewart, first vice president of the Fall River Women’s Union (left), and Women’s Union member Julia Westgate Lown (right).

Bristol County Savings Bank

Taunton, Mass.-based Bristol County Savings Bank, through its charitable foundation, awarded grants totaling $40,000 to six New Bedford and Dartmouth-area nonprofits; $36,200 to four Attleboro nonprofits; and $26,000 to eight Pawtucket, Rhode Island nonprofits. Pictured, from left: Nelson Hockert-Lotz, treasurer, AHA! New Bedford; Rebecca McCullough, development director, New Bedford Women’s Center; Rosemary Gill, codirector, The Zeiterion Theatre; Joseph Nauman, board member, BCSCF-SAB, and executive vice president, corporate and legal, Acushnet Co.; Patrick Murray, president and CEO, BCSB, and president, BCSCF; Dr. Jean MacCormack, chairperson, BCSCFSAB, and board member, BCSB; Koreen Santos, board member, BCSCF-SAB, and president, Santos & Santos Certified Public Accountants & Business Consultants; Ian Gollub, music teacher and band director, Global Learning Charter Public School; and Ellen Woods, president and founder, Camp Ellie Mae. 28 BANKING NEW ENGLAND

Centrix Bank

Bedford, N.H.-based Centrix Bank was a platinum sponsor of the first annual Great NH Restaurants’ Charitable Trust Golf Tournament in August, the first fundraiser to help launch FEEDNH, a new nonprofit organization created by Great NH Restaurants. Its mission is to improve New Hampshire communities with a focus on the needs of families, education, elderly and the disadvantaged. Pictured, from left: Centrix Bank President and CEO Joseph B. Reilly and Tanya Untiet, community outreach coordinator, and Tom Boucher, trustor and chairman of the board, Great NH Restaurants’ Charitable Trust.

Meredith Village Savings Bank

Meredith, N.H.-based Meredith Village Savings Bank’s Jenifer Williams (left) and Eric Petell (right) present a $5,000 check to L.S. Elisabeth Swiriduk, teacher and administrative assistant for Carroll County Adult Tutorial Program (center) and recent Carroll Academy graduates Rachid Fabiane (second from left), Jasmine Tilton (third from left), Charlene Pennell (third from right) and Chrissy Ireland (second from right). The grant will be used by Carroll Academy to provide tuition and exam cost assistance to students.

Gilford High School’s FIRST Robotics Team 1831 was one of 13 local nonprofit organizations to receive a grant from the Meredith Village Savings Bank Charitable Fund in 2014. Meredith Village Savings Bank’s Becky Reposa (right) presents an $8,500 check, held by “Yelping Turkey II,” to Gilford Robotics’ team advisor Jackie Dever (left) and team members (left to right) Joseph Bonnell, Connor Craigie and Ethan Theberge.

MutualOne Bank

The MutualOne Charitable Foundation has also awarded the second $10,000 installment of a three-year $30,000 pledge to The Center for the Arts in Natick (TCAN), to support the expansion of TCAN’S performance space through the renovation and restoration of the second floor of the organization’s facilities, to feature a performance hall that can be configured for film screenings, music or theater performances, cabaret style events, and a variety of other functions. Pictured, from left: Steven M. Sousa, executive vice president and chief operating officer, MutualOne Bank, and MutualOne Charitable Foundation trustee, and Rachel Stewart, administrative director of the foundation, with David Lavalley, executive director of The Center for the Arts in Natick.

Meredith Village Savings Bank

Meredith Savings Bank also supported the Greater Meredith Program’s Sculpture Walk with a $5,000 contribution that will help maintain and update the display. The program, begun in fall 2012 with two sculptures, was expanded in 2014 to a sculpture walk containing 24 unique works in the downtown Meredith community. Pictured, from left: Sam Laverack, MVSB president and CEO (right); Rick Wyman, executive vice president and CFO (third from left); Liz Lapham, executive director, GMP (second from left); Sculpture Walk Committee cochairs Sandy Sullivan (second from right) and Bev Lapham (third from left); and Katheryn Rolfe, board member, GMP, and Sculpture Walk committee member (left). The group is pictured in front of “Black Sailboat,” a wrought iron and copper sculpture created by David Little and Steven Hayden of Meredith.

Milford National Bank and Trust Co. Meredith Village Savings Bank The Milford National Bank and Trust Co., based in Milford, Mass., presented the largest gift in the bank’s 165-year history, $500,000, to support Milford Regional Medical Center’s building expansion. The donation supports a major capital initiative that will result in a new emergency department, intensive care unit and private patient rooms.

North Middlesex Savings Bank

Framingham, Mass.-based MutualOne Bank, through its charitable foundation, has awarded $5,000 to the Greater Framingham Community Church in support of infrastructure renovations currently underway. The grant was among awards totaling $101,065 in the foundation’s most recent round of funding. Pictured, from left: Rev. Dr. J. Anthony Lloyd, pastor; Rachel Stewart, the foundation’s administrative director; and Yasmine Ouweijan, manager of MutualOne Bank’s Concord Street branch in Framingham.

Pepperell, Mass.-based North Middlesex Savings Bank donated $7,500 to Habitat for Humanity of North Central Massachusetts, and will also commit volunteer time to the project. Construction was set to begin in October and the selected families are expected to move into their new homes in the spring of 2015. Pictured, from left: Tom Dufault, vice president, mortgage lending, North Middlesex Savings Bank; Maggie Monroe-Cassel, executive director, Habitat for Humanity North Central Massachusetts; Stephen Sugar Jr., vice president, commercial loans, North Middlesex Savings Bank.

A $3,500 grant from the MutualOne Charitable Foundation to enhance recreational and therapeutic treatment for youth at the Wayside Campus of the Wayside Youth & Family Support Network is celebrated by, from left: Jacob Hanson, assistant program director (holding a specially designed mat used in the yoga program); Marisa Rowe, director of development and marketing; Rachel Stewart, administrative director of the foundation; and Bretton Torkelson, Wayside Campus clinician. BANKING NEW ENGLAND