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S P RIN G 2 0 1 6
B A N K E R
WHAT YOU NEED TO KNOW
Economic Survey Results | Breach Response Plan | Economic Leadership Forum ENDORSED BY THE NEW JERSEY BANKERS ASSOCIATION
SCoTT BARAnoWSki, CiA DiReCToR – inTeRnAl AuDiT SeRViCeS
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JERSEY B A N K E R
NJBankers Board of Directors John W. Alexander Chairman/Chief Executive Officer Northfield Bank
James P. Genoy, Jr. President/Chief Executive Officer/Treasurer Monroe Savings Bank, SLA
Anthony Labozzetta President/Chief Executive Officer Sussex Bank
Kevin Cummings President/Chief Executive Officer Investors Bank
David J. Hemple President/Chief Executive Officer Century Savings Bank
Stewart E. McClure, Jr. * Regional President Lakeland Bank
Louis Anthony Costantino, Jr. * Managing Director, Industry Manager J.P. Morgan
Thomas J. Holt Senior Vice President Bank of America
D. Nicholas Miceli Market President TD Bank, N.A.
Edward Dietzler President The Bank of Princeton
James A. Hughes President/Chief Executive Officer Unity Bank
Peter Michelotti President/Chief Executive Officer Community Bank of Bergen County
John S. Fitzgerald * President/Chief Executive Officer Magyar Bank
Henry P. Ingrassia President/Chief Executive Officer Glen Rock Savings Bank
Craig L. Montanaro * President/Chief Executive Officer Kearny Bank
Paul E. Fitzgerald President/Chief Executive Officer First Choice Bank
Thomas J. Kemly President/Chief Executive Officer Columbia Bank
John E. McWeeney, Jr. President and Chief Executive Officer ext. 627 jmcweeney@njbankers.com James M. Meredith Executive Vice President and Chief Operating Officer ext. 614 jmeredith@njbankers.com
Claire Anello Office Manager, Database and Website Manager ext. 631 canello@njbankers.com
Michael P. Affuso, Esq. Executive Vice President and Director of Government Relations ext. 628 maffuso@njbankers.com
Cris Goncalves Manager of Education ext. 630 cgoncalves@njbankers.com
Emily T. DeMasi Vice President and Director of Communications ext. 610 edemasi@njbankers.com Wendy C. Mandelbaum Controller ext. 603 wmandelbaum@njbankers.com
Contributing Editor Emily T. DeMasi
Robert Rey President/Chief Executive Officer NVE Bank Peter G. Schoberl Chairman/President/Chief Executive Officer Community First Bank Kathleen Stone Senior Vice President, Senior Business Banking Executive BB&T
NJBankers Officers
NJBankers Staff
Jenn Zorn Senior Vice President and Director of Education & Business Development ext. 611 jzorn@njbankers.com
Michael Nardo Executive Vice President/NE U.S. Market Executive – Corporate Banking PNC Bank, N.A.
Lauren Barraza Executive Assistant ext. 618 lbarraza@njbankers.com Cynthia M. Zaccaro Administrative Assistant II/ Senior Administrative Assistant ext. 632 czaccaro@njbankers.com Erin Suckiel Assistant to the Director of Communications ext. 629 esuckiel@njbankers.com
Gerald L. Reeves * Chairman President/Chief Executive Officer Sturdy Savings Bank
James S. Vaccaro * Second Vice Chairman Chairman/President/CEO Manasquan Bank
Angela Snyder * First Vice Chairwoman Chairwoman/CEO Fulton Bank of New Jersey
John E. McWeeney Jr. President and CEO New Jersey Bankers Association
Counsel Michael M. Horn, Esq. McCarter & English, LLP Mary Kay Roberts, Esq. Riker, Danzig, Scherer, Hyland, Perretti LLP
*Executive Committee
Contact New Jersey Bankers Association www.njbankers.com 411 North Avenue East Cranford, NJ 07016-2436 Phone: 908-272-8500 Fax: 908-272-6626
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Diane Starr Administrative Assistant to Education Department ext. 600 dstarr@njbankers.com
www.thewarrengroup.com 280 Summer Street • Boston, MA 02210 617-428-5100
Published continually as a quarterly publication by the New Jersey Bankers Association from 1929 to Winter 1986. Revived as a quarterly publication by NJBankers and The Warren Group in 1998 under the name New Jersey Bank & Thrift and continued as New Jersey Banker in 2002. Combined with The League Leader, published by the New Jersey League of Community Bankers, in December 2008 and continued as New Jersey Banker.
