Banking New York 4Q 2013

THE INDUSTRY MAGAZINE FOR FINANCIAL EXECUTIVES & PROFESSIONALS • FOURTH QUARTER 2013 • VOLUME 30

WHY YOUR CUSTOMERS DON’T TRUST YOU, AND HOW TO PROVE THEM WRONG EVANS BANK REAPS REWARDS FROM COMMUNITIES SERVED MONEY LAUNDERING: WHAT COMMUNITY BANKS NEED TO KNOW AVOIDING FINANCIAL LOSS WITH NEW RISK MODELS

RISING TO THE OCCASION

HOW TO

DISASTER-PROOF +INSIDE: LESSONS FROM THE INSURANCE INDUSTRY | ENERGY SAVINGS OPTIONS FOR BANKS Produced in partnership with the Independent Bankers Association of New York State

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BANKING NEW YORK Volume 30 | Fourth Quarter 2013

RISING TO THE OCCASION HOW TO

20

DISASTER-PROOF

04 FROM THE EDITOR

A Line in the Sand

14 LESSONS FROM INSURANCE

A Road Map for Bringing Life to Banks

06 F ROM THE PRESIDENT & CEO

16 TOP OF THE CHARTS

08 AN OPTION THAT SHOULD NEVER BE IGNORED

18 BANK SECRECY ACT

Three Years of Accomplishments

24

10 ABUNDANT ENERGY SAVINGS OPTIONS FOR COMMUNITY BANKS

Timothy Warren Jr. PRESIDENT David Lovins ACCOUNTING MANAGER Mark DiSerio SALES DIRECTOR OF MEDIA SOLUTIONS

George Chateauneuf GROUP SALES MANAGER

Richard Ofsthun ADVERTISING ACCOUNT MANAGER

Claire Merritt

Communities Served

28 ALL ABOUT TRUST 26

CEO & PUBLISHER

Avoid Financial Loss

26 BANK PROFILE Evans Bank Reaps Rewards from

TWG STAFF

Money Laundering: What Community Banks Need to Know

24 BUILDING A BETTER MODEL Addressing Model Risk to

12 THE FIRST HALF OF 2013 FOR U.S. AND NEW YORK STATE COMMUNITY BANKS

CONTRIBUTING WRITERS THIS ISSUE Linda Goodspeed; Phyllis Hanlon

Ending the Waiting Game

How to Regain Your Customers’ Trust

30 SMALL CHANGE

EDITORIAL DITORIAL DIRECTOR

David Harris CUSTOM PUBLICATIONS EDITOR

Christina P. O’Neill EDITORIAL OPERATIONS MANAGER

Cassidy Norton Murphy CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES

John Bottini DESIGN PRODUCTION MANAGER

©2013 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher.

Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210 www.thewarrengroup.com

Scott Ellison MARKETING COMMUNICATIONS MANAGER

Michelle Laczkoski GRAPHIC DESIGNERS

28

Amanda Martocchio & Tom Agostino

Fourth Quarter 2013 | 3

LETTER FROM THE EDITOR | By Christina P. O’Neill

A Line in the Sand

T

he cover story in this issue addresses what regional and community banks in New York have done to help in the rebuilding efforts as of the year anniversary of Hurricane Sandy. The storm’s incredible size and its path through some of the costliest real estate in the country have raised questions about how viable it is to keep rebuilding on the coast.

That question is a non-starter in Manhattan, but the pockets of lower-cost, working-class coastal communities around New York City are likely to be up for grabs. These communities have served as havens for generations of people who worked hard to be able to call them home.

Federal disaster relief has come from the Department of Housing and Urban Development, which is asking prospective grantees to do their risk-assessment homework in order to be eligible for the second round of funding.

New York state’s community banks have risen to the occasion, knowing that the very fabric of their customers’ lives has been riven. While those in regions unaffected

by Sandy question federal relief efforts, the truth is that

natural or man-made disasters can strike anywhere, with long-term effects on local economies. By putting themselves in positions to help, community banks can be at the forefront of assessing genuine needs. We commend them for their efforts.

■

Christina P. O’Neill Editor, Banking New York The Warren Group

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4 | Banking New York

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PRESIDENT & CEO’S MESSAGE | By Frank J. Capaldo

Three Years of Accomplishments Three years ago, I joined New York’s community banking family when I accepted the position of president and CEO of the Independent Bankers Association of New York State (IBANYS).

T

he association, which was founded in 1974 to ensure that New York’s smaller, independent community banks had a voice in Albany, is the only state trade group exclusively representing community banks in our state.

I was excited to join “the family” because I have always believed that community banks share a commitment to meeting the financial needs of their respective local communities. A community bank is a financial institution with a strategic business plan to recycle deposits into loans within the same communities where the deposits were gathered. This encourages a vibrant, growing local economy.

When entrepreneurs and families look for financial help – whether to buy a first home, or to seek a small business or consumer loan – they often turn to the institution they know and trust – a local community bank that is involved in the community, through economic development, civic organizations and philanthropic activities.

During my three years at IBANYS, we have worked hard together, and we have written a remarkable success story. Together, we have turned this association around via our “Four Pillars” strategic plan. Just to mention a few of our successes: • In a devastating economic downturn when other associations were losing members we increased our number of member banks from 41 to 67 – a 50 percent increase!

• Built a similar increase in our associate membership.

York 6 | Banking BankingNew New York

• Successfully launched a new “preferred provider” program that has established an important new stream of non-dues revenue, a critical component for all trade associations’ financial stability going forward.

• Established new “peer group councils” for our member banks’ CFOs and compliance officers.

• Increased attendance among bankers, associate members and exhibitors at our Annual Convention, and also at our CFO/Senior Management, Compliance and Security Conferences.

• Dramatically enhanced our communications efforts through our weekly e-newsletter, quarterly magazine, and our op-ed program to represent the positions of New York community banks in the public eye through our oped program, press releases.

• We have good reserves on our balance sheet and operating in the net black on our P&L. While my job of turning around and setting the association on a firm foundation is complete, I am extremely confident the association will build on the strong foundation we have built these past three years, and is well positioned for future success. Most importantly, I know IBANYS will continue to be the voice of community banking in New York state.

