Massachusetts Banker 1Q 2011

FIRST QUARTER 2011

THE MAGAZINE

O F T H E M A S S A C H U S E T T S B A N K E R S A S S O C I AT I O N

Steve Antonakes enters the

Washington Whirlwind Inside the new CFPB

PLUS: The Interchange Controversy page 04 Charitable Foundation Awards page 14 Lending Near a Floodplain page12

FIRST QUARTER 2011

THE MAGAZINE

O F T H E M A S S A C H U S E T T S B A N K E R S A S S O C I AT I O N

Cover Story Photos: James Kegley

features C O V ER ST O R Y

Underwater?

Q&A

What Climate Change Means for a Loan Portfolio Near the Floodplain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Mr. Antonakes Goes to Washington . . . . . . . . . . . . 16 C olum n s

Chairman’s Column . . . . . . . . . . . . . . . . . . . . . . . 4 Legislative Review . . . . . . . . . . . . . . . . . . . . . . . . 8 departments 14

Dossier:

Needham Bank . . . . . . . . . . . . . . . . . . . . . 6

14

MBA Awards

On the Move . . . . . . . . . . . . . . . . . . . . . 22 Good Neighbors . . . . . . . . . . . . . . . . . . . 26 MBA Calendar of Events . . . . . . . . . . . . . . 30

MBA Charitable Foundation Awards 2010 Grants . . . . . . . . . . . . 14

One Washington Mall, Boston, MA 02108-3906 Phone 617-523-7595 • Fax 617-523-6373 www.massbankers.org

Officers Chairman: Kenneth C. Brennan, President The Village Bank, Auburndale

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Vice Chairman: Norman S. Seppala, President Granite Savings Bank, Rockport

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First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

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Chairman’s Column

by Kenneth C. Brennan

A Change in Interchange

I

n July of last year, the so-called Durbin Amendment became law as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In mid-December, the Federal Reserve released proposed rules to implement interchange fee reforms mandated by the new law. It’s probably accurate to say that our industry was shocked by this amendment coming out of left field at a time when we thought that reform would address the mortgage company abuses and Wall Street shenanigans that were the cause of the financial crisis.

While Sen. Richard Durbin (D-Illinois) pontificated about the benefits that capping interchange fees would produce for small businesses, it was really big-box retailers that were popping champagne corks all across the American landscape, with projected annual savings somewhere in the range of $4 to $9 billion.

Durbin said, “Wall Street reform is about two things: holding big banks accountable for how they operate and empowering consumers to make good financial choices… Passage of this measure gives small businesses and their customers a real chance in the fight against outrageously high ‘swipe fees’ charged by Visa and MasterCard. It will prevent giant credit card companies from using anti-competitive practices, allow merchants to offer discounts to their customers and restore common sense and fairness to this broken system… Small businesses will be able to keep more of their own money. Making sure small businesses grow and prosper is vital to putting our country back on solid economic footing.”

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Others echoed Durbin, saying that the passage of this amendment would save consumers money as retailers passed along their cost savings. Well, we all know how that is going to work out: it’s not going to happen. In some countries, like Australia, where interchange fees have been capped for some time, a U.S. Government Accountability Office study predictably showed that the savings by merchants were not passed along to consumers.

On many levels the Durbin amendment is fraught with problems, inconsistencies and falsehoods, and it will produce a huge list of unintended consequences for years to come. While as the CEO of a small bank I am not in the business of defending Visa or MasterCard or, for that matter, larger banks, price controls are simply bad for everyone, including consumers, and are even bad for the banks below $10 billion in assets that are not directly subject to the new controls. It all boils down to price controls constricting healthy competition.

The argument that small businesses are burdened by interchange fees is shallow. It fails to take into consideration the real value that all retailers receive while offering customers great conveniences through credit and debit card usage. Security is guaranteed by card issuing banks. If a security problem occurs it’s the banks and card companies that make the consumers whole for fraud and absorb the cost for issuing new cards. Retailers don’t have the costly burden of managing cash.

They are guaranteed payment; in contrast, checks can bounce. Retailers suffer fewer losses because cards replace cash, which can be lost or stolen, including by employees. They are able to serve customers more quickly and efficiently because there is less

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

cash to be counted and sorted and fewer checks to be written, verified and stored. Retailers receive faster credit for their sales. They may have more sales because customers are not limited to the cash in their wallet or money in their bank account when deciding to make a purchase. In addition, credit and debit cards not only benefit merchants relying on in-person sales, they have made Internet commerce possible. It is also worth noting that merchants can, and some do, offer cash discounts if they wish to avoid interchange fees.

The security issue is particularly vexing. Durbin and all of the other supporters of the amendment in Congress failed to recognize that retailers – not banks – are the major cause of data breaches in this country and abroad. This alone was justification for interchange fees remaining unchanged. These are factors not considered by analysts when they quote the “real” cost of each transaction.

Why should consumers care about a fee that looks like an internecine battle between business interests and not something that impacts them?

First of all, as mentioned previously, there is no easy way to hold retailers accountable for the reduced prices that will supposedly be returned to consumers from the retailers. Second, retailers will be able to discriminate against individual cards and set limits (minimum and maximum) per transaction. Third, consumers need to understand that convenient banking services all have costs. The products of banks and card companies are their services, and there are costs associated with providing such service.

Merchants and their supporters in Congress seem to believe that the banking industry should shoulder all of the costs of the electronic payment system, even when retailers are receiving substantial benefits. However,

as we all know, banking services like debit cards cost money – and banks will be forced to find ways to replace this lost revenue in order to continue providing their customers with the products and services they expect.

So what’s the net-net for consumers? Costs will need to be passed along somehow, perhaps in fees for debit cards. Almost certainly many free checking accounts will be modified. More importantly, consumers may need to carry more cards. Retailers may offer “specials” to price-controlled credit cards which could cost consumers more in higher interest rates and annual fees.

On the face of it, the exclusion of small banks from the new legislation makes it appear as if we will be impacted to a lesser extent; however, we’re not going to be celebrating any time soon and are extremely concerned. Our income is dictated by Visa and MasterCard. We’re not likely to get much business from retailers and they can incentivize their customers to use their card of choice.

Moreover, now that the floodgates are open, we can expect retailers to push for controls on our debit and credit cards as they have the larger banks. This is the slippery slope of price controls.

The real irony in Durbin’s stated motivation behind the legislation, the need to provide some relief to small businesses, is that many more of them will be driven out of business by the likes of Wal-Mart and Home Depot, who will be the chief beneficiaries of the new policy.

How’s that for an unintended consequence, Senator Durbin? n

Ken Brennan is chairman of the Massachusetts Bankers Association and president and CEO of The Village Bank, Auburndale. He can be reached at kbrennan@villagebank.com

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Dossier

More Things to More People Needham Bank Institution:

Needham Bank

President and CEO:

John (Jack) McGeorge

Headquarters:

Needham, Mass.

Assets:

$1.1 billion

Branches:

5

ATMs:

6

Employees:

106

Charter:

State Mutual

Founded:

1892 Jack McGeorge

O

ver the past few years, many Main Street banks have experienced a renaissance of sorts. Traditional old-time service and tried-and-true banking practices have attracted customers looking for a safe, secure, locally focused institution. People are recognizing the win-win nature of these relationships, which can create a positive ripple effect that benefits both sides, emanating from the bank and into the community.

One institution enjoying such a renaissance is Needham Bank.

Established in 1892, the bank started off small and has enjoyed a long history of steady growth. “We had 73 customers back then,” says Needham Bank President Jack McGeorge, “and as MetroWest grew over the years, so did the bank.

Today we have offices in Wellesley, Westwood, Needham, Dedham and Medfield and serve more than 40,000 customers.”

That strengthened position is the result of an unwavering commitment to service, a focus on leveraging the latest technologies as they come along, constantly evolving product offerings, and a promise to

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continually give back to the communities outside the bank’s walls.

“Some people see their local community bank as a nice little place where they feel comfortable, know the people, and perhaps have a savings account or even a mortgage,” says McGeorge. “But most are so much more than that. We’re a billion-dollar institution capable of offering all the products and services of the big banks. And, of course, they can’t touch our level of accessibility or service.”

Delivering on those promises requires constant vigilance on the part of McGeorge and his team.

“Over the past couple of years, we’ve brought on more than 40 midto high-level personnel to expand our product offerings and maintain our service levels,” he says. “We’re starting the process to expand our physical footprint by more than 6,000 square feet in Needham and have recently modernized many of our facilities. We’re poised for further growth.”

That growth promises to come in a myriad of different areas.