Spring 2016 New Jersey Banker
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SPECIALIZED EXPERTISE
Table of Contents
Audit & Compliance SEC Rules & Regulations SOX 404 Internal Audit Control
Network Attack & Penetration Information Systems Audit Business Resumption Planning
Cover 16 Impact of New Flood Insurance What You Need to Know Strategic & Succession Planning Profit & Process Improvement Enterprise Risk Management
Tax Planning & Advice Tax Preparation & Compliance
Departments 5 New Members 10 Politics & Policy Tax Policy And Faith Based Initiatives 6 Chairman’s Platform Reflecting on Our Great Association 11 Upcoming Events 8 From the President’s Office NJBankers Off to Fast Start in 2016
Tax Accounting
28 Bank Notes 30 Bank Shots
Features
Audit & Co-Sourcing Regulatory Compliance Insurance & Trust
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Digital Danger Internet-Based Nonbank Lenders a Threat to Consumers
9 Feature NJBankers Study Explores Impact of Commercial Banking and Savings Institutions on State Economy 12
Directors’ Corner Sorting Necessary from Noise: How to Focus Your Board’s Time
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Behind the Teller Line Boiling Springs Savings Bank
18 Feature The Importance of Having a Breach Response Plan in Place
20 Feature Commercial Lending Beyond the Bank Loan 22 Feature NJBankers Releases 2015 – 2016 Economic Survey 24 Feature Economic Leadership Forum Draws More Than 500 Attendees 26
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Spring 2016
Digital Danger
Internet-Based Nonbank Lenders a Threat By Camden R. Fine
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very industry and marketplace is facing some measure of paradigm-shaking digital disruption these days. Among the newest financial industry disruptors are online marketplace lenders, the deceptively benign name for potentially predatory nonbank lending platforms proliferating on the Internet. Many of these technologybased lenders are digitally slicked-up credit providers of least and last resort. None offer a glimmer of relationship banking whatsoever. For several reasons, ICBA is concerned about the risks these emerging credit providers could be spreading. Their risky, virtually unregulated and rapidly expanding lending is troubling – for borrowers, for our economy, for our financial system. Camden R. Fine Scions of Silicon Valley and Wall Street, President and CEO of ICBA online marketplace lenders are a creation of today’s teeming petri dish of so-called FinTech technology innovation. These nonbank firms rely on powerful Big Data software engines to mine the Internet for information that feed black-box algorithms to justify their high-cost loans and nearly instantaneous credit approvals. Speed is their novelty and allure. For many consumers, the credit they offer is too easily obtained – and too easily misunderstood. Often targeting the most unsophisticated and desperate borrowers, online marketplace lenders offer caveat emptor credit that is unbridled by any mainstream regulatory oversight or constraints. Some solely serve consumers. Others cater exclusively to small businesses. Some specialize in payday, purchase-finance, education or merchant cash-advance financing. Virtually all are driven by Wall Street and hedge fund investors impatiently seeking the biggest, most immediate investment returns. A borrower’s ability to understand or repay these
New Members
loans is the least motivation for these companies. Moreover, the inherent risks online marketplace lenders carry have an ominously familiar pattern. Higher defaults are hardwired into their assumptions. Their computer-generated lending typically involves little to no underwriting. No collateral is involved. The creatively disparate data these companies rely on have never before supported widespread credit decisions. Their obscure lending practices are untested by any reasonable measure of time or economic stress. And mirroring activities during the financial crisis, some marketplace lenders are aggressively offloading their loans into securitized investment vehicles on Wall Street. Yet despite their troubling characteristics, these lenders are proliferating like digital dandelions. Because of all of their real dangers, ICBA is sounding a warning bell, and we may ask community bankers to help us in the future. In comment letters and industry forums, we have encouraged Treasury and other public officials to study the products, businesses practices and risks of these lenders. We are asking them to consider whatever regulations are necessary to protect consumers and our overall economy. Moreover, as an alternative to these lenders, we are also asking Treasury officials to work with ICBA to ease the considerable regulatory burdens of community banks that are discouraging their truly productive, responsible lending. Technology and innovation should bring progress and solve problems, not spread new dangers or harm. We still feel the recent pain brought by activities trumpeted as financial progress that soon became financial scourges. For our still-recovering citizens, economy and country, ICBA emphatically says never again. ■ Camden R. Fine is president/CEO of the Independent Community Bankers of America. He can be reached at camden.r.fine@icba.org.