■ Frank J. Capaldo President and CEO IBANYS

IBANYS Board of Directors Officers Chairman Gregory Hartz Tompkins Trust Company, Ithaca Vice Chairman Christopher Dowd Ballston Spa National Bank, Ballston Spa Treasurer/Secretary John Buhrmaster First National Bank of Scotia, Scotia Directors Thomas Amell Pioneer Savings Bank, Troy Ronald Bentley Chemung Canal Trust Company, Elmira Brenda Copeland Steuben Trust, Hornell Randy Crapser Bank of Richmondville, Cobleskill Ronald Denniston First National Bank of Dryden, Dryden Martin Dietrich NBT Bank, N.A., Norwich Robert Fisher Tioga State Bank, Spencer E. Peter Forrestel Bank of Akron, Akron Stephen Gobel First National Bank of Groton, Groton Richard Koelbl Alden State Bank, Alden Douglas Manditch Empire National Bank, Islandia Salvatore Marranca Cattaraugus County Bank, Little Valley Paul Mello Solvay Bank, Solvay David Nasca Evans Bank, N.A., Hamburg Joseph Perri Gold Coast Bank, Islandia G. William Ryan Cayuga Lake National Bank, Union Springs Glenn Sutherland Catskill Hudson Bank, Rockhill Mark Tryniski Community Bank, N.A., DeWitt Kathleen Whelehan Upstate National Bank, Rochester IBANYS STAFF Frank J. Capaldo President & Chief Executive Officer Stephen W. Rice VP Government Relations & Communications William Y. Crowell, III Legislative Counsel Linda Gregware Director of Administration & Membership Services Chris Stoeckel Member Service Representative

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PUBLIC AFFAIRS UPDATE | By Stephen W. Rice

An Option That Should Never be Ignored The “Money” column in Consumer Reports’ November 2013 issue was entitled “Dump Your Big Bank and Save.” The column urged consumers to consider using “credit unions, regional banks, virtual banks and prepaid cards” as four alternatives to using large banks. To our surprise, the column made no mention whatsoever of the approximately 7,000 community banks across the country.

W

e certainly believe that our financial system offers consumers a myriad of choices, and that there is an appropriate role for many different types of institutions.

However, we also strongly believe that community banks are also an important option – one that should never be ignored or overlooked.

Stephen W. Rice In New York state, we have nearly 170 local independent community banks that are widely recognized for our performance, products and services, and for meeting the housing, small business and consumer needs of our custom8 | Banking New York

ers and communities. Many have been doing so for more than two centuries, in towns, villages and cities all across the state.

Earlier this year, the New York State Department of Financial Services (DFS), which oversees and regulates commercial banks, thrifts, credit unions and many other types of financial institutions, released a comprehensive report on community banking in the state. Significantly, the DFS made clear that community banks continued to lend to homeowners and small businesses during the financial crisis, as larger banks pulled back.

They also found community banks provide most of the loans for New York’s small businesses and farms.

Even though we have less than a quar-

ter of all bank assets in the state and compete against much larger institutions, we generate more than half of all small business loans and nearly all the small farm loans in the state! Many community banks also traditionally hold on to, and service, the real estate loans they make, rather than originating them and then selling them off to mortgage loan servicers.

In releasing its report, DFS Superintendent Benjamin Lawsky stated: “Community banks focus on the unique needs of their communities.

They build strong customer relationships which help attract local retail deposits. These banks take deposits from their communities and then typically recycle them back into their communities in the form of loans.” Governor Andrew Cuomo added: “Community banks represent a strong economic engine that drives growth in New York and their performance is remarkable.

Small business is the engine of job growth and most small business loans come not from the big national banks, but from community banks.”

Community banks continue to lend throughout the markets we know and understand so well, and we remain committed to the future of our local consumers, small businesses and farmers. With locally based ownership and a commitment to our customers and neighborhoods, we are extremely close to the pulse of our communities.

The fact is, in communities all across New York and the country, we truly are the backbone and lifeblood of our communities. And, we are an option that should never be ignored.

■ Steve Rice coordinates government relations and communications for the Independent Bankers Association of New York State. He has worked in the New York banking industry and New York state government for more than three decades.

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ENERGY | By Andrea McMaster

Abundant Energy Saving Options for Community Banks Energy expenses are becoming one of the largest costs of doing business for banks large and small. Whether it’s maintaining the costs of your energy bills from month to month, the cost of replacing fixtures and equipment that use that energy, or dedicating the time and manpower it takes to create a plan to lower energy bills and become more efficient, controlling energy costs can significantly save banks money, but the task can seem overwhelming.

E

lectricity and natural gas prices are rising across New York. With this volatile pricing season, now is the time to take that first step.

For many banks, reducing and controlling energy costs can make a significant difference in their monthly expenses. As energy costs fluctuate monthly, it will become harder to budget these costs. Knowing what electricity and natural gas purchasing option is best for your bank is step one.

Since deregulation began in New York, businesses now have the option to choose an alternative supplier for both their electricity and natural gas needs. This allows for the flexibility in choosing pricing options. The two most common pricing options are a fixed rate or an index rate. The fixed price option gives businesses the ability to secure a set rate for a contracted term based on the company’s historical usage. A fixed rate option also allows for budget certainty. Since you know your rate and your usage, you know what your annual costs for energy will be. Fixed price options will also protect you from market volatility and set your mind at ease should the market spike for any reason.

The index option allows businesses to pay a variable market price for energy. This option allows customers the opportunity to take advantage of mar10 | Banking New York

ket volatility by giving you the ability to manage your usage based on the market at any given time.

More costs upfront save over time

Retrofitting equipment to new, more efficient equipment can decrease energy costs as well.

Outdated equipment can actually be increasing your energy demand, therefore increasing your costs. The cost to replace a burnt out light bulb may sometimes be cheaper than replacing outdated lighting, but in the long run it may actually cost you much more. Just as putting a quick fix on your boiler can be cheaper than replacing the whole boiler, in the end the costs of that quick fix can be devastating to your bottom line.

Having a comprehensive energy study completed on all of your site locations can help you determine where you are using the most energy, what equipment needs to be replaced due to inefficiency and how you can retrofit this equipment so it generates saving in both usage and dollars. These studies are presented to you with an easy to understand cost versus saving analysis. The costs of these projects can be combined with state grants and incentives, utility incentives and can allow for on bill financing deterring out of pocket upfront costs.

If you want to go deeper into controlling energy costs, green energy technology projects like solar panels, wind turbines, and fuel cells all currently have grants and tax incentives available to make installation more affordable. Solar panels are a great way to reduce electricity costs and allow banks to become more environmentally friendly. Most renewably energy companies will provide you a study that includes grants and incentives to make it easier to see if this is a costeffective measure for you to take.

Many companies are unaware of revenue-generating programs available to them. While assisting with the stability of the overall energy grid, banks can generate profits. To determine if you qualify for these programs, a simple study can be completed. Participation in these programs can also be a great public relations tool to let your customers know they are part of a banking institution helping to sustain the reliability of the energy grid.

Energy is no longer a simple cost of doing business that you have no control over. These are just a few of the steps you can take to lower your energy costs. Whether you want to dive in and take advantage of all of these steps or you just start with the basics in reducing costs through purchasing supply, there is no better time to start than now.