Through a recent partnership with Morgan Stanley Smith Barney,

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

Needham Bank now offers a complete array of investment and financial advice services. Consumer and business checking account customers are taking advantage of a recently enhanced online banking system complete with mobile banking capabilities.

Needham Bank’s long history and strength in real estate loans is the foundation for an impressive and expanding portfolio in residential, commercial and construction.

As of Jan. 31, 2011, loans in those three categories represented 47, 16 and 18 percent of Needham Bank’s assets, respectively. While it has always been a core part of the bank’s business, that residential number increased recently as the bank carved out a niche in jumbo mortgages.

“It wasn’t something we set out to do,” McGeorge says, “but when the mortgage market was in turmoil in early 2008, those loans became harder to come by. We started getting calls, saw an opportunity and, even being very selective and diligent, underwrote a significant number of them.” continued on page 21

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Legislative Review

by David Floreen

Double Probation

I

n November, voters across the nation signaled their displeasure and frustration with the status quo. We witnessed one of the most stunning electoral transformations since the 1930s, especially given the rousing enthusiasm President Barack Obama garnered just two years ago. How fickle and impatient we are, indeed.

While the U.S. Senate remained under Democratic control by a slim margin, due to the lack of mainstream attractiveness of the Republican candidates (Alaska, Delaware, Nevada), the House witnessed the greatest shift of power in more than 70 years as Republicans gained 63 seats. They needed only 39 to take control. The new margin in the 112th Congress is 242 Republicans to 193 Democrats, compared to the justconcluded 111th Congress, where the margin was 255 Democrats to 170 Republicans.

Massachusetts was not immune to the Republican surge, irrespective of its reputation as a bright blue state. Democrats retained all 10 Congressional seats and all six constitutional offices, despite spirited races

by Republicans for governor, state treasurer and auditor. Republicans doubled their ranks in the House, jumping from 16 to 31 seats. All told, there will be 40 new house members and eight new senators, a turnover of 25 percent, the highest level of new members since 1990.

Republicans won smashing victories in state legislatures across the nation, capturing an outright majority of all 7,382 of the nations’ state legislative seats. According to the National Conference of State Legislatures,

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Democrats ran 50 fewer candidates while Republicans ran 822 more candidates. The net result: Republicans now have their largest advantage in states since the Great Depression. Republicans gained control of the legislatures in Michigan, Pennsylvania, Ohio, Wisconsin and Indiana.

Regionally, the trends were similar. Maine switched from an allDemocrat controlled legislature and governor’s office to all-Republican controlled for the first time in generations. New Hampshire, which swung wildly Democrat in 2006 and held in 2008, did a U-turn back to Republican control. The Senate went from 14-10 Democrat-Republican to 19 Republicans and only five Democrats. In New York state, Republicans regained control of the all-important state senate, although they came up one vote (50-100) shy of managing to sustain vetoes and other policy matters.

Another trend: rookies. Many new faces means much more outreach by interest groups to educate new legislators on the substance and nuances of the myriad issues they will consider. For example, many new members of Congress said the first time they ever entered the Capitol was during an orientation program in November. In Michigan, the 110-member House will contain 60 new members with no legislative experience and 90 percent of all Michigan legislators will have two years or less experience. Similar patterns exist in other states.

Why does this matter? Power and policy. Just before Christmas the U.S. Census Bureau released the national and state-by-state population figures based on the 2010 census data. The bureau also released the state Congressional apportionment totals that dictate which states will gain and lose seats in the 113th Congress, to

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

be elected in the fall of 2012. Massachusetts, along with nine other states, will lose one seat, while Texas will gain four seats. Who establishes Congressional district boundaries?

States. Who in the states controls that process? Primarily legislatures, with varying degrees of influence by governors. In a few but growing number of states, independent commissions redraw district lines.

This process is critical because the 2012 elections likely will set the tone for the next 10 years. If Republicans can craft districts to reflect their power bases, those districts will remain in place until 2022, making it harder for Democrats to regain some seats. This is especially true in the Midwest states. Add in the escalating influence of conservative Republicans in the south and west, where population is still growing, and the power shift is obvious.

What does this mean for banks and their customers?

First, let’s be clear, no one knows for sure, but here are some observations. Dodd-Frank has shifted, for now, the primary bank regulatory power to Washington and federal regulatory authority. Congress may tinker with some of the details of the Consumer Financial Protection Bureau (CFPB), but it does not appear that Washington is ready to dismantle the CFPB before it starts.

Second, since Republicans now control the House, they can conduct oversight hearings and focus attention on the issues that they believe deserve greater scrutiny. Do not underestimate the power of the bully pulpit and the desire to hold the Obama administration accountable for all sorts of administrative actions or inactions, particularly in advance of the 2012 presidential elections. continued on page 10

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Legislative Review continued from page 8

Third, it remains to be seen how Dodd-Frank language curtailing federal pre-emption will play out in Washington and the states. For years, federally chartered banks and thrifts looked to the Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS) to protect and expand their ability to offer products and services irrespective of various state impediments. States felt constrained because they knew that if they tried to impose significant restrictions on bank fees, products or practices, often aimed at federal institutions, only state banks, which often did not engage in the targeted practice would be negatively impacted.

Beacon Hill Update The 2010 legislative session ended with a whimper on Tuesday, Jan. 4, 2011. Unlike many other even-numbered years, when a surge of activity occurred during informal sessions to adopt significant legislative initiatives, this end-of-year activity was non-eventful. Aside from enactment of an automatic homestead law and a modest expansion to the mechanics lien law, the banking industry escaped unscathed. This dearth of activity can be traced to a number of factors: Legislative leaders were drained by the end-of session drama over casinos, many fiscal challenges, focus on the November elections, and the loss of a dozen Democratic incumbents. There was also the matter of the escalating investigation into allegations about “pay to play” in the state’s Office of Probation. Perceptions matter and legislative leaders do not want to appear to be advancing any matters that could suggest that those bills were approved due to any undue influence in an informal session.

What’s ahead in the new session?

As previously mentioned, there are 48 new legislators, 40 of them in the House. They did not run to be back-benchers and keep quiet for their first year. They do not want to be “one-hit wonders;” they want 10

to make a difference. At the end of January, Senate President Therese Murray (D-Plymouth) and Speaker of the House Robert DeLeo (D-Winthrop) announced their new, revamped leadership teams, including two new chairs for the Committee on Financial Services: Senator Anthony Petruccelli (D-East Boston) and Representative Michael Costello (D-Newburyport). For the first time in recent history there are two new chairs in the Senate and House ways and means committees.

It will also be especially challenging to House Minority leader Bradley Jones (R-North Reading) as he leads all the new House Republicans.

The deadline to file bills was Jan. 21, so it will be a while before we can filter all 5,300-plus bills introduced in the Senate and House and assess which proposals will consume much of the Association’s attention in 2011.

We anticipate that mortgage foreclosures, bank products and fees, taxation, expanded credit union powers, expanded financial education, broader definition and expanded penalties for bank robbery and check fraud, adoption of the uniform trust code, and an as-yet unidentified topic will be our primary matters of concern in the year ahead.

At this writing, the top issues likely to command attention on Beacon Hill in 2011 are: the fiscal year 2012 budget and how to close a likely $1.5-plus billion gap without any notable increase in revenues; measures to reign in health care costs both in MassHealth/Medicaid and in the private sector; redistricting both the congressional districts and all 160 House and 40 Senate seats; education reform; job and economic development, and the ongoing parole and probation department investigations.

Washington Report Just before Christmas, Congress adopted by strong bi-partisan votes a major tax package agreement worked out by President Obama and Senate Republicans. It extended the Bush tax cuts for two years, extended unemployment benefits until the end of

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

2011, imposed a temporary one-year cut in Social Security taxes paid by employees from 6.2 to 4.2 percent, providing immediate income boosts to many taxpayers, along with many other provisions. More important than the substance, perhaps, is the politics this package represented.

Liberal Democrats and conservative Republicans hated the compromise for diametrically opposite reasons; liberals because it gave too much to the rich, and conservatives because it added too much to the federal deficit. Will this pattern continue?

For banks, the focus in Washington will be on the bank regulatory agencies as they plow ahead to restructure and implement much of Dodd-Frank on July 21, 2011. Former Massachusetts commissioner of banks Steven Antonakes assumed a key new post in the new CFPB in November, and is responsible for overseeing the examinations of the largest banks and credit unions in the nation to ensure compliance with federal consumer protection laws and regulations. (See cover story.)

The Federal Reserve Board is charged with drafting and implementing the new provisions regulating interchange fees. Preliminary drafts suggest that this could be detrimental to both banks and their customers (see Chairman’s Column, page 4). The list is endless; the focus on regulation will be relentless for much of 2011.