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Spring 2016 New Jersey Banker
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Chairman’s Platform
Reflecting on Our Great Association By Gerald L. Reeves
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s I near the end of my two-year term as chairman of NJBankers – an organization I’ve been very proud to serve – I would like to express my sentiments and observations from my years as chairman. First, I would like to thank the president of our association, John McWeeney, and his excellent staff for their wonderful support during my terms of service. I believe that John and his team have created Gerald L. Reeves the best banking Chairman NJBankers trade association President and CEO force in the nation! Sturdy Savings Bank Every person who
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I have interacted with has been professional, courteous and helpful. They all deserve to be named and lauded whenever possible. Many thanks to Jim Meredith, Mike Affuso, Jenn Zorn, Emily DeMasi, Wendy Mandelbaum,
Angela Snyder for dedicating her time to become an officer of this fine association and wish her well as she takes the helm as chairwoman. I have gotten to know Angela well over the past years and have a high
I encourage current committee members to continue their service to the association and invite member bank leaders to support their employees as they serve on committees. Claire Anello, Cris Goncalves, Cindy Zaccaro, Lauren Barraza and Erin Suckiel. Secondly, I would like to congratulate
degree of respect and admiration for her. I know she will be an effective leader of NJBankers.
Spring 2016
I have been actively involved in the association through the years yet as chairman, I have become even more impressed with the efforts and achievements of our 34 committees and nearly 780 bankers who volunteer their time on committees. Committees are led by passionate chairpersons with knowledgeable members who are engaged and willing to develop content for professional development programs; make recommendations on legislation and regulatory positions; and share their experiences and expertise in industry matters. Committees can accomplish great things. I encourage current committee members to continue their service to the association and invite member bank leaders to support their employees as they serve on committees. It’s clear to me that bankers, like me, see the importance of employee commitment to committees since 99 percent of our members are represented on a committee or board. I would like to thank the regulatory agencies – NJ DOBI, FDIC, OCC, CFPB, Federal Reserve and their representatives for their participation in our numerous educational programs and forums throughout the year. Open communication between regulators and bankers is key to a positive and successful relationship. Their guidance is invaluable and appreciated. This is a good time to thank the members of our association for your support of our advocacy efforts. Mike Affuso directed legislative and regulatory efforts making positive and effective strides whether guiding us on legislative process in the Garden State or developing opportunities to meet with legislators in Washington. Our legislators need to hear our concerns directly from us. NJBankers has done an excellent job of facilitating communication with legislators on the issues that affect our businesses every day. It has been my extreme pleasure to serve this fine association and champion our industry in my capacity as chairman and I feel confident, that with your continued support of NJBankers, great things will happen. ■ Gerald L. Reeves is chairman of the New Jersey Bankers Association and president and CEO of Sturdy Savings Bank. He can be reached at greeve@sturdyonline.com.
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From the President’s Office
NJBankers Off to Fast Start in 2016 By John E. McWeeney Jr.