■ Andrea McMaster is owner and partner of Four Corners Energy, a one-stop shop consulting company designed to assist businesses, including community banks and financial institutions with all their energy needs. The firm’s experience ranges between electricity/natural gas procurement, energy services, green energy technology and municipal and government relations. Andrea may be reached at andrea@4cornersenergy.com.

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PERFORMANCE GAP | By Jarius DeWalt

The First Half of 2013 for U.S. and New York State Community Banks There has been a lot written regarding the “tale of two cities” performance division between community banks and mega bank/regional powerhouses.

A

lthough we agree that the market power of these players overhangs the competitive environment for community banks, we find a more fundamental “best of times, worse of times” dichotomy facing community banking firms – a wide gap in the performance from the highest 10 percent to the lowest 10 percent on a numJarius DeWalt ber of key driving forces, as well as the recognition that a number of areas that once were great strengths are becoming areas of potential weakness and increasing risk as a result of the changing economic environment, competitive landscape and regulatory climate.

The Federal Reserve’s objective of returning to “normalized” long-term rates and the concurrent transition to Basel III and Dodd-Frank regulatory rules over the next few years are coupled with “shadow” banks and other non-banking entities moving more aggressively into the retail market for both funding sources and borrowing customers.

In preparing for a presentation to the Independent Bankers Association of New York State (IBANYS) western regional meeting using Ratio-based Strategic Risk Indexing (RSRI), Paradigm reviewed the wide spectrum of performance across a number of driving factors for the first half of 2013 on both national and New York state levels for community banks with total assets of 12 | Banking New York

$5 billion or less. We noted a number of strategies where community banks have shown great strengths during the period since 2008, which are now exhibiting warning signs of growing potential for adverse regulatory actions for a number of firms, given elevated safety and soundness concerns.

Risk is the primary focus of regulators, but senior management and board of directors of community banks must balance risk and opportunities. Banking has never been and is not now a risk-free endeavor, but risks can be managed and mitigated. This review using RSRI tools provides an overview of the performance gaps between the highest performance and lowest performers, nationally and for New York state, on return on average equity (ROAE) as the measure of successful implementation of strategies for community banking entities.

ROAE

Return on equity is the ultimate measure of the return to the providers of risk capital for your institution.

The wide spread on ROAE from the average for the highest 10 percent to the average for the lowest 10 percent illustrates the divergence in performance during the first half of 2013.

The spread averaged 3659bps for the quarter ending March and 3876bps for the quarter ending June, averaging 3768bps for the first half of 2013 for the national universe of community banks. The spread was less wide for New York state banks, with a March spread of 2368bps and a June

National Return on Average Equity Mar-13

Jun-13

1st Half 2013

Highest 10%

21.98

23.72

22.85

Highest 20%

19.31

19.11

19.37

Average

6.50

7.13

6.82

Lowest 20%

(6.39)

(6.49)

(6.44)

Lowest 10%

(14.61)

(15.04)

(14.83)

Spread

3659

3876

3768

New York State Return on Average Equity Mar-13

Jun-13

1st Half 2013

Highest 10%

15.66

18.30

16.98

Highest 20%

12.90

15.60

14.25

Average

5.34

6.36

5.85

Lowest 20%

(3.77)

(2.12)

(2.95)

Lowest 10%

(8.02)

(5.47)

(6.75)

Spread

2368

2377

2373

spread of 2377bps, resulting in a first half average spread of 2373bps. The ROAE for the highest 10 percent nationally averaged 22.85 percent for the first half of 2013, while the average for the lowest 10 percent was a negative 14.83 percent. New York state banks had a first half average for the highest 10 percent of 16.98 percent, while the lowest 10 percent averaged a negative 6.75 percent. The average for the 134 New York State banks for the first half of 2013 was 5.85 percent, while the national average was 6.82 percent. In both cases, the ROAE for the average community bank was significantly below the 10 percent threshold typically anticipated as a minimum return for investing in a banking enterprise. ■ Jarius DeWalt is chief strategist at Paradigm Asset Management Company. He may be reached at jdewalt@paradigmasset.com.

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LESSONS FROM INSURANCE | By Kenneth A. Shapiro

A Road Map for Bringing Life to Banks

O

ver the last 20 years there have been similar, marked changes in banking and insurance. Two decades ago, building branch offices was the epitome of banking convenience.

Today, it’s a free app for a smartphone.

The story of the life insurance business isn’t much different. Twenty years ago, there were only a couple of choices in life insurance policies, which were arguably complex and confusing. Qualifying was complicated, applications were cumbersome and processing was lengthy.

It was about then that some banks became interested in getting in the insurance business. Most gravitated to auto and homeowner-type coverages, since these were relatively straightforward, quick transactions, while life insurance sales took longer and were more complex.

There’s a natural synergy between banking and life insurance. They both deal with financial products and services, are highly regulated, operate with conservative corporate cultures, and are charged with a fiduciary

i s responsibility to their customers.

Even so, some bankers think that life insurance is too different and too far removed from banking, too much of a problem or could take the focus away from more pressing issues. Admittedly, such concerns were appropriate in the past.

While these are valid objections, it’s worthwhile to understand the dramatic changes that have occurred in the life insurance industry over the past decade – changes that have brought it closer to banking: Technological advances.

Not so many years ago, the life insurance industry was anything but technologically integrated. Company computer systems were proprietary, so applications, policies and other paperwork were overnighted back and forth. It was a slow, stodgy and inefficient process. Today that’s history. Processing

close to 100 percent electronic, as is even some underwriting.

Medical underwriting advances. Perhaps the most dramatic and far-reaching change is in medical underwriting, which has been the benefactor of vastly improved medical care and medications. Applicants who would have been rejected or offered higher rates in times past, enjoy standard rates today, including some with a history of cancer, diabetes, heart disease, and so forth.

Product development advances.

The life insurance industry’s history is something less than innovative when it came to product development (perhaps, not unlike banking). But spurred by competition, the life companies have taken huge steps forward by focusing on consumer needs (very

Kenneth A. Shapiro is president of First American Insurance Underwriters Inc., a national life insurance brokerage firm based in Needham, Mass. He can be contacted at 1-800-444-8715 or kshapiro@faiu.com.

14 | Banking New York

much like banking). For example, the new “hybrid” life and long-term care products are powering sales because they provide a death benefit and longterm care in one policy.

Equally important, technology is shaping the consumer’s buying behavior. Few banking customers want to stand in line and wait for a teller or even to go a bank when they can use a sophisticated, full-service 24-hour ATM or, increasingly, do their banking using a smartphone or a tablet.

In the same way, today’s life insurance customers are often surprised to discover that purchasing a policy is a surprisingly quick, unobtrusive and painless experience. For some policies, there are only three or four medical questions or, depending on the policy, none at all. And some policies are issued electronically either immediately or in a few days.