Congress had barely two weeks off for the Christmas holidays before it convened the first week of January under the new leadership of John Boehner (R-Ohio), the new Speaker of the House. Boehner has made it very clear that he understands American voters demand leaders focus on creating jobs, reducing the deficit and shrinking the burgeoning federal bureaucracy. If his party cannot deliver, they too will suffer in the next election. In essence, Republicans are on probation; deliver or be gone. n David Floreen is senior vice president at the MBA. He can be reached at dfloreen@massbankers.org.

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Underwater?

What Climate Change Means for a Loan Portfolio Near the Floodplain

by J. Wylie Donald, Esq.

I

n a time of climate change, lenders who rely too much on flood -plain maps could find their portfolios underwater.

Under existing law, lenders are required to determine whether a property participating in a federal program (such as a loan guarantee) is in a Special Flood Hazard Area, for example, the delineated 100year floodplain. If it is, the lender must ensure that the property has flood insurance.

However, nothing prevents a lender from insisting on flood insurance for properties outside the delineated floodplain. But many lenders do not insure even after due diligence points to some risk, because it’s costly, and both bank and non-bank competitors will make the loan without it if a bank insists on the additional insurance.

A lender could simply hope that its loan portfolio will dodge the flood bullet. More prudent lenders, however, should be keenly interested in

12

the accuracy of the 100-year floodplain contour, also known as the base flood elevation (BFE). If the BFE is inaccurate, borrowers may be without flood insurance because it will not be required, thus putting a bank’s security at risk. Further, the construction of a building outside the BFE is likely to be sub-optimal in that flood considerations will not have been adopted. As will be shown below, climate change will have an effect on the BFE.

FEMA’s Role?

FEMA acknowledges that climate change may impact its floodplain maps, but currently does not incorporate climate change factors into its analyses.

The most recent report of the Intergovernmental Panel on Climate Change (IPCC) states that the frequency and amount of precipitation has increased over much of the world’s land areas. It predicts that in some areas heavy precipitation

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

events will become more frequent, along with tropical cyclones, typhoons and hurricanes.

If this is true, and if heavy precipitation events become more frequent, the likelihood of a flood in a particular community increases. Further, because the severity of flooding depends in part on the ability of the ground to absorb rainfall, more frequent storms are more likely to result in saturation of the ground, resulting in more severe floods.

Additionally, current floodplain maps are disconnected from reality. Hydrologists, hydraulic engineers and other planners determine current flood risk by evaluating past weather events using historical data (e.g., precipitation records, stream gauges) and the characteristics of the watershed (e.g., percent of impervious surfaces, flood channels).

No consideration is given to future weather predictions.

Other agencies reject FEMA’s failure to consider climate change con-

cerns in its preparation of floodplain maps. A review of the National Flood Insurance Program (NFIP) by the American Institutes for Research concluded that “the 100-year standard is inadequate for a successful long-term program to reduce flood losses unless it is viewed as a starting point to which additional levels of protection are added as appropriate.” The Delaware River Basin Commission concluded that there was “a solid, scientific basis for … [climate change] predictions and further refinements in predictions for the Delaware Basin.”

Accordingly, if one is evaluating lending risks in a flood-prone community, one should treat the BFE as the floor – not the ceiling – in the risk analysis. And the risk of flood, even with an accurate floodplain map, is not small. The term “100-year floodplain” may seem to suggest a small risk. However, over the course of a 30-year mortgage there is a 26 percent chance of a

100-year flood (as FEMA points out on its website).

Due Diligence on Flood Insurance What should banks do? First, for loan properties within the delineated 100-year floodplain, a bank should ensure that the required flood insurance is in place. Interestingly, although bank regulators strenuously assert that banks are diligent in ensuring that required flood insurance is obtained, FEMA just as strenuously asserts that this is not the case.

The simplest answer to this dispute is for a bank to confirm for itself that its portfolio carries the required insurance.

Second, for properties near but outside the delineated 100-year floodplain, banks should evaluate the accuracy of that delineation, considering both known errors in the floodplain maps, changes occurring in the community since the publication of the most recent maps, and the threat of climate change and changing pre-

cipitation patterns. It can be as simple as redrawing the contour outside the BFE, inside of which flood insurance would be required before a new loan is made. To acquire real competitive advantage, a bank could retain a consultant to identify the specific areas subject to increased flood risk, and make lending decisions accordingly.

Last, neither of the above steps addresses the risk overhanging the bank’s current loan portfolio: specifically, that a number of properties are at a heightened likelihood for flood but do not carry flood insurance. If that is a concern, the bank should seriously consider whether it is in a position to obtain a change to the 100year floodplain maps.

A bank that chooses to do nothing is at increased risk, which would become a harsh reality during a flood.

And the risk is not only the impairment of security interests. Flooded continued on page 20

First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

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MBA Charitable Foundation Awards 2010 Grants

T

The Italian Home for Children receives a $5,000 award from the MBA Charitable Foundation. Left to right: Rob Nelson, Commonwealth Co-operative Bank; Chris Small, The Italian Home for Children; and Dan Forte, the Massachusetts Bankers Association.

The Wellness Community receives a $5,000 award from the MBA Charitable Foundation. Left to right: John Boucher, South Shore Savings Bank; Gail Martin, The Wellness Community; Kevin Kiley, the Massachusetts Bankers Association; Ann Allegrini and Tim Cummings, The Wellness Community; Susan Sutterland and Don Gill, S Bank.

“Our Place” Center for Homeless Children receives a $5,000 award from the MBA Charitable Foundation. Left to right: Susan Lapierre, Cambridge Savings Bank; Dan Forte, Massachusetts Bankers Association; Major Stephen Carroll, the Salvation Army; and Anne Cushman, Cambridge Savings Bank.

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M a s s a c h u s e t t s B a n k e r n First Quarter 2011

he Massachusetts Bankers Association (MBA) Charitable Foundation recently awarded its annual community grants. The 32 grants are a record number and total $128,500, also a record amount for the foundation, which now has provided gifts totaling $1.3 million over its 14-year history.

The foundation, supported by the nearly 200 member banks of the MBA throughout Massachusetts and New England, distributed the grants over eight geographic regions in Massachusetts, giving awards to deserving social service agencies.

“There is terrific need all across the region, and there are so many deserving social service agencies,” said Norman S. Seppala, chairman of the MBA Charitable Foundation and president of Granite Savings Bank, Rockport. “We’re pleased to be able to help support the work of so many individuals and organizations in their time of need.”

In addition to the 23 primary award recipients, nine non-profits received $1,500 “Honorable Mention” awards from the MBA Charitable Foundation.

The Massachusetts Bankers Association Charitable Foundation awards are symbolic of the many individual donations banks make on a regular basis to organizations and causes in their local communities. In addition to the more than $40 million a year given by Massachusetts banks to local charities, MBA member bank employees contribute thousands of volunteer hours across the Commonwealth.

Honorable Mention Awards

2010 Award Winners – $5,000 Region I

Region V

Roslindale Food Pantry The Italian Home for Children, Jamaica Plain

Boys & Girls Club of Greater New Bedford/Wareham Cape Cod Times Needy Fund, Hyannis The Family Pantry, Harwich

Region II Boys & Girls Club of Woburn Food for Free, Inc., Cambridge Mystic Valley Elder Services, Malden “Our Place” Center for Homeless Children, Cambridge

Region III Lazarus House Ministries, Lawrence Ruth’s House, Haverhill The Paul Center for Learning and Recreation, Chelmsford

Region IV Boys & Girls Club of Marshfield New Baby Bundles, Inc., Weymouth The Wellness Community – Massachusetts South Shore, Hanover

Region VI The Shine Initiative, Leominster Veterans Outreach Center – Metrowest, Marlborough Worcester Youth Center

Region I

Elizabeth Seton Academy, Dorchester

Region II

Birthday Wishes, Newton Cambridge Housing Assistance Fund, Cambridge Greater Waltham Association for Retarded Citizens

Region III

Region VII Greenfield Family Inn Providence Ministries for the Needy, Inc., Holyoke Weston Rehabilitation Associates, Inc., Holyoke

Region VIII Child Care of the Berkshires, North Adams Elder Services of Berkshire County, Inc., Pittsfield

Children’s Friend and Family Services, Salem

Region IV

Cradles to Crayons, Quincy Foxboro Council on Aging Franklin Food Pantry

Region V

Nantucket Boys & Girls Club

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The information presented includes transactions effected and matters conducted by Stifel Nicolaus Investment Banking, the Capital Markets Division of Legg Mason Wood Walker, Inc. (acquired on December 1, 2005), Ryan Beck & Co., Inc. (acquired on February 28, 2007), Thomas Weisel Partners LLC (acquired on July 1, 2010), and their respective affiliates. Stifel, Nicolaus & Company, Incorporated and Thomas Weisel Partners LLC are affiliated broker-dealer subsidiaries of Stifel Financial Corp. which are collectively referred to herein under the marketing name Stifel Nicolaus Weisel.

