Maryland Banker 2Q 2016 by The Warren Group

SECOND QUARTER 2016

Financial Education

Makes a Resounding Impact Across the State THE OFFICIAL PUBLICATION OF THE MARYLAND BANKERS ASSOCIATION

Your Life Your Success Register Today at www.mdbankers.com Live Your Life engaged with confidence and passion knowing you are communicating the best version of you for Your Success.

CHAIRMAN Daniel J. Schrider President and CEO Sandy Spring Bank

SECOND QUARTER 2016

Financial Education

CHAIRMAN-ELECT George D. Swygert, Jr. Regional Executive Capital One, N.A.

Contents

Makes a Resounding Impact Across the State

VICE CHAIRMAN Michael G. Livingston President and CEO The Bank of Glen Burnie

THE OFFICIAL PUBLICATION OF THE MARYLAND BANKERS ASSOCIATION

PAST CHAIRMAN John A. Scaldara, Jr. Chairman and CEO The Columbia Bank

186 Duke of Gloucester St. Annapolis, MD 21401 410-269-5977 / 800-327-5977 www.mdbankers.com

President & CEO Kathleen M. Murphy

Maryland Bankers Association

Publication Editor Cynthia L. Gentilcore

08 cover

Maryland Bankers Association

Board of Directors

Financial Education Makes a Resounding Impact Across the State

James M. Anthony Chief Operating Officer, Severn Savings Bank Judy Balloff Director, Enterprise Client Coverage, Bank of America Andrew M. Bertamini Regional President, Maryland Market, Wells Fargo Bank, N.A. James R. Bosley, Jr. President and CEO, Farmers & Merchants Bank

message from the chairman Maryland BankPAC Helps Our Voices Be Heard

message from the president A Milestone to Celebrate!

Kenneth C. Cook President and Vice Chairman of the Board, Revere Bank Sam DiPaola President, Maryland, SunTrust Bank Ralph W. Emerson, Jr. Senior Vice President, M&T Bank Raymond W. Hamm, Jr. Market Executive Greater Maryland, Executive Vice President, PNC Bank, N.A. Michael E. Hough Regional President, Western Maryland and Pennsylvania, BB&T Kim Liddell Chairman, President and CEO, 1880 Bank William J. Pasenelli President and CEO, Community Bank of the Chesapeake Carissa L. Rodeheaver Chairman, CEO and President, First United Bank & Trust Raymond M. Thompson President and CEO, Calvin B. Taylor Banking Company

Nearly 575 Bankers and Business Leaders From Oakland to Ocean City Attend the Ninth Annual Economic Outlook Forum 14 Proud to Be a Maryland Banker MBA’s Day in Annapolis

Techniques to Create Adequate Liquidity

Thomas S. Wintz President and CEO, Rosedale Federal Savings & Loan Association

DEPARTMENTS:

news and notes 20 PUBLISHED BY

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professional development calendar 22

Second Quarter 2016 | 3

Message from the Chairman DANIEL J. SCHRIDER | MBA CHAIRMAN PRESIDENT AND CEO SANDY SPRING BANK

Maryland BankPAC Helps Our Voices Be Heard

ftentimes, when we compete against one another as bankers, we can pull off some pretty creative things to win business. At the same time, when it comes to working together for our industry, Maryland has a passionate group of bankers who have an ability to bring a high level of intensity and commitment to help make Maryland banks and bankers grow stronger. We work with one another at conferences and events, our annual convention, and our banking school. We even serve on committees and task forces to share the best practices on emerging trends. We help our communities come together to make our state a better place to live, work and raise a family. We visit Washington and Annapolis together to create and share one voice for our industry. We do this because our industry has been committed to doing what is right for 120 years. The pressures on our industry require that our voice remains strong, our stories continue to be told, and our representatives at the local, state and national level are informed as to the impact banking has on the lives of individuals and businesses throughout our state. One way to ensure that our voice, on your behalf, remains strong and grows even louder is through Maryland BankPAC, MBA’s Political Action Committee. Here’s how Maryland BankPAC helps our voices be heard:

The MBA operates two PACs, a Federal PAC and a State PAC, and both follow strict laws which regulate who can contribute to the PACs, how much can be contributed, and how these contributions are directed to candidates.

Federal PAC MBA’s Federal PAC is governed by the Federal Election Commission. An individual can contribute up to $5,000 per year to the Federal PAC. The Federal PAC can contribute up to $5,000 per election to a Federal candidate. Since there are typically two elections each cycle, a primary and a general election, the Federal PAC can donate up to $10,000 per election cycle to a Federal candidate. Contributions can only be solicited from individuals at member institutions if the chairman, president or CEO has granted permission. So the first and most important step is to sign the solicitation approval form. For your convenience this form can be completed online on MBA’s website at www.mdbankers. com/government_relations/Maryland_ BankPAC.aspx or you can contact MBA’s Maryland BankPAC Treasurer Lynn

Mitchell at 443-837-1603 or lmitchell@ mdbankers.com.

State PAC MBA’s State PAC is governed by the Maryland State Board of Elections. Maryland PAC law allows a state-chartered institution to make corporate contributions to the State PAC up to the four-year election cycle maximum of $6,000. (Federally chartered institutions, including national banks and thrifts, are prohibited from making corporate contributions to political action committees and to candidates for public office in connection with any U.S. election – federal, state or local.) Individuals can also contribute up to the $6,000 maximum. The State PAC can donate up to $6,000 per election cycle to a state candidate. The four-year state election cycle is determined by the gubernatorial election and begins Jan. 1 after the election. The current state election cycle runs Jan. 1, 2015, through Dec. 31, 2018. While the contribution rules can seem overwhelming, please think about how you, your directors and your officers can get involved. Maryland BankPAC Treasurer Lynn Mitchell is available to help answer any questions you might have. Maryland’s banking industry really does amazing work – let’s make sure that our voice reflects all that we do. ■ Dan Schrider is the chairman of the Maryland Bankers Association. Reach him at dschrider@sandyspringbank.com. Second Quarter 2016 | 5

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Did you know that 1 in 8 people in Maryland are food insecure, which is more than 770,000 Marylanders.