Today, banks have abandoned their traditional passive attitude and have adopted a sales culture not that much different from that of the life insurance industry. In the same way, the life insurance business now recognizes the need to retain customers by building relationships, something that’s second nature to bankers.

Banks long counted on the interest rate spread on their lending for much of their income. But when interest rates dropped to historic lows, bankers turned to fee income as a critical source of revenue, particularly as operating costs escalated.

The life insurance industry, on the other hand, was built on agents being paid a commission (or, if you will, a fee) for making a sale. Today the sales culture of these two significant industries is roughly the same.

Similarly, both are concerned with helping their customers preserve and grow their wealth, and they do it in highly regulated environments.

Although there are instances of both getting off the track, their customers can have confidence in the safety of their investments.

Just as banks have taken momentous steps to make themselves much more user-friendly, the life insurance industry has moved in the same direction by

MORE SIMILAR THAN DIFFERENT In years past, while bank forays into life insurance sales differed in approach, with some using either inhouse personnel and others outsourcing the responsibility, the results were often lackluster, possibly stemming from cultural conflicts, inadequate commitment of resources, and more pressing matters.

making their operations and insurance policies much more attractive to consumers.

Since banking and life insurance are closer together than they’ve ever been, it’s prudent for bankers to examine how to leverage that synergy to work for their customers and their businesses.

In summary, the alignment and compatibility of banking and life insurance is striking: life insurance is an asset that does not take money out of a bank and helps protect other assets. On top of that, they share similar attitudes toward enhancing their customers’ financial well-being. Neither is a stranger to the demands of operating under rigorous regulatory requirements.

Over time, both bankers and life insurance professionals have learned that the most successful sale is the one that creates a relationship with customers by identifying and meeting their needs.

Banks considering moving into the life insurance arena should first explore the possible benefits of including life insurance in a bank’s product mix. Next, they should determine what needs to take place if a life insurance component is to fit successfully into a bank’s customer environment and the ways in which it can contribute to enhancing the customer experience.

■

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Fourth Quarter 2013 | 15

TOP OF THE CHARTS | By Roxanne Emmerich

Ending the Waiting Game Prospecting Done Right

D

o your commercial lenders lack the skills and mindsets to effectively prospect? As a result, is your net interest margin squeezed, and squeezed, and squeezed, with no hope of a turnaround?

Do your lenders compete for the “Most Creative Too-Busy Excuse for Not Prospecting” Award?

You’re not alone.

A recurring theme I hear when talking with hundreds of bank executives each month is, “My lenders aren’t prospecting.” If they have lenders who are prospecting, their scattered and non-systematic efforts are ineffective at best. At worst, they position your bank as a vendor instead of the desirable trusted advisor.

As a result, they mumble those nasty words, “Loan demand has dried up,” thinking that’s an adequate response to the fact that good prospects rarely walk in the front door these days.

It’s time to stop the waiting game.

The fact that prospects ever strolled in the front door was a miracle. Now we as an industry need to figure out what every other person in professional sales figured out years ago – if you want quality new business and premium pricing, you’re going to need to attract those high-quality prospects.

And that means smart, well-thoughtout attraction strategies delivered in a systematic way to create predictable revenue growth.

REFINING YOUR APPROACH Top 100 prospects need an elevated level of targeted attraction strategies that build reputational excellence.

And based on the “segment” of your Top 100 list, those strategies must make sense for that market.

Start by creating a buzz that you are a bank that’s up to a different game.

Relationships are solidified during

adversity. That’s when you have the best opportunity to be the hero, the one who keeps clients informed and finds solutions that will help them save their businesses and prosper in tough times.

Instead of using old school marketing methods, contact top prospects and clients alike through personalized and value-added mail, calls, seminars and the like to position your bank as an expert and advocate for them. That will create referrals and enduring relationships for decades ahead.

There are hundreds of potential attraction strategies. The ones you choose for each niche must be varied, properly timed, and tested to make sure the sequencing, headlines, value and process are optimized. But step one is to get your lenders out of the waiting game, once and for all, and working hard to determine exactly what bait will attract the best and hungriest fish.

■

Roxanne Emmerich is CEO of the Emmerich Group Inc. Contact her at Roxanne_Emmerich@EmmerichGroup.com.

16 | Banking New York

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BANK SECRECY ACT | By John Meyer

Money Laundering What Community Banks Need to Know

B

ank Secrecy Act compliance officers stand in a unique position to defend our communities by identifying potential tax evasion, drug trafficking and other criminal activity. BSA officers have the opportunity to work hand-in-hand with law enforcement to identify criminal activity and provide evidence used in the prosecution. Though this role is rewarding, it can also be very difficult to keep up with the weight of regulatory compliance.

For BSA officers at community institutions, this important job is getting much more difficult in the aftermath of the highprofile BSA/AML regulatory scrutiny aimed at the larger U.S. banks such as JPMorgan, Bank of America, Citigroup and HSBC over the past couple of years. Thomas J. Curry, comptroller of the currency, stated before the Senate Committee John Meyer on Banking, Housing, & Urban Affairs in March 2013 that “as large banks improve their BSA/AML programs and jettison higher risk lines of busi18 | Banking New York

ness, we are concerned that money launderers will migrate to smaller institutions.” The June 2013 BSA/AML Developments and Trends Report to the American Association of Bank Directors echoed his concerns, adding that “regulators are thus cautioning these smaller institutions to understand and allocate the resources and personnel necessary to effectively manage recent upticks in higher-risk activities.”

The consensus is that increased money laundering risk is a growing threat for community financial institutions; however, there are ways for banks to improve BSA programs to mitigate the increasing risk.

STOP USING ONE-DIMENSIONAL RULES

For most BSA officers, the monitoring process begins with a canned core processor report of cash transactions over a certain dollar amount, exported into Microsoft Excel. Those with basic BSA/AML software in place can pull reports to detect more than just structuring. However, what both of these processes have in common is that the reports only filter activity based on one “rule” at a time, such as a transaction limit or type. Most of the activity filtered

by a single report is not suspicious unless it is combined with the results of another report or additional variables, adding multiple dimensions. This methodology is the next generation of BSA monitoring because it helps catch more suspicious activity while reducing overall alerts.

USE STATISTICS TO UNDERSTAND NORMS AND FIND OUTLIERS

Banks need to know what is normal activity for their customers before they can know what is truly unusual or suspicious.

Organizing customers using peer-related groups, like similar businesses or consumer groups, because they can vary drastically.

Then, within each segment, determine the standard deviations for the overall financial activity and individual transaction types for that group. Activity that lands more than two or three standard deviations away from the mean may be considered statistically significant, allowing banks to pinpoint and focus on truly suspicious activity. Making this an ongoing process, periodically updating the analysis to determine if risk factors have changed at the institution, will allow BSA officers to proactively modify thresh-

olds for filtering suspicious behavior. Some institutions refresh this analysis annually, but pick an interval or instance that makes sense for your institution, especially if new risk is being introduced in the form of new products, mergers or market segments.

tion or variation to one account, and then never revisiting, is dangerous, because the account’s activity may change over time.