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efore the first snowflakes hit the ground in January, NJBankers had successfully conducted our 5th Annual New Jersey Economic Leadership Forum with over 500 attendees treated to a series of outstanding presentations on key issues facing our national and state economies. Keynote speakers included political pundit Charlie Cook and Federal Reserve Bank of New York President John E. McWeeney Jr. William Dudley. President/Chief Executive Officer NJBankers Andy Sieg, managing director and head of global wealth and retirement solutions for Bank of America Merrill Lynch, Michele Siekerka, president of the New Jersey Business and Industry Association, and a host of other speakers and breakout groups gave the attendees a lot to think
mist Dean James Hughes and the Bloustein School of Planning and Public Policy at Rutgers University on both of these projects. Our Economic Survey enjoyed an outstanding 81.2 percent response rate from our member bank managing officers, who generally displayed optimism about the continuation of the economic expansion and economic conditions in the United States and New Jersey. A special thank you to our associate member FinPro for sponsoring our Economic Survey for the third consecutive year. Conducted for the first time, the Economic Impact Assessment has provided NJBankers with credible data about the significant contribution the banking industry makes to New Jersey’s economy. This information will be extremely helpful in our advocacy and public relations efforts. Special articles on both economic reports appear in the magazine on pages 9 and 22. Responding to the heightened regulatory sensitivity among our members re-
This new conference is part of our continuing efforts to bring members new programs on the issues they’re most concerned about. about as we move forward. Given its great programs, large crowds and the significant media coverage it generates, the Economic Forum has helped to considerably raise the profile of banking in New Jersey. (See page 24 for more.) Two important NJBankers initiatives also came to fruition in the first quarter; the 6th Annual NJBankers Economic Survey and a report on the Economic Impact Assessment of the banking industry on the Garden State’s economy. We partnered with Distinguished Professor and Econo-
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garding CRA and Fair Lending, NJBankers teamed with Kenneth H. Thomas, Ph.D., one of the nation’s leading experts on CRA to launch a special CRA and Fair Lending Conference in February. Attendees benefitted from Thomas’ insight as well as an interactive panel of bank regulators. This new conference is part of our continuing efforts to bring members new programs on the issues they’re most concerned about. Some other upcoming new programs include the Summit on Cyber Security being held in April that is jointly sponsored by
NJBankers, the New Jersey Chamber of Commerce and the New Jersey Credit Union League. Noted speakers Richard Torrenzano, CEO of the Torrenzano Group, and award-winning author Bray Roberts, a director of the National Cybersecurity Institute, will focus on how C-suite leaders and directors can protect their business, brands and reputation in the digital age. In June, NJBankers will be hosting a Commercial Real Estate Seminar with well-respected New Jersey real estate expert Jeffrey Otteau and a regulatory panel. This new program was a direct result of feedback we received from members of our Enterprise Risk Management and Commercial Lending committees about the increasing concerns of regulators regarding commercial real estate exposure. While we’re looking to add value for our members with new programs and initiatives, NJBankers continues to offer a full slate of traditional programs that remain relevant and popular. Two important examples are our Directors and Managing Officers Conference and the ABA Government Relations Summit in Washington, D.C., both of which were held in March. The DMO Conference provides a good opportunity to keep bank directors informed and educated on key banking issues while the Government Relations Summit allows NJBankers to send a group of bankers to our nation’s capital to meet with the New Jersey Congressional delegation. As we move forward into the year some of our most important and exciting events are scheduled including the popular Women in Banking Conference in April and our 112th Annual Conference in May in Scottsdale, Arizona. We hope to see many of you at our various events. We strive to be a member-driven organization and as such we welcome your ideas and suggestions. Thanks for all of your support. ■ John E. McWeeney Jr. is president and CEO of the New Jersey Bankers Association and can be reached at jmcweeney@njbankers.com.