Senior Executive Involvement For more information, contact: Rick E. Maples Head of Investment Banking (314) 342-2038 • maplesr@stifel.com

Michael F. Barry, Managing Director (212) 847-6458 • barrym@stifel.com

Ben A. Plotkin Executive Vice President, Vice Chairman (973) 549-4025 • ben.plotkin@stifel.com

Mark B. Cohen, Managing Director (212) 847-6438 • mark.cohen@stifel.com Robin P. Suskind, Managing Director (973) 549-4036 • robin.suskind@stifel.com

member sipc and nyse | www.stifel.com First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

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THE MB INTERVIEW:

Mr. Antonakes Goes to Washington Cover Story Photos: James Kegley

by Bruce E. Spitzer

A

s the new year approached, the Treasury Department and former Harvard professor Elizabeth Warren, assistant to President Barack Obama and special advisor to the secretary of the Treasury on the new Consumer Financial Protection Bureau (CFPB), announced the hiring of key leadership for the bureau’s implementation team currently housed at the Treasury. Massachusetts Commissioner of Banks Steven L. Antonakes has now left his job at the Division of Banks, taking a lead role on the portion of the CFPB team focusing on the nation’s largest depository institutions.

In Massachusetts, Gov. Deval Patrick appointed David J. Cotney, formerly the chief operating officer of the Division of Banks, as the new commissioner.

Following on the commitment to create a level playing field among financial institutions of various sizes, Elizabeth Warren stated about the Antonakes appointment, and that of Peggy Twohig to lead the non-depository supervision team, “Peggy and Steve will play critical roles in building a CFPB that will level the playing field between bank and non-bank lenders. For the first time consumer credit is going to be regulated by product instead of by the kind of 16

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

company selling it, and these two will be instrumental in developing this new approach.”

Steve Antonakes served as the Commissioner of Banks for the Commonwealth of Massachusetts for the past seven years and oversaw nearly 240 state-chartered banks and credit unions and more than 4,500 non-bank financial entities. He also served as a voting member of the Federal Financial Institutions Examination Council (FFIEC) and as the vice chairman of the Conference of State Bank Supervisors (CSBS).

He began his career as an entry level Community Reinvestment Act bank examiner in June 1990 and worked his way through the management ranks to become the Commissioner of Banks – only the second career bank examiner to serve in that position. Antonakes graduated from Lynn Public Schools and holds a bachelor’s degree from Penn State University, an MBA from Salem State College, and a doctorate in law, policy and society from Northeastern University.

Massachusetts Banker magazine recently interviewed Antonakes who, as yet, has no official title at the CFPB as he begins to build the consumer supervision program for the nation’s depository institutions from the ground up.

Q&A Q: First of all, congratulations. Will you be living in D.C. full time or commuting from Massachusetts?

A: A bit of both. I have an apartment in Arlington, Va., and I am commuting. However, the cumulative commuting time is actually less than while I was working in Boston.

Q: How is that? I fear the answer is another indictment of Boston traffic.

A: Perhaps it is. I am enjoying not having a car. I am just five stops on the Metro to the office and come home on weekends.

Q: On a personal level, what drew you to this job? What really excites you about it?

A: The unlimited opportunity. How often in government do you get to create something brand new? We don’t have a past; we will not be encumbered by a past. We will be able to take a fresh look at everything and really consider what worked well and what didn’t work well. You don’t have a situation here in which you’re trying to change a culture. You’re trying to create a culture. So it was just an incredibly exciting opportunity that, in many respects, comes just once in a lifetime.

Q: Can you give us your new job description, even though you don’t have an official title yet?

A: I am responsible for leading the depository supervision group. So, essentially my job is to ensure that we are prepared to supervise the largest hundred-plus banks, thrifts and credit unions in the country come July 21, 2011. At that designated transfer date, we take on responsibility for the enforcement of 18 federal consumer financial protection laws. Accordingly, the primary tasks that I am working on include the transfer of responsibility, knowledge, and data from several federal regulatory agencies, as well as the recruitment and training of a substantial examination force. If you want to get a little further in the weeds, we need to develop individually crafted plans of supervision for these depository institutions. In addition, we’re creating examination procedures and protocols, and developing the IT systems that will support our supervisory processes and exam programs.

Q: Do you have individual deadlines for all of that, or are you just working on all those separate tasks moving towards July 21?

A: The looming deadline is July 21, the transfer date.

Granted, several of these tasks we are working on we have to accomplish well before that date. So really at this point, we’re working closely with HR and IT professionals to support the creation of the exam programs and the recruitment, transfer, and train-

How often in government do you get to create something brand new? [The Consumer Financial Protection Bureau] doesn’t have a past; we will not be encumbered by a past.

– Steven Antonakes ing of exam staff. We’re also meeting regularly with federal and state regulators to formalize information sharing agreements and protocols so that we can exchange exam findings and best coordinate exam responsibilities.

Q: How many employees do you think will eventually be located at the CFPB? A: We are still in the midst of workforce planning at this time. It will be in the several hundreds for sure and, in all likelihood, one of the largest concentrations will be in the depository and non-depository supervision effort.

Q: Will you have regional offices or everyone based in D.C.?

A: We’re still working through those types of issues as well.

Q: The CFPB lists in its mission statement a focus on the nation’s largest depository institutions. How much will you be focusing on smaller community banks, if any?

A: On the depository side, our direct role is supervising those institutions with assets greater than $10 billion.

While we are required to also monitor the compliance of all depository institutions, the direct supervision for banks under $10 billion will continue to be conducted by the prudential federal bank agencies and state banking departments. Nevertheless, it will be incumbent upon us to consider the impact of our actions (rulemaking) on all financial institutions, including those that we supervise directly and those that we do not.

Q: Also, in terms of structure, the CFPB will fall under the Fed’s purview. How would you describe that?

A: At this moment in time, we’re still under [the] Treasury. Effective July 21, we’ll be considered a bureau of the Federal Reserve and our funding will be provided by the Federal Reserve. However, we will remain completely independent from the Federal Reserve in terms of our decision-making processes. continued on page 18 First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

17

Mr. Antonakes Goes to Washington continued from page 17

Q: What lessons and experience that you garnered in Massachusetts as Commissioner of Banks will serve you well in the new bureau?

A: Well, probably the most important lesson is not to be wed to the past and to be willing to embrace new approaches. You have to be willing to abandon methods that prove to be unsuccessful. In addition, I think one of the primary benefits of my experience with the Division was that it provided a strong understanding of the key differences between banks of varied sizes and complexity, as well as credit unions and non-banks.

Q: What are you most proud of? You did navigate through some really difficult times.

A: I think we struck the right balance; we acted when we needed to act, but we tried to stay out of people’s hair when they were doing a good job. I am also very pleased by the professionalism of the staff. We worked hard on succession planning to ensure that folks within the agency were appropriately trained and prepared to take on additional responsibilities. So I think the transition with my departure and John Prendergast’s departure [to CSBS], should be pretty seamless.

The stability in senior leadership for the past 20-plus years has been a great advantage.

Q: If you asked most people who know you in Massachusetts (and we have asked many) they would say that throughout your career as a regulator you managed to successfully walk a kind of tightrope, winning the respect of both consumer advocates and bankers. How did you accomplish that?

A: At the division, our goal was always to be fair and reasonable, and that was drilled into me early and often by the likes of Tom Curry, Ted Geary and Andy Calamare. It doesn’t mean you shy away from taking action. It does mean that it’s never personal and that you apply the rules consistently. In addition, we always had an open-door policy and equally considered the concerns of industry and consumer groups alike. Most importantly, though, I’ve never believed that the goals of safety and soundness and consumer protection were in conflict. My experience overwhelmingly demonstrated that well-managed banks were both profitable and treated their customers correctly.

Q: Elizabeth Warren’s been a lightning rod in some quarters. Can you describe the leadership role that you think that she will take going forward, and are her priorities different from yours?

A: First and foremost, Professor Warren really wants to get this right. She also has a strong appreciation of both the importance of community banks and for how rising compliance costs are disproportionately im-

Community banks didn’t contribute to the crisis and they’ve served as a source of strength as our economy recovers.