“Embrace Life, Nurture Success” Food Drive The Council of Professional Women in Banking and Finance 2016 Philanthropy Initiative, “Embrace Life, Nurture Success” Food Drive, will help the Maryland Food Bank in its mission to lead the movement and nurture the belief that together we can improve the lives of Marylanders by ending hunger. For more than 35 years, the Maryland Food Bank has partnered with communities across the state to distribute food to individuals and families in need. Through carefully-crafted programs, the Maryland Food Bank aims to meet the immediate needs of Marylanders while simultaneously working to find long term ways to reduce hunger statewide. Currently distributing more than 120,000 meals per day — nearly 44 million meals annually — the Maryland Food Bank will continue to expand its efforts until hunger ends. The following are the most needed items, but other non-perishable food items are accepted as well: Breakfast — cereal, oatmeal, quick oats, granola/cereal bars Canned Proteins — tuna, salmon, chicken, beans, peanut butter Canned Vegetables — low sodium, no salt added Dairy — shelf-stable milk, evaporated milk, infant formula Fruits and Juices — light syrup or its own juices, fruit cocktail, applesauce, juice boxes Pasta & Rice — brown & white rice, pasta, macaroni & cheese Soups & Stews — low sodium, beef stew, chili, chicken noodle, vegetable, turkey & rice

To learn more about how your bank branches and offices can participate in “Embrace Life, Nurture Success” Food Drive contact MBA’s Cindy Gentilcore at cgentilcore@mdbankers.com or 443-837-1602.

Together we can positively impact the lives of more than 770,000 Marylanders!

Message from the President KATHLEEN M. MURPHY | PRESIDENT & CEO MARYLAND BANKERS ASSOCIATION

A Milestone to Celebrate!

or major historical events over the last 10 years, our memories are vivid. And in some ways 10 years seems like a lifetime, particularly as the banking industry endured the years of the Great Recession. Ten years is a long time when you think about the Millennial generation – today’s 18– to 34-year-olds were just 8 to 24 years old just 10 years ago. And now we see this generation impacting how we interact with our customers, how we build our workforce and how we look at providing financial services for the next 10 years and beyond. So if 10 years has brought about immense change, what has happened since the year the MBA was founded? In 2016, I reflect on major historical events that shaped our nation, our economy and our industry over the past 120 years – nationally and here in Maryland. For the banking industry in our state, 1986 was a very important year – it was the year banks in Maryland banded together with unity and a collective voice. Did you know it was also the year the x-ray was used for the first time? Since 1896, Oklahoma, Alaska, Arizona and New Mexico have become states. We’ve had two world wars, the Vietnam War, Desert Storm, Operation Iraqi Freedom and more. As a nation we spread our wings when Charles Lindbergh flew across the Atlantic in 1927 and we began to drive

fuel-propelled cars when Ford Motor Company was established in 1903. I vividly remember watching Neil Armstrong walk on the moon – and the photographs that came back with amazing images of the Earth, images that changed how we think of our world and our universe. The space shuttle flew for the first time in 1981 and the Hubble Space Telescope was placed into orbit in 1990. Since the MBA was founded, our industry’s security preparedness has moved from worries about people like the infamous gangster John Dillinger, who robbed 24 banks and escaped from jail twice, to bank CEOs and boards making cybersecurity preparedness a top priority. Apple has transformed how we communicate and how we compute – the first Apple II computer was released in 2001, followed by iTunes two years later and the iPhone in 2007. And we have seen vast changes in the regulatory environment since the Dodd-Frank Act was signed into law in 2010, OTS regulated thrifts came under the supervision of the OCC and the CFPB was formed. And I could go on. So with the evolution we have seen and the imminent changes yet to come, I’m energized by three words that capture the Maryland Bankers Association and that reflect

Now we see this generation impacting how we interact with our customers, how we build our workforce and how we look at providing financial services for the next 10 years and beyond.

our members – Dynamic. Proactive. Resourceful. Your Association – including our banker leadership and our incredible staff team – has been here for you through the 12 decades since our founding. And you have been here for your Association. This 120-year milestone is one to celebrate – because bankers and banks have been a part of every historical shift in our nation and our state. And I celebrate because of the incredible privilege we have to represent you, to be a resource to you and to promote you. 120 years – now that’s a milestone to celebrate! ■ It’s my honor to serve this great industry. Please contact me at any time to discuss issues of importance to you at kmurphy@mdbankers.com or 443-837-1601. Second Quarter 2016 | 7

Financial Education

Makes a Resounding Impact Across the State

8 | The Maryland Banker

he Maryland Bankers Association’s (MBA) efforts and initiatives in financial education have been ongoing since the association’s founding in 1896. In 1999, the MBA decided to take a closer look at initiatives focusing on financial education when the news media focused on unscrupulous lenders who duped consumers. Focusing its efforts on both children and adults, the MBA pursued sound financial management and basic money skills with as wide an audience as possible. Then in 2004, the association elevated financial education to one of its five mission areas, the others being advocacy, communications, professional development and services. Elevating financial education demonstrated the industry’s commitment to educate residents across Maryland. Since then, through various activities, initiatives and partnerships Maryland has continued to work toward making each resident of the state aware of what it means to be financially literate, and that financial education is a basic life skill. In fact, some have said that building a solid financial education foundation has saved their lives. MBA’s ongoing initiatives include serving as a conduit for two national focus events Teach Children to Save and Get Smart About Credit, through the American Bankers Association (ABA): • Teach Children to Save is held annually in April. This unique event is where Maryland bankers trade their spreadsheets for chalkboards every April to teach the ABCs of financial education to elementary school students around the state. Bankers are uniquely qualified to educate students about important financial education skills such as distinguishing between wants and needs and the benefits of building good savings habits at an early age. • Every October, Maryland bankers join with bankers across the nation for Get Smart About Credit to educate high school students about good money management skills. Many young adults today have easy access to credit but lack the skills to manage their personal finances successfully. Students learn how using credit wisely can open doors while abusing credit can shut them. Learning about budgeting, credit reports and interest rates help these students make wise financial choices now and in their adult years. MBA member banks are able to teach an enormous number of residents in the state financial literacy. For example, since 2009, approximately 25 employees of New Windsor State Bank (NWSB) have made over 1,000 financial education presentations and reached close to 12,000 children and adults. Lisa Monthley, senior vice president, chief deposit officer Continued on page 10