Make sure the system is built to send reminders when individual parameters need to be reviewed.

APPLY MONITORING THRESHOLDS THAT MAKE SENSE

MEASURE EFFICIENCY BY TRACKING HITS VERSUS SARS FILED

Just because a customer shows up on a large cash report doesn’t mean that the customer is doing something wrong, and recurring false hits are a fact of life. But should they be? Today, more advanced automated systems allow for individual customer-level monitoring at thresholds that make sense for that customer’s business.

Monitoring against individual parameters is superior to exempting, because if that customer starts performing extremely out of the ordinary, that behavior can still be caught. Setting and forgetting an excep-

It is important to track the alerts that actually become SARs, because it allows the BSA program to become more efficient. If you are able to present these ratios and show they are reasonable, you will give yourself, and your regulators, greater confidence in your program.

TRACK ALERT PRODUCTION OVER TIME

This goes hand-in-hand with tracking the ratios. It is critical to be aware of and document how many alerts are monitored as part of the BSA program over time, so

you can be aware of changing trends. Do not set and forget parameters; constantly improve them by working to reduce the amount of false hits to which the program is exposed. Look for ways to reduce false positives while still monitoring the true hits.

DOCUMENT YOUR CHANGES

Keep a detailed audit trail, so you can track when and why you make changes to your program. This way the bank, and the regulators, will know what is working at the institution and what isn’t.

Working in BSA is about to get more difficult. Community banks still have the ability to keep watch over our neighborhoods. It won’t be easy, and financial institutions will need to continually arm themselves with knowledge and better tools, but it can be done.

■

John Meyer is chief product officer at Banker’s Toolbox.

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Fourth Quarter 2013 | 19

RISING TO THE OCCASION HOW TO

DISASTER-PROOF

BY PHYLLIS HANLON

W

hen Hurricane Sandy blew into the area in 2012, leaving behind destruction and damage that, in some cases, has yet to be addressed, the New York Bankers Association (NYBA) and the New York Business Development Corporation (NYBDC) established a $10 million small business emergency loan fund to provide financial aid to businesses impacted by the super storm. The fund offered expedited loans of up to $25,000 to qualifying small businesses. Interest and payment free for the first six months, these loans assumed a one percent interest the next two years.

20 | Banking New York

Following suit, several NYBA member banks initiated their own philanthropic efforts directed toward individuals. M&T Bank, headquartered in Buffalo, and Astoria Federal Savings made a combined $350,000 donation to the American Red Cross. Both banks also matched contributions from the general public, its employees, directors and retirees.

Other financial institutions were well prepared to respond to natural disasters.

In January 2010, New York Community Bank (NYCB) launched NYCB Cares Program when a devastating earthquake struck Haiti. This initiative brought

key departments together to develop a collection campaign that was supported by the bank and its Foundations. This program has served as a model ever since and was implemented after Hurricane Sandy and most recently for the Arizona wildfires in Yarnell, according to Kelly Leung, spokeswoman for NYCB. “We have run multiple disaster campaigns at this point and have a team that comes together when one needs to be considered,” she says.

Hurricane Sandy prompted NYCB to coordinate multiple campaigns and donations. “We collected over $100,000 for the Salvation Army efforts, and

A group of Berkshire Bank employees pose for a picture at one of this year’s Company-Wide Day of Service projects in the Capital District of New York.

Berkshire Bank partnered with Rebuilding Together Saratoga County and employees helped paint the home and repair stairs of a local family in need.

developed a Family Helping Family program internally for employees to help each other, since many of our employees were affected,” said Leung.

“And finally we chose to support some regional hands-on organizations, like NeighborWorks, that were going to be around beyond the storm.”

NYCB also has a Community Reinvestment Act (CRA) officer who ensures the organization reinvests in a way that benefits the communities it serves. CRA officer Mike Fields develops relationships with organizations and helps create opportunities for employees who want to become involved in these efforts. In fact, oftentimes, employees propose projects, based on their personal passions.

Like many of the other New York institutions, Berkshire Bank, a wholly owned subsidiary of Berkshire Hills

Bancorp with a presence in New Y o r k , Massachusetts, Connecticut and Vermont, partnered with the American Red Cross to increase financial support for victims of Hurricane Sandy.

Lori Gazzillo, of Berkshire’s continued on page 22 

employees help refurbish buildings, participate in charity walks and collect food; they also serve on boards and committees, coach athletic teams, do fundraising and marketing and present financial literacy programs for homebuyers and in schools.

RE-ENGAGING WITH THE COMMUNITY

Berkshire Bank’s Robert Curley, New York regional chairman, painting the Northeast Parent and Child Society.

Foundation, points out that whenever one of the non-profits they traditionally support suffers from a natural disaster like this, Berkshire steps in to offer additional assistance. “We’ve provided grant money to some of these organizations. They might have gotten a grant earlier in the year, but may need more money if their insurance does not cover their losses,” she says.

A disaster like Sandy can become an accounting nightmare when it comes to tracking financial contributions. “It’s best to use a software tool of some sort to manage the charitable giving and to ask individuals to give their donations through that tool for transparency and tracking,” says Bill Horne, CEO of Truist, a provider of corporate philanthropy solutions. “In recent disasters, there have been some issues of accountability raised about whether the donations were actually getting to where they needed to go. Using an automated tool generally minimizes that disruption. Moreover, if the agencies receiving the help could provide a statement of outcomes, clearly noting who benefitted from these gifts and how, the entire process and all constituents would be better served.”

YEAR-ROUND COMMUNITY INVOLVEMENT While Berkshire Bank is a stalwart presence during disasters, the institution also makes a concerted effort to be present all year round for its local communities. In addition to grants, corporate giving and in-kind 22 | Banking New York

donations, the bank partners with other financial institutions in the Recycle, Reuse & Renew Technology Partnership Program, which distributes computers, servers, phones and other pieces of technology to those who express a need.

They’ve also given away furniture and other items on a case-by-case basis.

Berkshire’s Foundation, which gives $1.4 million each year to organizations, fosters a sense of giving back in all its employees. “It’s a key piece of who we are,” Gazzillo says, noting that employees give more than 37,000 hours of volunteer services. “Our employees understand and embrace the bank’s philosophy. From the moment they join the organization, they’re encouraged to volunteer,” she says. “They participate in one hundred company sponsored projects of different sizes and they do independent volunteer work.”

Berkshire Bank provides employees with 16 hours of paid time off every year during business hours to volunteer.