– Steven Antonakes pacting community banks. Probably our biggest advantage is as a new agency; we are not encumbered by our past, and this is really a tremendous strategic advantage that will benefit us. Mortgage simplification and credit card simplification are certainly short-term goals, and Professor Warren believes, and I agree, that if we can accomplish that, it will advantage consumers and industry alike. We will be successful if we can begin to eliminate some of the redundant regulation and lower compliance costs while also providing consumers with a better understanding of the products that they’re receiving.

Q: Will you actually have the power to limit redundant regulation?

A: We should have the power to simplify redundant and ineffective regulations. As an example, there are truth in lending disclosures and RESPA disclosures that have been in conflict for years, partially because one was governed by the Fed and one was governed by HUD. They both come to us now. If we could rationalize what’s required by those two laws that would be a significant achievement in its own right.

Q: What do you think needs fixing with banks, and in the non-deposit world?

A: Well, on the bank side, I believe the greatest challenge for us is to be nimble and well positioned to address change and emerging risks in real time. Our goal is to accomplish this by having our research group and consumer response group closely integrated with our supervision programs. We also anticipate leveraging new technologies to improve the effectiveness and efficiency of existing exam techniques. CFPB also has the opportunity to significantly level the playing field between banks and non-depositories. In Massachusetts, a robust exam program for non-bank entities remains in place, and I believe limited the proliferation of some of the worst practices that occurred elsewhere in the country. A new federal overlay that provides additional resources to complement state efforts should further reduce any remaining gaps in supervision.

Q: Tom Curry went to the FDIC and now you to the CFPB – both recent Massachusetts commissioners moved on to D.C. What do you think it is about the Massachusetts job that has prepared you both so well? continued on page 21

18

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

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Underwater? continued from page 13

borrowers without flood insurance have not been bashful about suing lenders, alleging negligent lending procedures with respect to flood insurance advice. One need go no further than the Internet to find law firms touting their success in obtaining recoveries on such theories. Before all that happens, a bank would do well to review its insurance coverage.

Mapping Change?

Climate change is occurring; the only debate is the role of humans in causing climate change, which is a debate of little significance in the floodplain. In the floodplain lenders need to know what risks or opportunities are going to unsettle business.

One of the NFIP’s primary contributions has been the creation of detailed maps delineating the risk of flood. These maps have helped to guide development to areas less

threatened by flood and to raise public awareness, and they are the basis on which homeowners and businesses procure (or not) flood insurance. Unfortunately, the maps suffer from several serious flaws: 1. They are misleading. Many property owners believe that because their property is not located in the “100-year flood plain” they are not at risk and that experiencing a 100-year flood is only slightly probable.

Neither conclusion is accurate.

2. They are not current – they are updated on average every 10 to 15 years or more. Areas with substantial development, whose flood characteristics have changed, have not had those changes incorporated into the local applicable maps. Nor are new data or new estimation techniques timely incorporated.

3. They are not consistent with the reality of more severe weather

due to climate change because the maps do not consider climate change effects.

To be sure, to speak of a fullblown floodplain lending crisis is without foundation. Some banks have few loans where a change in precipitation patterns will make a difference in risk. Other lenders may have such loans, but compared to their entire portfolio, the loans are not material. But there are certainly some that will need to know whether they are protected when the waters rise. Regardless of where a bank sits on this continuum, the time to gather knowledge is now, not when the flood is topping the sandbags. n J. Wylie Donald is a partner at McCarter & English LLP. He is a member of the Insurance Coverage Group and co-chair of the Climate Change and Renewable Energy Specialty Group. He can be reached at jdonald@mccarter.com.

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M a s s a c h u s e t t s B a n k e r n First Quarter 2011

Needham Bank

Mr. Antonakes Goes to Washington

continued from page 6

continued from page 18

From a balance sheet standpoint, Needham Bank’s loans-to-assets ratio is around 80 percent with investments-to-assets at approximately 15 percent. “We like things in balance,” says McGeorge. “Our return on assets has historically been well over 1 percent, and I expect to return to those levels this year. Our return on equity remains in the high threes, an excellent figure given the bank’s high net worth and equity position of 16 percent.”

Another number the bank takes great pride in is its assets-per-employee of $1.1 million. “It’s a reflection of the dedication of our people, of their commitment and hard work,” says McGeorge. “In banking, capital is king, and we want to maintain a capital ratio of 15 or 16 percent. But don’t get me wrong, Needham Bank has always been about the people. They’re the ones who set us apart; they’re the ones who make all of this possible.”

Apparently, that pride and commitment spills out of the bank and into the surrounding communities.

Volunteerism is strong among the employees of Needham Bank and the institution is generous with its time and money.

“We love giving back to the community,” says McGeorge. “From educational causes to playing fields, landmark restorations, to civic pride events, we’re proud to support the towns we call home. Is it entirely selfless? Of course not. A strong, vibrant community is good for the bank, and we hope when a potential customer has a particular banking need, perhaps our name will spring to mind.

“We’re a community bank in every sense of the word. We’re also a strong bank, an aggressive and proud institution. Between our new people, new space, new technologies and new customers, Needham Bank is more things to more people today than ever before in our nearly 120-year history.” n

A: Well, first Tom and I both have spent virtually our entire careers in bank regulation. I don’t think there’s any substitute for experience. In my case, the commissioner’s position was actually my fifth job at the division. I had the opportunity to work as an examiner and in virtually every other management position in the division, and that provided an outstanding foundation. Second, the responsibilities within the division are remarkably diverse. We had supervisory authority, not only for state-chartered banks, but state-chartered credit unions, as well as 11 additional non-bank financial entities. In addition we had active safety and soundness, consumer protection, IT, BSA and CRA exam programs. So you pretty much got to touch everything. Some states don’t have as broad authority as we do for the banks, credit unions and non-banks, and a lot of states also didn’t have the kind of consumer and CRA-related responsibilities that we had as well.

Q: How do you think mutuals will be impacted by the new regs? Any differently?

A: I hope not. I always thought the form of governance for an institution was best left to management and the board to determine and, again, if what we do results in disadvantaging community banks, and mutual banks for that matter, then I would characterize that as a failure on our part.

Q: One of the early concerns about the creation of the CFPB was that you might eventually be in the business of telling banks what product lines to be in? Will you do that?

A: No, I don’t anticipate us going down that road.

Q: Do you expect any surprises or unintended consequences that might spring up from the creation of this new layer of regulation? Do you think about that?

A: Oh, all the time. Let’s just talk about the community banks again for a moment. Community banks didn’t contribute to the crisis and they’ve served as a source of strength as our economy recovers. Compliance costs already severely impacting community banks. If we do our job well, compliance costs for community banks should actually decrease and community banks should be better positioned to compete against other institutions that may have previously benefited from a lighter touch of regulation. If our actions drive up compliance costs for community banks and ultimately result in greater consolidation or reduced choice then, as I noted before, we have not achieved our strategic mission. So I think anything we do, anything we propose, we’re going to have to look at very carefully and ensure that we hit the bull’s eye and that there are no unintended consequences.

Q: What can you tell us about the new banking commissioner in Massachusetts, David Cotney? You’ve worked with him for many years.

A: Not only have we worked together for many years, David Cotney and I actually started as entry level examiners on the same day, on June 4, 1990.

He is a close friend and played a major role in every significant decision that I made as commissioner. In my view there is no one better qualified to be the next commissioner of banks. He shares my passion for the Red Sox. However, I have yet to be able to convert him into a Nittany Lions fan, perhaps my biggest failing. n Bruce E. Spitzer is director of communications for the Massachusetts Bankers Association and editor of Massachusetts Banker magazine.

First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

21

OntheMove Jane Connolly

John Morley

Cheryl Beauvais

Michael Ostrowski

Diane Giampa

Thomas Boland Jr.

Thomas Belton

Cheri Carty

Rosa Hernandez

Kristen Jilek

Ralph Letner

Suzanne Ashley

Vanessa Vladasi

Dawn Shea

BANKFIVE – Promotes William (Bill) R. Eccles to president and CEO. BANK OF CANTON – Hires Jane Connolly, vice president; Linda Fortier, vice president, loan administration manager; and James Tilley, regional lending manager.

BANK OF EASTON – Promotes John Morley, senior vice president, treasurer and CFO. Hires Cheryl Beauvais, vice president of lending.

BARRE SAVINGS BANK – Hires Michael Ostrowski, vice president and senior loan officer.

BAY STATE SAVINGS BANK – Promotes Diane Giampa, senior vice president; Thomas Boland Jr. and Thomas Belton, vice presidents; Cheri Carty, assistant vice president; and Rosa Hernandez, BSA officer/operations specialist.