Second Quarter 2016 | 9

Financial Education

CONTINUED F ROM PAGE 9

Lisa Monthley, senior vice president, chief deposit officer at NWSB, presents a financial education lesson to elementary students.

Capital One Student-Run Bank Branch located inside Parkdale High School in Prince George’s County.

at NWSB said, “NWSB is a community bank with roughly 80 employees and over the years we have particpated numerous times in ABA’s two national events: Teach Children to Save and Get Smart About Credit. However, I’m most proud of the weekly school banking program that NWSB has created in house. NWSB has built solid relationships with the local schools within our market and are always looking for new opportunities to reach out to students K-12. Our presentations are fun and very interactive, such as wearing silly glasses and parading around the classroom with a huge dollar bill! In other words, we do whatever it takes to hold these youngsters’ attention and promote financial literacy. Students learn the difference between a “want” and a “need” and how compounding interest paid by banks helps their money grow.” She added, “I am also very proud of NWSB employees’ commitment to promoting financial literacy within our community. You’ll find that community bankers are very passionate about giving back to the communities they serve and promoting financial literacy to our children is their number one priority.” While most banking institutions in Maryland view financial education as an important priority, Capital One, N.A. takes this philosophy a step further. With its view that financial literacy is a fundamental component of education – like reading, writing and arithmetic – and a key building block for future success, Capital One is the driving force behind two innovative programs operating in the State of Maryland. The first of these is the Capital One Student-Run Bank Branch located inside Parkdale High School in Prince George’s County. Since its opening in 2011, 50 students have participated in the program that, which involves running the day-to-day operations of 10 | The Maryland Banker

NWSB weekly school banking program.

Capital One, in partnership with Junior Achievement of Greater Washington and Prince George’s County Public Schools, grand opening of Finance Park.

a fully functioning bank branch for students and faculty. In addition to their roles as tellers, the student bankers are responsible for delivering financial literacy lessons to others students within the school. More than a financial literacy program, the student-run branch is an exercise in student development and skill building. Ninety-five percent of the students who have participated in the program have gone on to college, and 100 percent have graduated from high school (versus 72.9 percent for Prince George’s County students overall in the state of Maryland). “The banking program gave me life-long skills that I use throughout my daily life,” former student banker Jennifer DaSilva said. “Not only did they provide me with knowledge, ethics, and tremendous leadership skills that have gotten me through college, but they also assisted me in getting a full scholarship to a rigorous private institution. Capital One not only changed my mindset when it came to my approach in life, but ultimately became the stepping stone I needed to become an academic, well rounded and coherent thinking adult.” Last fall, Capital One, in partnership with Junior Achievement of Greater Washington and Prince George’s County Public Schools, opened a state-of-the-art 13,500-square-foot experiential financial education center on the grounds of G. James Gholson Middle School, called Finance Park. At Finance Park, students experience the challenges of making real-life financial situations on tablet computers (also provided by Capital One), led by volunteer role models from the community, following Junior Achievement’s unique 14-lesson, inclassroom curriculum taught by their classroom teachers. The center is the first of its kind in Maryland, and more than 9,000 students will visit the Park each year.

As part of its ongoing commitment to communities across the country, in 2015, Capital One launched Future Edge, a $150 million initiative to empower more Americans to succeed in a digitally driven economy through community grants and initiatives over the next five years. To learn more about Future Edge and other Capital One initiatives, visit www.capitaloneinvestingforgood.com.

MBA, a Founding MCFL Member In 2001, MBA continued its financial education commitment by becoming a founding member of the Maryland Coalition for Financial Literacy (MCFL), a division of the Maryland Council on Economic Education (MCEE). Mary Louise Preis, who was then commissioner of financial regulation for Maryland, gathered together financial professionals at the Federal Reserve Bank of RichmondBaltimore Branch to brainstorm strategies for increasing the financial literacy of Marylanders. The MCFL membership includes banks, credit unions, financial services, educators, government agencies, charitable foundations and private individuals who, collectively, realize that the financial health of the state depends on a financially literate citizenry. To accomplish its mission to increase financial literacy among Marylanders, the MCFL membership concluded that financial education had to start in our schools, so they raised some money, hired a managing director and became a division of the MCEE. Since MCEE has a long (more than 60 years) working relationship with Maryland schools and provides professional development for teachers, it made sense to combine the efforts of MCFL with the ongoing work of MCEE in Maryland. After several years, MCFL’s managing directors and its members advocated for increased financial education and were instrumental in convincing the Maryland State Department of Education (MSDE) to establish financial literacy standards in 2011. All Maryland public schools are mandated to include in the curriculum starting in the elementary grades and continuing into middle and high school. MCFL’s major focus currently is to help Maryland educators provide the most effective lessons possible so that Maryland students are educated about vital financial topics including: • Financial decision making • Choosing a career and earning and income • Managing money and budgeting • Understanding the uses of credit and debt • Creating, building and preserving wealth • Avoiding identity theft and fraud “MCFL and its members, including many banks, have made a difference in advancing financial literary across Maryland. Educators and business leaders recognize that it’s a life skill, just like reading, writing and math,” said Kathleen Murphy, president and CEO of the Maryland Bankers Association, a founding member of MCFL. MCFL members meet four times per year to talk about financial issues that affect Marylanders and to assess the progress of the financial education efforts in our schools and communities. Additionally, at these meetings MCFL members often find networking opportunities with fellow members that enhance the furtherance of financial education advocacy in schools and the