Spring 2016
Analyzing Results
NJBankers Study Explores Impact of Commercial Banking and Savings Institutions on Garden State Economy
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anks play an important role in New Jersey’s economy, from employing Garden State residents to paying state and local taxes to supporting the communities they serve with monetary contributions, employee involvement and so much more. With that, NJBankers commissioned a study with the Edward J. Bloustein School of Planning and Public Policy, Rutgers, on the impact that New Jersey’s banking industry has on the state’s economy. The Economic Impact Assessment (EIA) also highlights, through interviews with members, the contributions that the industry provides to the communities they serve. The resulting report details the size of this impact. The study was conducted under the direction of Dr. James W. Hughes, distinguished professor and dean of the Bloustein School; Marc D. Weiner, J.D., Ph.D.; and Will Irving, senior project manager and economic analyst, also of the Bloustein School. Employment growth in New Jersey’s banks has been strong relative to the nation in recent years, and employment in the state’s savings institutions did not undergo the same post-recession decline experienced at the national level. The data clearly supports the view that banks are an important part of New Jersey’s economy helping to drive growth and prosperity. Mike Affuso, NJBankers executive vice president and director of government relations communicated the results of the study in a testimony to the Assembly Financial Institutions and Insurance Committee in February. The presentation was well-received. A webinar was conducted with the Bloustein School in March presenting and discussing the results of the analysis. To access the webinar, visit njbankers.com. According to Dr. Hughes, “The comprehensive study fully documents the banking industry’s enormously positive impact on the New Jersey economy.” NJBankers President and CEO John E. McWeeney Jr., noted “The results of the study validate what we already knew intuitively and that
Among the study’s findings, commercial banks and savings institutions: • Directly employ nearly 45,000 people in New Jersey • Indirectly support nearly 79,000 additional jobs through expenditures • Generate over $9 billion annually as a result • Generate an estimated $16.7 billion in GDP in New Jersey annually through their activities and economic ripple effects • Generate approximately $530 million in state taxes • Generate $934 million in local taxes annually in New Jersey • Each $1 million in total expenditures made by the industry is estimated to generate: -- 8.5 direct and indirect jobs -- $621,684 in compensation -- $36,496 in state tax revenues -- $64,390 in local tax revenues • Employment growth in New Jersey’s commercial banks has been strong relative to the nation in recent years, and employment in the state’s savings institutions did not undergo the same post-recession decline experienced at the national level. is that New Jersey’s banks are major direct contributors to the success of New Jersey’s economy. When you add to that the significant level of economic activity driven by bank lending and the extensive support banks provide through charitable giving, sponsorships and volunteerism, New Jersey’s banks play a critical role in the state’s success. As we like to say, with New Jersey’s banks, New Jersey prospers.” For a copy of the EIA full report, contact Emily DeMasi, NJBankers vice president and director of communications at edemasi@njbankers.com. ■
Spring 2016 New Jersey Banker
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Politics and Policy
Tax Policy And Faith-Based Initiatives By Michael P. Affuso, Esq.
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fter 16 years of failed federal tax policy, the current crop of candidates have taken a decidedly different track – avoidance. Only one, Sen. Bernie Sanders, is even raising the issue – soak the rich – and it won’t come close to paying for the pie-in-thesky promises that he’s making. Though his plan may have some political merits, its economic merits are as elusive as all the other candidates’ positions on tax policy. Michael P. Affuso In New Jersey, we Executive Vice President/ Director of Government Relations are considering sevNJBankers eral different alternatives, some appear to be sound, while others appear to more of a faith-based initiative. First, let’s focus on an easy target – transportation funding, which is an off budget item. Currently, roads are being built with money raised from bonding. We are told that this money will run out sometime this year – technically, it won’t – the revenue will simply be used only to cover debt service and new construction will cease. There are two choices if we wish construction to continue: raise the gas tax or bond more. Put in banking terms, bonding at this point would be like using your HELOC available credit to pay for the debt service of your current HELOC. The hole gets bigger and the cost per mile increases and eventually you run out of available credit. Raising the gas tax is another solution – some are advocating to a raise in the cost of the gasoline delivered to the station while others are advocating raising the tax at the pump. Either way, it is going to be borne by consumers. New Jersey does have the second lowest gas tax in the nation at 14.5 cents per gallon. The rub with this funding is when will the gas tax expire? Some are calling for the expiration to occur in 2021 at the height of a gubernatorial election – others want to put the nix on this and fund it further. Do I smell politics? But … The governor will not sign any mere gas tax increase without “tax fairness” and his