BERKSHIRE BANK – Promotes Charles Leach III, senior vice president; Remus Preda, vice president, trust officer; hires Scott Schiff, senior vice president; and Erica Hebler, mortgage originator.

22

BOSTON PRIVATE BANK & TRUST COMPANY – Hires Mary Ann Manning, vice president, marketing communications manager, and Kristen Jilek, Colleen Eyges and Ralph Letner, vice presidents.

BRISTOL COUNTY SAVINGS BANK – Hires Suzanne Ashley, mortgage consultant.

CAMBRIDGE SAVINGS BANK – Promotes Vanessa Vladasi, assistant vice president; hires Dawn Shea, vice president and Kevin Barbosa and Andy Beepath, assistant vice presidents, sales and service managers.

CAPE COD COOPERATIVE BANK – Promotes Cortney Roberts, assistant branch manager.

CAPE COD FIVE CENTS SAVINGS BANK – Hires Shari Hayes and Christopher Richards, commercial lending officers.

CITIZENS-UNION SAVINGS BANK – Promotes Dina Tabicas, assistant vice president/branch manager.

COMMERCE BANK – Promotes Nedal Azzam, Sean Coyle, Adam Glass, James

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

Goodhue, Danielle Johnson, Eileen Lessard, Nikole Nolle, Nurjan Wilkie and Amanda Wilson, assistant vice presidents.

COMMONWEALTH COOPERATIVE BANK – Hires Richard Costa, vice president, and Kristen Leetch, retail operations and compliance officer.

DEDHAM INSTITUTION FOR SAVINGS – Promotes William Lindquist III, senior vice president and senior credit officer; Maria Ingegneri and Tracy Harvard, senior vice presidents; Kerry Riggins, assistant vice president; Abigail King; credit officer; Robin McLeod and Tonia Reilly, officers; and Gina Iantosca, Susan Read and Tessie Wooten, managers.

EASTHAMPTON SAVINGS BANK – Hires Susanne deVillier, branch manager.

ENTERPRISE BANK – Hires Edith Joyce, senior vice president and treasury management director; Alvin Oasan, vice president; and Matthew Bryant, commercial lending officer.

FIRST TRADE UNION BANK – Hires Marie Duprey, senior vice president/senior credit officer, and Jeffrey Thompson, vice president.

Photo Submissions:

Submit photos and text for consideration for inclusion in Massachusetts Banker to Barbarajean Adams at bjadams@massbankers. org. Photos must be full color, high resolution (300 dpi or higher), at least 1200 by 1800 pixels (4 by 6 inches) and have a file size of approximately 1 MB, or they may not be useable. In the caption, first describe what is happening in the photo and then list all of the people, from left to right. (Unless it is a head shot.) Copy submissions without photos are also welcome.

Kevin Barbosa

Andy Beepath

Cortney Roberts

Shari Hayes

Christopher Richards

Dina Tabicas

William Lindquist III

Maria Ingegneri

Tracy Harvard

Kerry Riggins

Abigail King

Robin McLeod

Tonia Reilly

Gina Iantosca

GEORGETOWN SAVINGS BANK – Hires Philip Bryan, senior vice president.

LOWELL FIVE CENT SAVINGS BANK – Hires Lindsay Bojanowski, assistant vice president.

MUTUAL BANK – Promotes Dorothy Azar, assistant vice president; hires Elizabeth Shea, business loan assistant, and Adrianne Bearse, branch manager.

NEEDHAM BANK – Hires William Rosenberg, vice president; James Roberts, compliance officer; Stephen Jussaume, commercial loan officer; Michelle DeSimone, manager; Christopher Wilcox, loan collections specialist; and Craig Connolly, financial analyst.

NEWBURYPORT SAVINGS BANK – Hires Peter Matthews, senior residential lending officer.

NORTH BROOKFIELD SAVINGS BANK – Hires Donna Tiso, vice president and retail lending manager, and Anthony Piermarini and Dave Barszcz, vice presidents and commercial loan officers.

continued on page 24

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OntheMove Susan Read

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PEOPLESBANK – Hires Heidi Nowak Leonard, residential mortgage consultant.

RANDOLPH SAVINGS BANK – Promotes John Doyle Jr., president.

ROCKLAND TRUST COMPANY – Hires Louis Massa and John Renner Jr., vice presidents; Doug Hermann, senior reverse mortgage advisor; and Morgan Mohrman, financial consultant.

ROLLSTONE BANK AND TRUST – Promotes Lee Dearborn, vice president; Heather Sarasin, assistant vice president/ branch manager; Joan Daigle, mortgage lending manager; and Hollie Bennett, consumer lending manager.

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SALEM FIVE CENTS SAVINGS BANK – Hires Rimi Chaudhuri, senior vice president, retail sales manager.

THE COMMUNITY BANK – Hires John Clifford, chief financial officer, and Jane Callahan and Greg Glennon, vice presidents.

SOUTH COASTAL BANK– Hires Ted Fitzgerald, mortgage officer.

UNIBANK – Hires John Decker and David Nicholson, vice president and commercial

SOUTH SHORE SAVINGS BANK – Hires MonaLisa Rodrigues, manager.

STONEHAMBANK – Promotes Edward Doherty Jr., executive vice president.

STONEHAM SAVINGS BANK – Hires Donat Fournier, president, and Peter Bazzinotti, senior vice president and senior loan officer.

TD BANK – Promotes Alan Garson, executive director; Brian Welch, senior vice president/team leader; Jacob Ullucci, vice president and commercial portfolio manager; Diane Seely and Suzanne McManmon, vice presidents; Robert Babcock, market president, Anthony Pasquale, senior loan officer; hires Pamela Finegan, senior credit officer; Elaina Romano and Christopher Currie, store managers; Rodney Scott, vice president; Jeremiah Hynes, managing director/regional head; Sanghamitra Dutt, credit risk manager; William Martin, small business relationship manager; and Yessenia Mejia and Karen Norman, store managers.

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25

GoodNeighbors ABINGTON BANK – Donates $1,540 to St. Bridget’s and $4,230 to Abington Education Foundation.

Creative Arts Council; $3,000 to St. Bridget’s Food Pantry; and $3,000 to A Place To Turn.

BANK OF CANTON – Donates $10,000 to New England Shelter for Homeless Veterans and $1,000 to Caritas Communities.

HAVERHILL BANK – Donates more than $1,600 to three Haverhill area non-profit organizations.

BANKGLOUCESTER – Donates $15,000 to 15 local non-profit agencies.

BAY STATE SAVINGS BANK – Donates $1,500 to T & G Santa Fund.

BRISTOL COUNTY SAVINGS BANK – Donates a total of over $35,000 to 11 Taunton/Raynham non-profit organizations; $28,400 to six Attleboro non-profit organizations; and $10,090 to three Rehoboth area non-profit organizations.

CAPE COD FIVE CENTS SAVINGS BANK – Donates over $575,775 to various local non-profit groups.

COMMONWEALTH CO-OPERATIVE BANK – Donates $2,000 each to Morgan Memorial, Mass Society Cruelty to Children, Women’s Lunch, Hyde Park Food Pantry, Boston Food Bank, Disabled Veterans, Community Servings, Children’s Friends and Family, Home for Little Wanderers, Roxbury Boys and Girls, Italian Home for Children; and $1,000 to Christmas in the City.

FRAMINGHAM CO-OPERATIVE BANK – Donates $10,000 to Project Just Because; $3,000 to Townwide

MECHANICS CO-OPERATIVE BANK – Donates $5,000 to Boys & Girls Club of Taunton and $10,000 to Boys & Girls Club of Fall River as the title sponsor of its gala.

SOUTH SHORE SAVINGS BANK donates $10,000 to South Shore Habitat for Humanity to support its program to improve local communities and help people throughout the South Shore. L to R: Christopher Dunn, EVP and COO of South Shore Savings Bank and president of South Shore Habitat for Humanity’s Board of Directors; Martine Taylor, executive director, South Shore Habitat for Humanity; and John Boucher, president and CEO, South Shore Savings Bank.

MILLBURY SAVINGS BANK – Donates $40,000 to Quinsigamond Village and $25,000 to Vernon Hill School.

NEEDHAM BANK – Donates $125,000 to Needham 300 and $10,000 to Bay Colony Rail Trail.

NEWBURYPORT FIVE CENTS SAVINGS BANK – Donates $2,000 to Amesbury Public Schools’ Therapeutic Riding Program; $10,000 to Boys & Girls Club Lower Merrimack Valley; $25,000 to Opportunity Works; and $8,200 to Jump Start Youth Connection, Inc./Homework Outreach Program.