community at large. For example, Managing Director Allen Cox often asks MCFL members to provide financial education talks for faith-based organizations, community groups and in schools. Cox serves on several education advisory boards to reinforce the importance of teacher training and the need for all students to become financially literate prior to graduation from high school. He also advocates for more financial education via personal appearances, print, radio, TV and social media. Cox routinely conducts professional development for Maryland school systems upon request and offers 15 hour institutes for teachers who want more in-depth knowledge of the concepts they teach. Currently, seven of Maryland’s 24 school systems require students to take a high school course devoted to personal finance prior to graduation from high school. They are: Garrett, Allegany, Frederick, Carroll, Charles, Calvert and Caroline. Two other systems (Baltimore County and Talbot County), while not making a course required, succeed in getting a large number (90 percent in Baltimore County and 70 percent in Talbot County) of their high school students to take a course devoted to personal finance topics. Most of the other systems in Maryland have chosen to include the mandated personal finance curriculum in the Local, State and National Government course, which all students must take to graduate. Students also receive personal finance instruction in some math, business, and family and consumer science courses. MCFL’s and MCEE’s efforts to bring awareness and solutions to the problem of financial illiteracy has resulted in thousands of teachers, and about 250,000 Maryland students, becoming much better prepared to make informed financial decisions both now and in the future. But with about 850,000 students enrolled in Maryland public schools, there is still much work to be done. “MCFL plays a vital role in promoting the implementation of financial education throughout the state and also providing resources to train teachers in delivering quality instruction,” said Phil Hosmer, vice president at M&T Bank and founding MCFL member. A former Maryland student, Evan Richard, whose life was greatly impacted by financial education, is a great supporter of the cause who has even testified before to support financial literacy, and now works as a legislative aid for Maryland Senator Kathy Klausmeier. See page 12 for his story of how financial education saved his life. The financial industry’s support of increasing financial literacy can bring these critical life skills to hundreds of thousands more Maryland students. If you are interested in more information about MCFL and its activities, you can contact Allen Cox, MCFL managing director, at acox@towson.edu.

EverFi, an MBSI Preferred Provider Since 2011, EverFi has been a preferred provider of Maryland Bank Services, Inc. (MBSI), an MBA subsidiary, which brings its interactive financial education platform to schools throughout Maryland, through its partnership with banks, educating students at all grade levels. EverFi’s mission is to help banks lead the path forward to a better financial future for young Americans. EverFi allows banks to be able to fully private-label their technology to Continued on page 13

Second Quarter 2016 | 11

How High School Financial Education Saved My Life By Evan Richards In the fall of 2008, as Wall Street tumbled and billions of dollars disappeared in a matter of moments, financial security concerns took center stage. Nearly everyone in the U.S. was affected, and my family was no exception. In the summer of 2009, our already difficult financial situation worsened when my father underwent a failed back surgery that permanently took him out of the workforce. Financial security for me and my family flew out the window soon thereafter. Thousands of stories similar to mine have been published in media outlets throughout the world. They usually end with some sort of plea for help. My story is a little different. I believe that other students would benefit from the type of financial literacy training I had in high school. This is how high school financial education saved my life. The financial difficulty my parents went through caused me to wonder how I could make sure the same didn’t happen to me when I was older. Luckily, I was at the start of an educational journey that would help me become financially astute and stand me in good stead into adulthood. In the fall of 2009, I had begun my junior year at Lansdowne High School in Baltimore. In a stroke of good luck, I had applied for the Academy of Finance program at the school two years prior. It was a decision I will never regret, and it has led me to advocate for personal finance courses to be implemented in all school curriculums. There were two parts of this experience that were unusual but that were extremely useful once I was in the real world. First, the outstanding assignments I got were based on real life experiences and expectations. One of the first exercises I was assigned in my junior year involved learning to manage a budget as a hypothetical college graduate with a set income. I had to budget expenses such as rent, utilities, a vehicle, groceries, insurance and of course 10 percent of my income was put into a savings account. At the end of the month, I found I had spent about $200 over my expected income. This exercise made me realize how important it is to manage expenses within my income before real money was put into play. Lessons such as this are crucial, and more students need this type of experience. The second key part of my financial education was being involved in a series of classroom-based learning programs like the Personal Finance Challenge, where schools compete to test their financial knowledge on such

topics as spending, credit, savings, investing, income, and money management. These programs were made possible by a nonprofit organization called the Maryland Council on Economic Education (MCEE). MCEE and similar nonprofits are vital partners for schools to help them give students the financial education they desperately need but typically don’t receive. MCEE provides training and other resources to teachers like mine, so they can teach economic and financial literacy. The skills that I learned from the Academy of Finance and MCEE helped me when I pursued my college education at Towson University. I had an advantage over the other students because I already had had experience managing budgets and contracts, while many students were just dealing with them for the first time. While I was fortunate that I received enough scholarship money that I did not have to reach into my own pockets to pay for college, I applied my budgeting skills to other expenses, such as buying textbooks. Instead of buying the first book I could find, I shopped around to find the cheapest price. I was ahead of most students when first coming to college, who are not given prior education about or responsibility for managing money because their parents have always done it for them. The knowledge that I received from MCEE and the Academy of Finance benefited me not only in college but also in my everyday life. No matter what career they choose, everyone needs financial knowledge to survive on a day-to-day basis. It really is life-changing information. By receiving financial education at a young age, I’ve been at a distinct advantage because I was able to apply things that I had learned in college on my first day, while many students were tackling these challenges for the first time. I wonder how empowered people would feel if they began economic and financial literacy as young as kindergarten. That kind of early preparation is possible through organizations like MCEE. Once students graduate high school they should be able to say that what they learned in school will undeniably make their lives easier and better. Financial literacy would account for a huge portion of that knowledge and self-confidence that is needed for entering and being successful in the “real world.” By educating them at a young age, students can leave high school equipped with the economic and financial skills they need to make informed, rational decisions as consumers, workers, citizens, savers, investors and participants in our global economy. ■