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national ascendency may likely forbid any tax increase at all. Tax fairness is in the eye of the beholder; some contend it is a reduction or phase up of the estate and inheritance tax while others wish to focus on not taxing retirement income. New Jersey is one of only two states that imposes both estate and transfer inheritance taxes. The threshold at which taxation begins is $675,000 and is the lowest among the 16 states that impose the tax and well below the federal threshold of $5.4 million. However, fewer than 5 percent of deaths in New Jersey result in estate-tax liabilities, which generate about $325 million in revenue. The breakdown among filers is stark. Estates valued in the top bracket of $5 million or greater represented just 3.3 percent of all filings but reaped 42 percent of estate-tax revenues. Also up for consideration is an increase of the exclusion of retirement income from state income taxation. Currently, joint filers can exclude $20,000 from taxation and individuals $15,000. The legislation would increase those levels fivefold over three years. There is not yet a budget cost associated with this proposal. So essentially in order to fund road construction, there will be an additional revenue shortfall in the state operating budget based on the trade-off for tax fairness. This may be a reasonable compromise if it leads to greater competitiveness, but it still does not address the shortfall it creates. And it’s a shortfall on top of a shortfall since the full pension payment hasn’t been made in a generation. The proposed solution is not finding new funding, it’s forcing an appropriation. Proponents of a constitutional amendment will force an appropriation of quarterly payments to eventually ensure that the entire pension payment is made. The hope is this amendment, plus some changes that would create pension smoothing and other cost reductions would ensure solvency. This is all true. But, where will the money come from? Since the full pension payment has not been made in 20 years, the New Jersey budget has for 20 years been balanced without meeting a principal liability. It would be akin to claiming a person’s
budget was balanced by only making partial mortgage payments for the past 20 years. Taken together, tax fairness + the constitutional amendment = either spending cuts or other tax hikes to the tune of over $2 billion dollars or 7 percent of the current budget. The answer is most likely going to be both. The millionaire’s tax plus “combined reporting” get you less than half way. Democrats are unlikely to find any more politically palatable tax increases while the governor is unlikely to sign either – which brings us to the spending side. In every budget address that I’ve seen in the past 15 years, every governor touts that “this budget brings the largest amount of property tax relief ever.” That’s because the tax relief comes as state aid to municipalities via many sources. This is an enormous part of the state budget and most likely to be cut to find the savings necessary to create a real balanced budget. The net result is that municipal budgets will then be squeezed leading to increases in property taxes – don’t get fooled about the property tax cap, it’s really a spending cap and the municipalities will have a revenue decline not a net spending increase. Both sides of the constitutional amendment are entrenched in their respective positions without stating any funding source. Opponents are opposed because it will hamstring the budget and will definitely result in tax increases. Proponents support it without identifying any tax increase, except the millionaires tax (which isn’t going to be signed), or corresponding spending cuts. They do believe that since New Jersey has lagged in recovery, that there will be some future pent up economic zoom that will make everything all right. It seems like a combination of a faith-based initiative and voodoo economics. The takeaway – you’ll pay more at the pump, in your property tax bill and in your state taxes or we’ll kick the can further down the road and we’ll pay even more than that later. ■ Michael Affuso, Esq. is executive vice president and director of government relations for NJBankers. He can be reached at maffuso@njbankers.com.