THE PROVIDENT BANK – Donates $52,000 to local non-profit organizations.

DANVERSBANK’s President and CEO Kevin Bottomley, left, presents a check in the amount of $25,000 to Guard Support member and Lt. Col. Michael Finer of Guard Support of Massachusetts, to support its program of assisting soldiers and families of Massachusetts soldiers deployed abroad.

UNIBANK – Donates $17,500 to seven local food pantries.

UNITED BANK – Donates $15,000 to various area non-profit organizations.

WATERTOWN SAVINGS BANK donates $5,000 to the Greater Waltham Association for Retarded Citizens (GWARC) to support its programs. L to R: Ron Dean, CEO, Watertown Savings Bank, and executive director, Waltham West Suburban Chamber of Commerce; John Peacock, board member, GWARC; Roz Rubin, executive director, GWARC; Tom Coxall, lending specialist, Watertown Savings Bank and board member, GWARC; Joan Galgay, coordinator, Club 50 and associate vice president, Watertown Savings Bank; and Connie Braceland, business development office, Watertown Savings Bank and former GWARC board member.

SOUTHBRIDGE SAVINGS BANK donates $1,500 to Quinsigamond Community College to assist in its mission to provide students with laptops. L to R: Dale Allen, vice president community of engagement and Gail E. Carberry, education director and president, QCC; Jill Motyka, marketing manager, Southbridge Savings Bank; and Michael Wronski, executive director, QCC Foundation.

FRAMINGHAM CO-OPERATIVE BANK donates $10,000 to Resiliency for Life (RFL) to support its academic intervention and dropout prevention program for than 60 at-risk students at Framingham High School.

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M a s s a c h u s e t t s B a n k e r n First Quarter 2011

FRAMINGHAM CO-OPERATIVE BANK – Donates $5,000 to the Jewish Family Service of Metrowest to support its Hastings House project, designed to house and accommodate low-income seniors.

COMMERCE BANK donates $5,000 to Easter Seals to support its programs and services for children and adults with disabilities. Back row, L to R: J.T. Kelly, vice president, and Patty Mahoney, senior vice president, Commerce Bank, and Easter Seals Explorer Camp volunteers Michael Josephs of Leominster and Tyler O’Neill of Worcester. Front row, L to R: Easter Seals Camp Manager Colleen Flanagan and Explorer campers Jose and David Rodriguez of Worcester.

NEEDHAM BANK donates $4,700 to Dedham Haiti Relief Fund to assist the people of Haiti devastated by this year’s earthquake. L to R: Chris Eigsti, manager, Needham Bank; Adrienne Albani, relief coordinator, town of Dedham; and Rev. Philippe Emmanuel, Dedham Temple Haitian Seventh-Day Adventist Church.

ROCKLAND TRUST COMPANY’s Branch Manager John Ciccarelli, left, presents a check in the amount of $4,000 to Catherine Pisacane, executive director of Project Smile, to support its Greater Milford program that provides stuffed animals, reading books, coloring books and crayons to police and fire departments, which then have access to these comfort items for children involved in traumatic situations.

STONEHAM SAVINGS BANK donates $5,000 to Austin Preparatory School to support its “Next Big Step” renovation project. This check is the third in a series of five checks for a total multi-year donation of $25,000. L to R: Paul Moran, headmaster; Austin Preparatory School; Deborah Dobbins, vice president, commercial loan officer and Jeffrey Worth, executive vice president, Stoneham Savings Bank.

COMMERCE BANK donates $5,000 to Music Worcester, Inc. to sponsor the performance of the BBC Concert Orchestra, conducted by Keith Lockhart. L to R: Mark Georgeson, vice president/information technology project manager, Commerce Bank; Music Worcester Board member; Stasia Hovenesian, executive director, Music Worcester; and Brian Thompson, president and CEO, Commerce Bank.

CITIZENS-UNION BANK’s Senior Vice President Ann RamosDesrosiers (right) presents a check in the amount of $5,600 to Karen Maciulewicz, director of The Greater New Bedford Adult Day Health Care Center, Inc./Project Independence to support its programs.

STONEHAM SAVINGS BANK donates $5,000 to Homeowners Options for Massachusetts Elders (HOME) to support its program of conserving and protecting the equity of thousands of elder Massachusetts homeowners facing serious financial issues. L to R: Jeffrey Worth, executive vice president, Stoneham Savings Bank; Leonard Raymond, executive director, HOME; and Peter Bazzinotti, senior vice president, Stoneham Savings Bank.

ROCKLAND TRUST COMPANY donates $1,500 to New Hope to support its programs to help families affected by domestic and sexual abuse. L to R: Christine Ledin, member, Rockland Trust Women of Action; Kim Thomas, executive director, New Hope; and Patricia Pierannunzi, branch manager, Rockland Trust.

ROLLSTONE BANK donates $2,000 to Cornerstone Performing Arts Center to help with renovations to their Main Street studio and performance space. L to R: Linda Racine, executive vice president, Rollstone Bank & Trust; Ellen Gorman, artistic director, Cornerstone Performing Arts Center; and Peter Cormier, managing director, Cornerstone Performing Arts Center.

CITIZENS-UNION BANK donates $1,800 to the Cape Verdean Recognition Scholarship Committee to support its programs. L to R: Mary Ann Rogers, president, Cape Verdean Recognition Scholarship Committee; Ann Ramos-Desrosiers, senior vice president, Citizens-Union Savings Bank; and Marilyn Gonsalves, vice president, Cape Verdean Recognition Scholarship Committee.

WATERTOWN SAVINGS BANK donates $5,000 to the Watertown Food Pantry to support its programs. L to R: Ron Dean, CEO, Watertown Savings Bank; Kelly Cronin, community relations manager; Alfredo Bartolozzi, executive director, Watertown Food Pantry; and Brett Dean, president, Watertown Savings Bank.

First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

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GoodNeighbors continued from page 25

BRISTOL COUNTY SAVINGS BANK donates $30,000 to the Taunton Fire Department to purchase a new Jaws of Life rescue system. The grant will be provided in $10,000 installments over three years. L to R: Scott Dexter, deputy fire chief, Taunton; Patrick Murray, president, Bristol County Savings Bank Charitable Foundation (BCSBCF) and executive vice president, treasurer and COO of Bristol County Savings Bank (BCSB); Tim Bradshaw, fire chief, Taunton; Dennis Kelly, chairman, BCSCF, and president, BCSB; Charlie Crowley, mayor, Taunton; and Dennis Leahy, treasurer, BCSCF and senior vice president, BCSB.

BAY STATE SAVINGS BANK donates $5,000 to Girls Inc., BRISTOL COUNTY SAVINGS BANK – donates $5,000 to to support its educational and advocacy programs. L to R: Bob Buttonwood Park Zoo to support its “Boo at the Zoo” event, which Zompa, Citadel Broadcasting; Paul D. Gilbody, executive vice raises funds for its educational and family programs. L to R: Pete president, Bay State Savings Bank; Debora B. Hopkins, executive Selley, senior vice president and Val lacasse, vice president, Bristol director, Girls Inc.; Paul Barber, Flying Rhino Restaurant and chairCounty Savings Bank; Blair Bailey, president, Buttonwood Park man of Taste of Shrewsbury Street; Diane M. Giampa, senior vice Zoological Society; and Dr. William Langbauer, director, Buttonwood president, Bay State Savings Bank; and John Piccolo, president, Magner_4Prod_WarPubs_NY/MA/CenPt/CU:Layout 3/8/10 10:30 AM Page 1 Park1Zoo. Shrewsbury Street Merchants Association.

SOUTHBRIDGE SAVINGS BANK’s Assistant Vice President and Branch Manager Sheila Veideman presents a check in the amount of $500 to John Mannina, executive director of Legal Assistance Corporation of Central Massachusetts (LACCM), to assist the program in its support of an AmeriCorps member.

UNIBANK donates $2,500 to Bellingham Public Library to purchase an Early Literacy Station (ELS), an educational software program for children ages two through 10. L to R: Sue Garten, chair, library board of trustees; Bonnie Willand, branch manager; Bernadette Rivard, director, Bellingham Public Library; and a child using the ELS.

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NORTH SHORE BANK’s Vice President of Marketing Christopher Pesce, right, presents a check in the amount of $500 to Merritt Kirkpatrick, curator of the George Peabody House Museum, to help supply the museum’s new “Arts in Storefronts” project.

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28

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

ROCKLAND TRUST COMPANY’s Regional Branch Manager Jim Smith presents a $1,000 check to Cheryl Opper, executive director of School on Wheels of Massachusetts, to supports its program of providing academic support to children in homeless shelters.