Second Quarter 2016 | 12

Financial Education

CONTINUED F ROM PAGE 11

A Strong Partnership The following are two MBA member banks discussing why they value their partnership with EverFi. “This year marks the fifth consecutive school year that Sandy Spring Bank has partnered with EverFi to deliver the Sandy Spring Financial Scholars Program. This free, web-based financial literacy program has reached more than 12,500 high school students in seven counties across the region. Through this innovative partnership, students in 34 high schools have completed nearly 60,000 learning modules, dedicating roughly 41,000 hours to financial literacy. Students get hands-on lessons about real-life financial needs, such as establishing good credit, saving for retirement, or paying student loans. Additionally, the program continues to deepen relationships between Sandy Spring employees and educators through various inschool engagement opportunities. Sandy Spring values its partnership with EverFi, the area school districts and the teachers who bring the program to life for their students. As a community bank with deep local roots, Sandy Spring Bank recognizes that financial competency is not only an essential life skill, but it is also important to building strong communities.” “The Community Bank Financial Scholars’ Program, fueled by EverFi, brings an innovative approach to financial literacy to every public high school in Southern Maryland,” said James F DiMisa, executive vice president and chief operating officer at the Community Bank of the Chesapeake. “Feedback from students and teachers has been overwhelmingly supportive, and we know that these graduates are better equipped to tackle tomorrow’s challenges. These young graduates are the next generation. These are our future employees and customers and we know that they have a solid foundation upon which to build. In addition, our partnership with EverFi has also opened many doors for the bank. It has allowed us to develop deep and lasting relationships with these school districts as well as the individual schools.” ■

maximize brand exposure with students and their parents. It can also help compliment the financial education programs banks currently have in place as well. The following statistics show how MBA member banks have impacted the schools here in Maryland: • Since 2011, EverFi’s financial literacy programs have reached over 47,400 Maryland students • In 2014-15, over 130 schools used the EverFi – Financial Literacy or Vault – Understanding Money program. EverFi anticipates working with over 150 schools this academic year. • In 2014-2015, after taking the high school course, Maryland’s students increased their scores on assessment tests by an average of 82 percent with the greatest gains made in the topics of financing higher education and renting versus owning. • EverFi asked students whether they felt prepared for a series of personal finance tasks and after taking the modules, 43 percent more students felt prepared to handle the important financial matters that lie ahead. Maryland banks are a trusted source of quality financial education for the communities they serve, so to learn more about EverFi, please contact Ryan Swift, EverFi’s vice president of business development at 202-629-0326 or rswift@everfi.com; or MBA’s Cindy Gentilcore at 443-837-1602 or cgentilcore@ mdbankers.com. ■

Testimonials from EverFi Participants Below are just a few testimonials from students and teachers about EverFi’s financial education programs:

From students: “Things that may have seemed confusing before were explained perfectly. I can safely say that I understand most of the different financial topics my parents talk about.” “The program covers everything in financial literacy from insurance and taxes to credit scores. I think it should be necessary for every student.” “I actually learned about how to handle my future better now from this.”

From teachers: “The material is very clear and straight forward and is easy to understand for the students.” “It is a great enhancement to my curriculum and provides students with certification.” “The modules are a great way for students to learn at their own pace.” Question: What was the best part of your experience with the EverFi course? Answer: “Seeing some of my students who would not have had time to process the information work at it until they truly understood it.” ■ Second Quarter 2016 | 13

‘First Friday’

Dr. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond

NEARLY 575 BANKERS AND BUSINESS LEADERS FROM OAKLAND TO OCEAN CITY ATTEND THE NINTH ANNUAL ECONOMIC OUTLOOK FORUM

Reid Wilson, Morning Consult

The Ninth Annual “First Friday” Economic Outlook Forum took place at the Renaissance Harborplace in Baltimore on Jan. 8. This event, the first event of its kind in the new year, helps to provide guidance on the year ahead and how businesses and banks can use that in their strategic planning. Anirban Basu, chairman and CEO, Sage Policy Group, a perennial favorite, kicked off “First Friday” with a regional and national perspective. Panelists then joined in the discussion covering topics like energy, employment, housing and other market segments. Basu moderated panelists including Andrew Richman, director of fixed income, SunTrust Bank; Anika Khan, director and senior economist, Wells Fargo Securities, LLC; and Dr. Luke Tilley, chief economist, Wilmington Trust. Dr. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond addressed the crowd, providing insight into the Fed funds rate change and economic outlook. Finally, Reid Wilson from Morning Consult, discussed the upcoming election and the polling and voting trends and what that could mean for business ahead. ■

SAVE THE DATE u Next year’s event will be held on Friday, Jan. 6, 2017. 14 | The Maryland Banker

Thank you To Our Sponsors! Platinum Sponsor SunTrust Bank

Gold Sponsors M&T Bank Old Line Bank PeoplesBank, A Codorus Valley Co. Sandy Spring Bank Wells Fargo Bank, N.A.