“This speaks to the commitment of the bank. Between sixty and seventy percent of our 1,000 employees participate in programs,” Gazzillo says. She points out that the bank uses a volunteer service software system, which enables them to send notices to a specific region when a project is available. “People can then sign up.

We often have waiting lists,” she says.

Generally focused on two priorities: community and economic development and education, Berkshire Bank

Horne points out that a bank’s resources are best directed to the needs of the immediate community it serves and doesn’t disappear when those needs are met. “If done properly, the bank is further positioned as a pillar of the community and customers see that it is in touch with the community’s needs.

While individuals do not appreciate public relations posturing in light of natural or manmade disasters, being there and staying there long after the disaster means a lot to the community,” he says. “Holding charitable reserves for such disasters may be prudent or having the mechanism to make the call to national headquarters for immediate funding is paramount. Often, it seems like there is a tremendous outpouring of charitable donations directly after an unfortunate event occurs, and then it dries up shortly thereafter. What may be more meaningful is the care administered to the community in the coming weeks and months after the disaster when everyone else has ‘moved on.’”

For instance, banks can re-engage with the community long after a disaster first takes place by sponsoring a first responders breakfast to show appreciation for everyone who helped out right after the disaster, notes Horne.

“The bank could be a no-charge depository for supporting victims of the disaster and report back the use of proceeds to the community and donors at large. The bank could also hold another fundraiser six months after the disaster as a reminder that people still need help and support.” Additionally, Horne recommends partnering with an outside organization that specializes in publishing stories about victims and how they benefitted from aid and support.

When Hurricane Sandy struck, it impacted much of the area that

Popular Community Bank serves.

Pamela Kulnis, director of people, marketing and public relations, says, “Our headquarters is in lower Manhattan, right in the thick of it. It hit us, particularly in the New York and New Jersey branches.”

Once all employees were accounted for, the bank launched into action, setting up collection points for in-kind donations as well as cash, which was given to the Food Bank for New York City, with whom the bank had a previous relationship, and the Salvation Army of New Jersey. General donations and matching funds from the bank amounted to $50,000, according to Kulnis.

She notes that some of their branches were operational, but people living in those areas had experienced some horrific damage. In spite of their dire situations, many of these individuals came to the bank to contribute to the funds. “This is a testament to the strength of our customers and the community,” Kulnis says. “We look to

be a presence, a shoulder-to-shoulder community partnership. These are the people we bank with, the people we sit across the table from. Through our branches we try to be a footprint in the community.”

Once the fundraising and inkind donation drives ended, Popular Community Bank wanted to express its appreciation to the community that so generously helped the storm victims. “We said, ‘Because of you, these organizations can do the work they need to do,’” Kulnis says. “On the anniversary of Hurricane Sandy, I expect we will hear lots of stories.

There are still many people living in hotels. I hope [the attention] raises the level of awareness.”

Throughout the year, Popular Community Bank’s Foundation provides grants to various community organizations and involves employees in the process.

Kulnis says, “Organizations come in and do a presentation to explain what they’ll do with the money. A committee of

employees goes onsite to check out the organization and decides where much of their contributions will go.”

In 2012, Popular gave grants to eight local organizations that totaled nearly $140,000. The grants support issues such as community health initiatives and victims of domestic violence. The bank’s partnership with Operation Hope trains employees to deliver effective financial literacy workshops.

During the annual Employees Make a Difference Day in October, staffers from Popular Community Bank provide elbow grease as they paint schools, sort and prepare food, plant community gardens and offer their services in other ways. Kulnis asserts that monetary support helps tremendously during and after a disaster, but feet on the ground and hands helping really make the difference. “It’s less about what you do and where you do it, as long as you do something,” she asserts. “We make sure we step back and look at how we can further connect with the community.” ■

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Fourth Quarter 2013 | 23

BUILDING A BETTER MODEL | By Meredith Piotti

Addressing Model Risk to Avoid Financial Loss

I

n this highly regulated and risk-focused environment, financial institutions are relying more on applying models to important procedures such as risk management and preparing for regulatory reporting. However, using models can increase risk, since there are a number of factors that could cause them to be inaccurate, leading to financial loss.

Understanding what model risk is, how to build better models, and keeping them accurate will reduce risk and losses at your financial institution while instilling best practices that can refined and replicated to help the organization become more secure and successful.

UNDERSTANDING MODEL RISK Model risk is quite simply the risk that results from decisions made based on misused or incorrect model output reports. These errors can lead to financial loss, poor business and strategic decision making, and long lasting damage to the financial institution’s reputation.

Model risk occurs when there are fundamental errors in the model that result from poor quality of input data, which of course, leads to poor quality output data on which decisions are based. Model risk also occurs when a model is used incorrectly or inappropriately such as when models are used in a different way from what was originally intended.

YOU CAN PREVENT MODEL RISK There are steps you can take to reduce the chance of model risk. The most important step is to put an “effective challenges” process in place. This is done by ensuring that there is ongoing critical analysis by objective, informed parties who can identify model limitations and assumptions and apply appropriates changes. There are three areas to look at in the people who will be doing the effective challenge.

Incentive – Having a person who did not build the model lead the effective challenges will produce better results, as they will have an objective view of the model, they will not hesitate to question of any assumptions in the model, and they will not be tempted to hide any flaws in the model that could be revealed and reflect poorly on them.

Competence – The people overseeing the model and raising the effective challenges must be competent and have knowledge of the model process. This can be accomplished through selecting people with this knowledge as well as by providing training on how the modeling works, what the outcomes should look like, and what indicates potential problems.

Influence – You want the people who are overseeing the effective challenges process to have influence in the institution so they can provide leadership on implementing the needed changes and be heard by the board, management, and staff.

Meredith Piotti, CPA, CIA, is an audit supervisor at Wolf & Company, specializing in financial institutions. She can be reached at mpiotti@wolfandco.com.

24 | Banking New York

IN-HOUSE MODELING VS. OUTSOURCED MODELING

TESTING YOUR MODEL

There is no question that your institution must create the best models possible to continue operating successfully. Depending on your institution’s size and available resources, there are two ways to get the modeling done: have your internal team build the model, or outsource the work to experts.

There are some things to consider when deciding to do the modeling in-house or to outsource.

Before undertaking modeling in your institution, you will need to assess if the team that would work on the model has the time and skills to build an accurate model that will produce solid output data. You will also want to consider how much control and customization you will need for your modeling needs.

One of the main benefits to in-house modeling is the amount of control you will have because you are the one building the model. However, the drawbacks to in-house modeling is that you could be limited by time and availability of staff, the complexity of the model that is needed, and not having the knowledge among your team to build an accurate model.

When developing your model in-house, there are important things to consider to make sure it's as effective as possible: • You need a clear statement of purpose that lays out what the model should be performing.