HAVERHILL BANK employees embraced the holiday spirit this season, bringing good tidings to area children and families and sponsoring visits by Santa Claus, among other activities. A local family of six was adopted by Haverhill Bank through the Haverhill area office of the Massachusetts Department of Children and Families. The parents and four children received a large array of wrapped gifts, along with $400 worth of gift cards donated by employees. Four bank branches also delighted children and adults with model trains and festive scenic layouts.

BRISTOL COUNTRY SAVINGS BANK donates $7,500 to Triumph, Inc. to support its early childhood programs. L to R: Dennis Kelly, chairman, Bristol County Charitable Foundation (BCSCF) and president, Bristol County Savings Bank (BCSB); Lou Ricciardi, board member, BCSCF; Rita Celia, executive communications assistant; Norma Barbour, board of director and Kelley Medeiros-Tucker, assistant director, Triumph, Inc.; Patrick Murray, president, executive vice president, COO and treasurer, BCSCF; Jann Alden, branch manager, BCSB; Marge Largey, board member; Dennis Leahy, treasurer and senior vice president, BCSB. n

Senior Vice President and Treasurer Patrick R. Dwyer, far right, demonstrates the hobby train layout at the Merrimack Street office during the 2010 Christmas Stroll. Dwyer has been assembling the layouts every year at each Haverhill Bank branch for more than a decade.

BOLI

A

A NEW ERA & APPROACH

t the start of this new decade, we are entering a new era of bank-owned life insurance portfolio management. It is an era that follows a rapid expansion of BOLI portfolios and one that has many banks struggling to manage inherited portfolios, or those purchased from different carriers.

BOLI is a tax-effective tool used to enhance bank earnings, but rules governing the use of BOLI are more complex these days.

Haverhill Bank employees Erica Lemire (left) and Tara Gillen (right) place gifts by the tree for a family of six the bank adopted through the Haverhill area office of the Massachusetts Department of Children and Families.

FRAMINGHAM CO-OPERATIVE BANK donates $1,000 to First Baptist Church in Framingham to help four homeless families.

L to R: Rachel Stewart, assistant vice president of marketing and Nancy Devine, vice president, Framingham Co-operative Bank; Lorna Mailhoit, member, First Baptist Church; and Michael Bilinsky, business development officer, Framingham Co-operative Bank.

Portfolio management requires a variety of skill sets and significant investments in infrastructure, technology and data security, requirements that, several years ago, led Steve Karam, CEO of Karam Financial Group, to form an alliance with Renaissance Bank Advisors. RBA invested several million dollars to design CPADS (Client Plan Administration System).

It is a robust package of asset and benefit liability accounting, concentration analysis and other tax and accounting support unique to the industry. Additionally, they have designed a propriety assessment process which helps banks determine the effectiveness of their BOLI holdings.

Karam added that, “In the current financial environment, we continue to see a need for BOLI in the community

bank space, to help offset benefit and non qualified plan offerings.” BOLI has evolved into an asset that needs to be managed just like other bank assets and Karam Financial Group has kept pace, continuing to provide access to products and services that play a vital role in the operations and profitability of banks and bankers.

Part of that role is to provide bank clients with increased capability and flexibility.

Banks must choose vendors that have the ability to design and deliver highly competitive products that can support the bank’s reputation.

It is clear that Karam Financial Group is committed to delivering expertise, guidance and post-sale services at all times, but especially in this new era of BOLI and portfolio management. Their long list of current bank clients, which serve tens of thousands of residents throughout New England, serve as testimony.

First Quarter 2011

STEPHEN R. KARAM FIRST NATIONAL BANK OF IPSWICH donates $1,360 to Action, Inc. to support its programs. L to R: Tim Riley, executive director, Action, Inc.; Jessica Benedetto, marketing and planning manager, Action, Inc.; Carol Grimes, vice president, and Russ Cole, president and CEO, FNBI.

Stephen is a Principal of Karam Financial Group with his father, Robert Karam. Their concentration is in the conceptual design, funding and administration of executive benefit programs and other qualified plans with a concentration in banking and not-for-profit institutions.

Karam Financial Group • 456 Rock Street Fall River, MA • stevek@karamfg.com • www.karamfg.com

Securities offered through LPL Financial Member FINRA/SIPC First Quarter 2011 n M a s s a c h u s e t t s B a n k e r

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2011 MBA Calendar Dates are subject to change. Announcements are mailed approximately six weeks prior to event.

For additional information, contact the education department at 617-523-7595. Visit our website at: www.massbankers.org

March

The advertisers in Massachusetts Banker make this magazine possible.

Please recognize their contribution and consider their services when needed.

14

Fundamentals of Credit Analysis: Introduction to Commercial Lending Part 1: Introduction, State of the Economy and Industry, the Credit Cycle – Marriott Courtyard Hotel, Marlborough

21

Fundamentals of Credit Analysis: Introduction to Commercial Lending Part 2: Understanding Financial Statements; Framework for Credit Analysis – Marriott Courtyard Hotel, Marlborough

24

Asset Liability Management Seminar – Marriott Courtyard Hotel, Marlborough

DRL Architects..............................................32

28

Fundamentals of Credit Analysis: Introduction to Commercial Lending Part 3: Analyzing the Ability to Repay –Ratios, Working Capital and Debt Capacity – Marriott Courtyard Hotel, Marlborough

www.drlarchitects.com

April

11

Fundamentals of Credit Analysis- Introduction to Commercial Lending Part 4: Analyzing the Ability to Repay Part 2: Cash Flow, Forecasting – Marriott Courtyard Hotel, Marlborough

12

Annual Spring Security Seminar – Marriott Courtyard Hotel, Marlborough

25

Fundamentals of Credit Analysis- Introduction to Commercial Lending Part 5: Analyzing the Ability to Repay – Marriott Courtyard Hotel, Marlborough

www.hhconsultants.com

26

Branch Manager Series – Marriott Courtyard Hotel, Marlborough

ICS Compliance.............................................02

Arthur Warren................................................25 www.afwarren.com

Federal Home Loan Bank of Boston..........07 www.fhlbboston.com

G.T. Reilly & Company.................................23 www.gtreilly.com

Hooker & Holcombe.....................................05

www.icscompliance.com

May

2

Fundamentals of Credit Analysis-Introduction to Commercial Lending Part 6: Clarkson Lumber Case Study – Marriott Courtyard Hotel, Marlborough

6

CFO Forum – Middlesex Bank Training Center, Westborough

9

Fundamentals of Credit Analysis-Introduction to Commercial Lending Part 7: Clarkson Lumber Case Study Part 2 – Marriott Courtyard Hotel, Marlborough

10

Branch Manager Series – Marriott Courtyard Hotel, Marlborough

13

CFO Forum— – Middlesex Bank Training Center, Westborough

16

Fundamentals of Credit Analysis-Introduction to Commercial Lending Part 8: The Carlton Polish Company Case Study: Preparation and Discussion – Marriott Courtyard Hotel, Marlborough

22-27

The New England School for Financial Studies, Freshman Class— – Babson Executive Conference Center, Wellesley

23

Fundamentals of Credit Analysis-Introduction to Commercial Lending Part 9: Concepts of Corporate Finance – Marriott Courtyard Hotel, Marlborough

24

Call Report Seminar – Marriott Courtyard Hotel, Marlborough

June

2

Annual New England Trust and Wealth Management Conference & Exhibit – Holiday Inn Boxborough Woods, Boxborough

5-10

The New England School for Financial Studies, Senior Class – Babson Executive Conference Center, Wellesley

6

Charitable Foundation Golf Tournament – Worcester Country Club

6

Fundamentals of Credit Analysis-Introduction to Commercial Lending Part 10: Carlton Polish Case Study – Valuing a Business; Warning Signs and Problem Loans – Marriott Courtyard Hotel, Marlborough

22-24

Executive Officers Conference – Cranwell Resort, Lenox

Event Spotlight: May 18

CFO Forum

Middlesex Bank Training Center, Westborough

30

list of Advertisers

M a s s a c h u s e t t s B a n k e r n First Quarter 2011

Integrated Security Group............................31 www.isgsecurity.com

Karam Financial Group................................29 www.karamfg.com

Magee Company............................................28 www.mageecompany.com

MassDevelopment.........................................11 www.massdevelopment.com

MassHousing..................................................13 www.masshousing.com

Nutter, McClennen & Fish............................20 www.nutter.com

Sheshunoff Consulting + Solutions............24 www.smslp.com

Stifel, Nicolaus & Co.....................................15 www.stifel.com

Travelers.........................................................19 www.travelers.com

VantisLife Insurance Company...................09 www.vantislife.com