Silver Sponsors Bank of America Capital One, N.A. Community Bank of the Chesapeake

Patron Sponsors Bay-Vanguard Federal Savings Bank BB&T Calvin B. Taylor Banking Company Carroll Community Bank Dixon Hughes Goodman LLP Farmers & Merchants Bank Federal Home Loan Bank of Atlanta First United Bank & Trust Hamilton Bank Howard Bank New Windsor State Bank Revere Bank Shapiro Sher Guinot & Sandler Shore Bank Stegman & Company The Bank of Glen Burnie The Columbia Bank UHY Advisors Woodsboro Bank

Shared Patron Sponsors Business Finance Group, Inc. First National Bank Harford Bank Maryland Title Center Rosedale Federal Savings & Loan Association The Harbor Bank of Maryland

Participating Associations Maryland Bankers Association Maryland Association of CPAs Maryland Association of REALTORSÂŽ Maryland Chamber of Commerce Maryland Retailers Association

Panel (left to right): Anirban Basu, chairman and CEO, Sage Policy Group; Andrew Richman, director of fixed GF_Banker'sNewsletter 3:56 PM Pageeconomist, 1 income, SunTrust Bank; Anika 2/3/16 Khan, director and senior Wells Fargo Securities, LLC; and Dr. Luke Tilley, chief economist, Wilmington Trust.

The leaders in providing legal advice to Marylandâ&#x20AC;&#x2122;s financial services industry

D. Robert Enten David S. Musgrave Marjorie A. Corwin Peter B. Rosenwald, II Christopher R. Rahl Andrew D. Bulgin John C. Morton Attorneys at Law 233 E. Redwood Street n Baltimore, MD 21202 410-576-4000 n www.gfrlaw.com

Second Quarter 2016 | 15

Proud to Be a Maryland Banker MBAâ&#x20AC;&#x2122;s Day in Annapolis

2016 Day in Annapolis attendees

16 | The Maryland Banker

House Speaker Mike Busch met with bankers in the House of Delegates Chamber.

Senate President Thomas V. Mike Miller addressed bankers at a special meeting held in the Senate Lounge.

Student bankers from the Capital One student-run bank branch at Parkdale High School along with their teacher and employees from Capital One.

ver 160 bankers from over 25 institutions across Maryland took Annapolis by storm on Feb. 10 for the MBA’s Annual Day in Annapolis. We are thrilled to report that banker attendance has doubled since bringing back this program in 2014! MBA’s Day in Annapolis is a powerful advocacy event, where bankers convene in Annapolis to meet with their local legislators to talk about issues concerning Maryland’s banking industry and their local communities. The program featured Andy Bertamini, president, Maryland Region, Wells Fargo Bank; Delegate Cory McCray (D-District 45); Chairman Bobby Zirkin (Senate Judicial Proceedings, D-District 11); Delegate Pam Beidle (D-District 32, and House Motor Vehicle and Transportation Subcommittee chair); and Delegate Susan McComas (president, Maryland Women’s Legislative Caucus; R-District 34B). This year’s theme focused on bankers as an integral

Kathleen Murphy, president and CEO, Maryland Bankers Association (left), moderated a special session at which Delegate Susan McComas (R- District 34 B), president, Maryland Women’s Legislative Caucus, addressed the Council of Professional Women in Banking and Finance.

“Thank you for putting together the Day in Annapolis event. Hosting this at the Maryland House of Delegates was fantastic. I must say this is my most favorite event ever. At first I was a bit unsure since I do not know about the process too well and I’ve never spoken to a delegate or senator one-on-one, let alone navigate the House of Delegates. It really turned out to be a non-scary and very enjoyable event. It truly was the best personal and professional interaction I had with the MBA and its staff. It was very valuable to spend the entire day with you all and see what you do for our industry.” — Alysson E. DuPont, SHRM-CP, PHR, vice president, human resources manager, Calvin B. Taylor Banking Company

Continued on page 18

Second Quarter 2016 | 17

MBA’s Day in Annapolis

CONTINUED F ROM PAGE 17

Andy Bertamini, regional president, Maryland Region, Wells Fargo Bank, spoke with Delegate Cory McCray (D-District 45) on the importance of collaboration to make Maryland communities better.

part of their local communities. Throughout the day, speakers discussed initiatives and collaborations between banks, bankers and local leaders to make Maryland communities better. Although it is impossible to describe the boundless initiatives of Maryland banks within the communities they serve, the MBA Day in Annapolis highlighted a few. During the morning session, Andy Bertamini and Delegate McCray discussed a collaborative effort to improve workforce development for young people in Baltimore City. The conversations that ultimately led to the development of this program began at MBA’s Day in Annapolis in 2015. Last year, McCray was invited to speak to MBA attendees about his perspectives as a new legislator and some of the reasons that led to his run for office. During the session, he spoke on his interest in workforce development and apprenticeship programs throughout Baltimore City. Finding a mutual interest in the subject, Andy Bertamini invited Delegate McCray to a meeting to speak further on possible partnerships and initiatives on which they could work collaboratively to improve workforce development. Further, understanding the value in having all perspectives, and as chair of the Baltimore Workforce Development Board, Andy Bertamini invited Delegate McCray to serve on the Baltimore Workforce Development Board leading to a lasting partnership between the legislative branch and the financial services industry to enhance the community of Baltimore. MBA featured this partnership because of the special connection between MBA’s Day in Annapolis and the two community leaders. It is an outstanding example of how bankers can connect with elected officials to make a difference in their communities. Another session featured a panel of two seasoned legislators: Senator Zirkin and Delegate Beidle. They discussed the state legislative process, how bankers can get involved and the importance and advocacy role