• Make sure the components in the model work as intended, are appropriate for the business goal, and are conceptually sound and mathematically correct.

• Have a good assessment of data quality and relevance, and that the appropriate documentation is available.

• Undertake periodic testing during development to make sure that the calculations within the model are accurate, that the model is stable and robust, that limitations are assessed, and that there is constituent behavior over a range of inputs.

Understanding if your model is working effectively is an ongoing process. To get an accurate understanding of the model’s accuracy and ensure that it reflects reality, you should seek out and utilize user feedback and insights and ask senior management to question assumptions and methods.

If the model is not working correctly, and you are developing it internally, you may want to consider hiring a professional team to move the process forward. If you are already outsourcing the work, you can work with the vendor or change vendors.

Outsourcing modeling allows your institution to seek out the best experts available to suit your needs and build the model for you without being limited by knowledge or complexity. It also means that the outside experts are working on the model, which frees up precious time for your staff to address other issues in the institution.

An outside expert brings a wealth of knowledge to the modeling process. These are people whose job it is to make the most accurate models possible. They not only get to know the particulars of your institution, they have also experienced and gathered a range of best practices from the many different financial institutions they work with and can apply them to your needs.

VALIDATING YOUR MODEL All models in the institution – as well as all parts of each model – should be subject to validation. Validation is a set of processes and activities intended to verify that the models are performing as expected and are in line with their design objectives and business uses. The frequency of the validation depends on the complexity of the model and how often it’s used. The rigor of the validation depends on the potential risk.

The validation should be performed by people who do not have oversight of the model. They should have the skills, experience, and authority to accurately validate the model and ensure that changes are made throughout the institution.

The ongoing monitoring of model validation is one of the most robust periods of testing for your models. It should include checking for mathematical accuracy, ensuring that the model is performing as expected, and assessing if it’s meeting regulatory requirements and best practices. It should be noted that one regulatory hot button right now is the override of assumptions, which can be used to manipulate outcomes.

To avoid regulatory scrutiny, it’s advised that any assumption override decisions be fully documented.

The final step of the validation process is the outcomes analysis. In this step, you want to compare the model’s outputs to benchmarks and industry norms, but most importantly, to the actual outputs created by the institution. This will allow you to more accurately evaluate the performance of the model. You will also want to look for some early warning metrics that give you a heads up on any flaws in your model.

Building, testing, and validating accurate models is important to your financial institution’s financial well-being.

By building a strong team around the modeling process, utilizing best practices, and seeking expert consultants when needed, you can create strong models that will serve your financial institution well into the future.

■ Fourth Quarter 2013 | 25

BANK PROFILE | By Linda Goodspeed

Evans Bank Reaps Rewards from Communities Served

F

ollowing back-to-back record years, and two national awards, Evans Bank is on a roll – and on pace for yet another record.

Not an easy task in the highly competitive western New York banking environment. And unlike some of its larger competitors, which have pursued a merger and acquisition strategy, Evans’ success has been largely home grown.

David J. Nasca “It comes back to our people and culture,” said Da26 | Banking New York

vid J. Nasca, president and CEO since December 2006. “Banking is commodity-driven. It comes back to execution and people. We execute well and have the right people in the right places.”

Headquartered in Hamburg, Evans Bank is a federally chartered commercial bank with $816 million in assets and 13 branches in four counties. Its parent company is Evans Bancorp Inc. For the second quarter of 2013, the most recent earnings statement available, Evans reported its net earnings increased 28.7 percent to $1.9 million.

In 2011, Evans reported a then-re-

cord $6.2 million in net income for the year. It topped that record the very next year with $8.3 million in net income. Through the first six months of 2013, Evans was on pace to equal or better its 2012 record.

Evans’ performance has not gone unnoticed. In September 2012, the investment banking firm Sandler O’Neill and Partners named Evans Bank one of 25 top performing banks and thrifts with market capitalization under $2 billion. Evans was selected from a pool of 461 financial institutions nationwide.

In July 2013, Evans was recognized among the top 10 percent of U.S. community banks in the first annual Raymond James Community Bankers Cup. The Raymond James Community Bankers Cup identified the top 10 percent of community banks with total assets between $500 million and $10 billion, a pool of more than 300 community banks nationwide.

Evans’ strong performance is due in part to a diversified revenue strategy. In 2000, it began purchasing several insurance related businesses, which form the Evans Agency, Inc. The Evans Agency includes a financial services division that offers access to investments and securities. Noninterest income now accounts for 31.5 percent of total revenue.

“That’s a pretty attractive level compared to the rest of the industry,” said Damon DelMonte, an analyst at Keefe, Bruyette & Woods Inc. “It makes them less dependant on spread income, which has come under pressure because of the low interest environment and asset yield.”

Evans also has an attractively low percentage of nonperforming loans – 1.65 percent of total assets as of June 2013.

“We are appropriately conservative,” Nasca said. “That being said,

what we’re about is really knowing our customers and their needs so we can provide business solutions and be that trusted advisor.”

In the second quarter of 2013, loans increased 2.2 percent over the prior year period, and 3.5 percent from the trailing first quarter to $607.4 million. The bank’s annualized loan growth rate was 13.8 percent.

Over the last five years, Nasca said Evans’ loan growth has averaged about 12 to 15 percent annually, and its deposit growth about 5 to 8 percent.

“That’s still only about two percent in deposit penetration,” he said.

“There’s a lot of opportunity to continue our growth.”

Nasca noted that “a lot of the low hanging acquisition fruit has already been picked in western New York,” meaning growth now must come from in house.

“Most of the acquisition work is behind us,” he said. “Organic is the way we have to grow now.”

DelMonte agreed. “There’s definitely been a lot of shakeup and market disruption in western New York.

It’s a good opportunity for smaller banks to take market share.”

Nasca said Evans’ team and products makes the bank well-positioned

MARKET PENETRATION The bank’s lending is in three main areas: commercial real estate, commercial industrial and consumer lending.

“We do a bunch of things for businesses – employee benefits, cash management,” Nasca said. “We have a nice set of complimentary products and work holistically with customers to meet a significant amount of their needs. It’s resulted in strong market penetration.”

to be the beneficiary of this market disruption.

“We know how to win business organically. That’s how we’ve gone at it because of the lack of acquisition opportunities.”

But large or small, he noted the current and future environment for banking institutions is filled with challenges and uncertainty. In the government’s efforts to rein in “too big to fail” banks, Nasca said the increased regulation has “hit everybody. “ “In our little community bank, it’s increased our compliance costs 500 percent, and we believe there’s more to come,” he said. “It’s created uncertainty and confusion, number one, and number two, regulatory creep.

It’s not a good environment to be aggressive in.”

But so far, Evans seems to have found the right formula.