of MBA. Both Senator Zirkin and Delegate Beidle emphasized the importance of having the perspectives of subject experts, such as MBA, as they make decisions on legislation impacting Maryland’s future. The vast range of topics covered by legislative committees every year makes becoming an expert on each subject impractical. As a result, legislators rely on subject experts from their districts to illustrate the real-life impacts of legislation on their constituencies. This perspective emphasizes the importance of banker grassroots advocacy. Without the necessary voices from the community, legislation can often lead to unintended consequences. The day also featured a special session for the Council of Professional Women in Banking and Finance with Maryland Women’s Legislative Caucus President Delegate Susan McComas. Delegate McComas discussed the work/life balance, how the Maryland Women’s Legislative Caucus fosters an environment of growth for women legislators and some initiatives of the Maryland Women’s Legislative Caucus, including a bipartisan initiative to stop human trafficking. With the proximity of the Baltimore port, the BWI airport and several other transportation facilities throughout Maryland, there is an increased focus and awareness necessary in Maryland to stop human trafficking. Delegate McComas spoke of the bipartisan effort of the Maryland Women’s Legislative Caucus to address the issue. Also joining the 2016 MBA Day in Annapolis event were 10 very talented student bankers from Parkdale High School in Riverdale, Prince George’s County. These talented student bankers staff Capital One’s student-run bank branch at Parkdale High School, and were selected through a competitive process to attend the program. The students – under the management and mentorship of Capital One bankers – operate a real bank branch, providing savings products and services for their fellow students, teachers and administrators. The student bankers are also responsible for teaching their peers the importance of basic money management skills such as budgeting and saving. Throughout the program, the students are paired with mentors from the bank who teach them about the trade, as well as help them prepare for college applications and college interviews and teach them professional skills. They were joined by their teacher, Susan Baudoin Bistransin. This is just one of the many programs throughout Maryland that banks are involved in to reach Marylanders at a young age in order to teach them about financial literacy, and promote workforce development. Throughout the day, banker attendees met with legislators and shared their unique perspectives. MBA greatly appreciates our members’ time and commitment to building and developing these very important relationships with their representatives. ■

Keep the Cash Flowing

Techniques to Create Adequate Liquidity By Jim Reber

his just in: The Fed, and economists, and the bond market all agree on the future path of Fed Funds, at least through 2016. And within a range. As of the start of 2016, Federal Reserve board members’ comments seem to anticipate three to four additional bumps to overnight rates this year. Several recent surveys of economists show that their expectations are for about three more tightenings. And even the futures contracts, which have very grudgingly built in prospects for Fed action, are now forecasting about three more hikes. So, if that happens, what will be the impact on your community bank investment portfolio’s cash flow? Most managers have access to financial models that will tell them prospectively how much liquidity will be produced each month, over a range of interest rate shocks. What we can add to the dialogue is that an investor can take out a lot of the guesswork (a bond wonk would call it “optionality”), by choosing securities with certain characteristics.

Premium callables In government agency land, the best way to make certain of your liquidity is to buy bonds with no call options. The case has been made by your correspondent that it is now very inexpensive to do so. Nonetheless, by purchasing high coupon callables at a premium, you can improve your chances of getting short-term cash flow, with a payoff in case the bond market gives you a head fake. The chance of your bond being called improves if the call feature is one time only. Here’s a recent example: The Federal Home Loan Bank System has an issue with a 2.2 percent coupon that matures Jan. 28, 2021 that can be called only once, on July 29, 2016. It’s priced a premium of 100.597 to create a yield to the call date of 1 percent. If it’s not called, the yield to maturity jumps to 2.07 percent. These “cushion callables” are very popular with short-term investors.

Short maturity MBS In the case of a security that has an amortizing balance, like most any mortgage-backed security (MBS), the stated final maturity has a great deal to do with how much principal you can expect over the next few months

or years. For a relatively short final (say, less than 15 years), the “scheduled” principal, which ignores any prepaid cash flow, will be significant and will increase noticeably just with passage of time. For example, an MBS with a stated maturity in 12 years will return about 15 percent of its principal in the next year, even if prepayments slow down further from their currently slow “speeds.” This extension protection, which is built into short maturity MBS, will also provide the investor with ready cash to reinvest at (presumably) higher rates.

True floaters Bonds whose interest rates fluctuate with the general market can be beneficial for several reasons. First, if short-term rates rise, the periodic coupon payments will too, resulting in more cash flow. For another, history has shown that for some adjustable MBSs, the homeowners will refinance their mortgages into fixed-rate vehicles, even if in the near-term their rates are locked in at higher levels, so as to not be exposed to further “rate drift.” This refi activity produces additional cash flow for the investor and can be directed to its best and highest use. The advice, then, is to anticipate a slowdown in your portfolio cash flow, even if it is running at a fraction of its pace from 2012. The “more is better” adage certainly holds true when investing in a rising rate scenario. Carefully selecting your bonds can keep you positioned to do just that. ■ Jim Reber is president and CEO of ICBA Securities, a Maryland Bank Services Preferred Provider, and can be reached at 800-422-6442 or jreber@ icbasecurities.com.

Track Record

Vining Sparks, ICBA Securities’ exclusive broker, can create a scenario cash flow report for any community bank, based on up to seven future interest paths. To request this document for your community bank, contact your Vining Sparks sales rep, or visit www.viningsparks.com. ■ Second Quarter 2016 | 19

News & Notes

Members on the Move

Patricia Stetler

Homer V. Hervey

Holly Johnston

Laurence Martinez

Patricia Stetler joined Arundel Federal Savings Bank as vice president and chief risk officer. Stetler has received certifications from the Institute of Certified Bankers of the American Bankers Association as a certified regulatory compliance manager and from the Association of Anti-Money Laundering Specialists as a certified anti-money laundering specialist. Carroll Community Bank (CCB) hired Homer V. Hervey as the new vice president, branch manager at the bank’s Bethesda location. Prior to joining CCB, Hervey served as the commercial branch manager/business development officer and vice president for OBA, which was acquired by First National Bank in 2014. Hervey will be responsible for overseeing and supporting the local business community in the D.C. metro region. Holly Johnston celebrated 30 years with CNB, member of Shore Bancshares community of companies. Johnston began her banking career at the CNB branch in Milford, Delaware. During Johnston’s career, her position has evolved from teller to head teller, and then customer service representative. She is currently a teller at the CNB branch in Felton, Delaware. Laurence Gerard-Martinez, joined New Windsor State Bank as the business center manager at the new Eldersburg branch. She most recently worked at Damascus Community Bank and brings 26 years of banking experience. Severn Savings Bank hired Erik Chick and Brian Wood. Both joined the bank’s Business Banking Team as vice president and commercial relationship manager. They will be managing commercial loan portfolios and establishing new commercial real estate and commercial banking relationships. Chick has 20 years of banking experience specializing in business banking and commercial real estate lending. He has worked in the Baltimore/Washington and Anne Arundel County region, specifically in Annapolis, for an extended time. Wood has 28 years of banking experience, 15 of them with 20 | The Maryland Banker

Erik Chick

Brian Wood

Debbie Danneman-Davis

Julie Hopkins

Severn Savings Bank, including commercial and business lending. He has also been a realtor with Champion Realty. Debbie Danneman-Davis celebrated 35 years with Shore Bancshares Inc. Davis began her career in the bookkeeping department at The Talbot Bank, a member of Shore Bancshares community of companies. During her career, she has held various positions from bookkeeping, proof department supervisor, operations department electronic banking manager as well as internal auditor to her current position at Shore Bancshares as deposit operations electronic banking representative. The Columbia Bank promoted Julie Hopkins to branch manager at the Gateway Plaza office. She previously was the assistant branch manager of the bank’s Ellicott City office. Hopkins has been with the bank since 2009. In her new position, she will be responsible for developing new business opportunities and the day-to-day banking operations of the Gateway Plaza office. She will provide customer service to clients and have a strong focus on community involvement in Howard County. James Jones was hired as vice president, commercial banking for The Columbia Bank. He previously worked at Myriddian Staffing Solutions as president. Jones will be responsible for building, developing and managing new commercial banking relationships, and enhance service for existing commercial banking customers. Wanda Hutchison celebrated 35 years at The Talbot Bank, a member of Shore Bancshares community of companies. Hutchison joined the bank as a floating teller working in all the bank branches. She has held various positions during her career at Talbot Bank, including branch manager, branch administration and her present role as vice president, branch manager at the Dover Street branch. Michelle Nuckols, senior manager, and Ann Barrar, senior consultant, joined DHG Financial Services, a national practice of Dixon Hughes Goodman. Both Nuckols and Barrar bring

Members in the Community A First Step in Financial Literacy James Jones

Wanda Hutchison

Josie Hankey

significant credentials in regulatory compliance to assist financial services companies with evolving regulatory requirements. Nuckols, a certified regulatory compliance manager, has 26 years of experience providing compliance consulting services and compliance audits to financial institutions. Nuckols was most recently the president and owner of Pierce Compliance Consultants Inc., where she provided regulatory compliance consulting services, bank secrecy act/anti-money laundering services and compliance audits to financial institutions throughout Virginia. Barrar has more than 27 years of regulatory, loan production, mortgage lending and retail experience. She has worked with Nuckols for 12 years focusing on compliance. Barrar performs regulatory compliance audits to ascertain compliance levels with consumer protection laws and regulations. Josie Hankey, communications strategist at Fallston Group LLC , was named 2015 New Professional of the Year by the Public Relations Society of America – Maryland Chapter (PRSA-MD) for her efforts and achievements as a rising PR professional. Hankey received the award at PRSA-MD’s annual Best in Maryland gala on Dec. 1, 2015. She was selected from a large pool of candidates by the West Michigan Chapter of PRSA in a majority vote.

Employees at the St. Michael’s branch of The Talbot Bank, a member of the Shore Bancshares community of companies, welcomed visitors from St. Luke’s Nursery School on Oct. 15, 2015. The children were given a tour of the bank, then made their very own piggy banks to take home. The bank visit is an annual event for the school. Pictured: St. Luke’s Nursery School students with Talbot Bank employees, from left: Ruth Barbour, Dawn Henckel, Parker Spurry, Renate Rice and Kate Loveless. ■

Leadership Maryland Class of 2015 Congratulations to Paul Brown, executive vice president, chief lending officer and chief client services officer at Howard Bank; Lisa Morgan, president and senior relationship strategist at PNC Wealth Management; and Talli Oxnam, senior vice president at Wye Financial & Trust for graduating from Leadership Maryland’s class of 2015 in December. The 47 graduates of the class of 2015 reflect a cross-section of the state, including diversity of geographic location, profession, ethnicity and gender. Leadership Maryland applicants are chosen by a selection committee each year to complete Leadership Maryland’s eight-month hands-on learning program focused on the state’s most vital social, economic and environmental issues. ■

Welcome New Members Associate Members: • B ankers Healthcare Group, LLC • M aryland Council on Economic Education • N CALL Loan Fund • USDA/Rural Development Associate Financial Member: • West Town Bank & Trust

Second Quarter 2016 | 21

Mar yland Bankers Association Professional Development Calendar A Local ABA Training Provider

SPECIAL EVENTS

May 5

June 5-8

Council of Professional Women in Banking and Finance – Annual Conference Annual Convention

August 1-5 Maryland Banking School SEMINARS, WEBINARS, SCHOOLS, AND ONLINE TRAINING Compliance

HR Management

March 29

Record Retention & Destruction Policies

April 22

Interview Skills for Better Hires (GSB) Getting Things Done When You’re Not in Charge (GSB)

March 30

UDAAP Review & Update

April 26

April 22

2016 Anti-Money Laundering & Bank Secrecy Act Seminar (PBS)

August 9-10

2016 Bank Secrecy Act Two Day School (PBS)

Lending

Finance

March 21 & 25 Analyzing Business Cash Flow March 28