■

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Fourth Quarter 2013 | 27

ALL ABOUT TRUST | By Patrick Sweeney

How to Regain Your Customers’ Trust

I

n a world where the post-crisis business environment is constantly shifting beneath our feet, it’s no wonder customers and investors have become more skeptical than ever about the financial system and its stability. It’s a transition that’s also impacted – and in some cases, strained – the relationship dynamics between financial professionals and their clients.

As a result of this uncertainty, merely selling financial solutions is not enough. Financial professionals must not only solve their customers’ problems with a solution, but build a relationship that garners trust and elevates the customer’s buying experience.

Many financial advisors and professionals rely purely on transactional techniques when dealing

with their clients – they have the skills to succeed in sales. But as more and more clients demand consultation, a new skillset is required.

In recognition of this new paradigm, BNY Mellon Wealth Management was compelled to cultivate a clientcentered culture. To do so, the company didn’t just replace “old world” financial advisors. Rather it redirected its current advisors, helping them leverage the strengths they already have to interact with clients differently, and then recruited talent in this new consultative model. By adapting a conscientious culture, BNY Mellon Wealth Management increased average new business revenue by nearly 20 percent and dropped sales force turnover by 50 percent.

To make a similar transition in your

Patrick Sweeney is president of Caliper Corporation. He can be reached at 609-524-1200.

28 | Banking New York

own company – and align the needs of the customer with current members on their teams – financial managers should abide by the following steps:

DEFINE SUCCESSFUL BEHAVIORS What is it that makes your clients choose you over the competition?

Your products are easily duplicated elsewhere, for a lower cost, but clients come to you because they believe you.

They feel safe working with you; you are there for them. It all comes down to trust.

What is it about your financial employees that make these interactions successful? Is it the interpersonal aspect – do your top financial advisors have a keen ability to engage in conversation with their clients? Are they empathic and assertive? What

are the traits of your top-performing financial professionals and what do their behaviors look like?

In search of these answers, BNY Mellon used a robust assessment tool to measure 23 different personality traits and motivational factors to determine which individuals had attributes related to competence, credibility and empathy – key qualities of consultative advisors.

Measuring and analyzing your bench strength is the starting place.

Then it’s a matter of implementing a structured process that keeps those competencies your top performers possess in mind as you recruit internal and external personnel into open roles and develop your current team.

Bottom line: Until you understand what makes you successful, leaders in the financial sector will be unable to replicate that success.

create a platform for development programs. Ultimately, this will help foster successful behaviors in others as well as encourage those behaviors in new hires.

To drive your team toward a more consultative relationship with their clients, where they are building relationships and trust, it’s more than just implementing a process. Your team has to get on board with your goals and be willing to embrace the vision and culture you’re looking to create.

Create development programs for all your employees; give them opportunities to take on stretch assignments based on their strengths; and allow them to mentor new employees coming into the company.

Not only will you encourage the behaviors you’re looking to achieve through these initiatives; you will also foster employee engagement.

Engaged employees are happy, productive employees – and that positivity is then transferred to your clients.

Your financial professionals are your brand. Helping them develop new skills will have a major impact on your client base as well as future growth.

This isn’t a task that has to be taken on internally: External coaching and third-party consulting and assessment can help financial organizations develop their own employees, help managers develop coaching skills and provide support that aligns with sales managers’ skills.

As a result, talent in the organization – in addition to the overall culture – will be more consistent, aligned and poised for success. And, perhaps most importantly, it will prove your company’s trustworthiness to the clients and prospects that matter most.

■

UNDERSTAND AND BUILD YOUR CULTURE It isn’t just about knowing what your top performers possess that will help your organization garner loyal clients that trust you; it’s also about the culture in which your top performers function that will help distinguish them.

By successfully building your culture around creating customer trust, your team will be positioned to effectively interact with its client base.

But leaders can’t just say what they’re culture is to enforce it; they have to live it and breathe it as well. Doing so will ensure your team is more able to live the company’s values as well.

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Fourth Quarter 2013 | 29

SMALL CHANGE

Karl F. Krebs

John Golding

CHEMUNG CANAL TRUST CO.

FIRST NIAGARA FINANCIAL GROUP

Elmira-based Chemung Canal Trust Company has appointed Karl F. Krebs to its management team as executive vice president, CFO and treasurer. He has also been appointed as CFO and treasurer of Chemung Financial Corporation, CCTC’s parent company. He has more than 30 years of banking experience, and most recently served as executive vice president and CFO of Financial Institutions Inc./Five Star Bank in Warsaw. Krebs earned a bachelor’s degree from Canisius College and an MBA from the State University of New York at Buffalo. He is a board member of the Buffalo Museum of Science and a past member of the board of trustees of the New York State Bankers Retirement System, where he also served on the group’s investment committee.

First Niagara Financial Group, parent company of First Niagara Bank, has promoted John Golding to senior director of small business banking.

Golding joined First Niagara in December 2012 as retail banking director for the company’s tri-state region. In his new role, Golding will develop and implement First Niagara’s small business strategy across its four-state footprint and will maintain the day to day operations of the company’s small business organization, serving customers with revenues up to $2 million. Golding will lead a team of 50 small business bankers, as well as First Niagara’s customer contact center organization, serving business customers. Prior to joining First Niagara, Golding was the COO of Nova Bank in suburban Philadelphia. Prior to starting his banking career, he was a small business owner and entrepreneur for 10 years and owned and operated a group of restaurants in the North Carolina area.

Additionally, First Niagara Financial Group has added Senior Credit Manager Laurentia (Laurie) Price to its commercial banking team. Price will lead a team of underwriters and two regional credit managers, who are responsible for ensuring the credit quality of First Niagara’s middle market and business banking portfolios, and for overseeing underwriting activities for the Tri-State and New England Regions. She will maintain offices in First Niagara’s New Haven, Connecticut and Nyack, New York regional offices, and will report directly to Nancy Cinfio, senior vice president and senior director of credit risk and approval. Price joins First Niagara from Integritas, Inc., where she served as CFO for the past two years. Prior to Integritas, Price was with Webster Bank from 2001 to 2011, most recently as senior vice president and chief credit approval officer.

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TD BANK TD Bank has named Jennifer T. Tocci to senior vice president and head of global compliance training in New York City. She is responsible for the delivery and management of the bank’s compliance training program across the organization. She has 14 years of banking experience. Prior to joining TD Bank, she served as vice president of global compliance training at Goldman Sachs, and before that, as assistant vice president and compliance training officer at The Bank of Tokyo-Mitsubishi UFJ, in New York City. Tocci is a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS).

SEND US YOUR NEWS!

SUBMIT NEWS FROM YOUR BANK OR CREDIT UNION TO ASSOCIATE EDITOR CASSIDY MURPHY AT CNORTONMURPHY@THEWARRENGROUP.COM

30 | Banking New York

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Fourth Quarter 2013 | 31