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Spring 2016 New Jersey Banker
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Directors’ Corner
Sorting Necessary from Noise: How to Focus Your Board’s Time By Stephen Brown Klinger
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irector liability has expanded dramatically over the last decade. As pressures on bank boards intensify, their time has become constrained. How can board members protect themselves while building value for their institution? We can win if we play offense; below are 11 check focal points for bank boards. Focus on value creation. Few banks connect executive compensation and return for shareholders. Too many boards accept mediocre performance by executives, who should be enriched for growing tangible book value per share (TBVS), earnings per share (EPS) and franchise value, not the bank’s asset Stephen Brown Klinger size. Understand what drives value. An institution’s stock price is driven by multiples of TBVS and EPS, which reflect the market’s perception of the risk profile of the bank. By looking to build value for investors, boards can put in place the proper strategies to achieve their goals, and manage the risk, governance and regulatory environments. Implement an enterprise risk management program (ERM). An ERM program does more than satisfy regulatory guidelines to establish an internal risk assessment program. The process also aligns the interests of different stakeholders, and improves the bank’s culture by instilling risk management responsibility, accountability and authority throughout the entire organization. It can boost the institution’s ability to raise new capital at higher multiples, fix liquidity and increase earnings. Finally, ERM enhances the strategic planning process by analyzing clearly delineated paths with the associated risk and rewards of each. Stay educated. Board members have a limited time to stay up-to-date on the issues impacting the banking industry. Custom bank education, using the bank’s data, provides the most flexibility for directors. Topics should include emerging issues, economic developments, capital markets trends and regulatory pressures, as well as each topic’s direct impact to the directors’ institution. Adopt governing principles. Prevent corporate drift by setting concrete principles which prevail above strategy or tactical solutions. Some examples are to achieve a specified CAMELS rating, eliminate regulatory orders, only consider a sale if market multiples reach a pre-determined level, or to set specific compounded annual return of TBVS over the next three years. Validate corporate infrastructure. An ineffective corporate structure could mean that more regulatory agencies are examining your institution than necessary. Boards should discuss the value of their holding company, registering their stock, the appropriateness of the bank’s charter and target capital composition at least annually. Commit to talent management. Many senior managers will retire over the next few years, but a proper talent management program encom-
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passes more than succession planning. An annual management review helps the organization prepare for the future, but a robust program further enables banks to attract, retain and motivate employees. Control the balance sheet. Between 2004 and 2007, the last rate rise, interest expense at depository institutions tripled. While models are necessary to understand the risk, the only way to turn this into a strategic advantage is to conduct price sensitivity analysis, customer retention analysis and customer loyalty studies. Streamline corporate governance. The board’s primary responsibilities include setting the strategic direction for the bank, creating and updating policies, and establishing a feedback monitoring system for progress. Though conceptually simple, a typical director’s time is strained. Time spent on board matters can be streamlined by centralizing information under one system, using consent agendas, spreading policy approval dates, utilizing video technology, educating the board using bank specific data, and appropriately scheduling committee meetings. Perform customer segmentation. Historically, banks have analyzed growth opportunities by assessing geographic boundaries. Today, institutions must now know and sell to their customers by identifying target customer profiles, developing products to profitably serve those customers, analyzing where those customers live, understanding how they communicate and building delivery channels specific to those customers. Have a capital market plan. What is the institution worth on a trading and takeout basis? Who can we buy? Who would want to buy the bank and why? Should the institution consider stock repurchases or higher dividends? Regardless of size, every institution needs to ask itself these questions, and memorialize the discussion in an integrated capital markets plan. ■ Stephen Brown Klinger is a director at FinPro Inc. For more information on FinPro’s value building strategic planning services, director certification, new director orientation, and board retreat facilitation services, contact Brown Klinger at 908-604-9336. FinPro Inc. offers 11 ways boards can cut through the chatter and focus on the most important issues for the institution.
Spring 2016
Get the inside track on
New Jersey’s Banking Community The New Jersey Bankers Association offers numerous opportunities to strengthen your brand. From event sponsorships and advertising in New Jersey Bankers magazine or Bulletin to the New Jersey Bankers’ Annual Sponsorship Program, consider this your opportunity to become a household name in the local banking community. Visit our website for a full listing of sponsorship and advertising opportunities at www.njbankers.com. SECURE YOUR SPONSORSHIP TODAY! contact Jenn Zorn jzorn@njbankers.com or 908-272-8500, ext. 611
Behind the Teller Line
Boiling Springs Savings Bank A TRUE COMMUNITY BANK
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oiling Springs Savings Bank is a local bank that has served its community proudly since 1939, with roots that go back to the 1870s. They currently have 17 offices located in Bergen, Essex, Passaic and Morris counties. With assets of over $1.5 billion, Boiling Springs is big enough to offer the services that the public wants, yet small enough to give their customers the friendly, personal attention they deserve. Boiling Springs Savings Bank has always been known as a generous benefactor to the towns where its branches are located and organizations in those areas. They take great pride in being a major contributor to every community they serve. In the late spring of 2006, Boiling Springs introduced a new service designed to give even more back to the community and actively support the nonprofit organizations within Robert E. Stillwell President and CEO the bank’s marketplace. This program, the of Boiling Springs Savings Bank Community Alliance Program (CAP), has a simple concept: The more supporters (donors, members, their families and friends) of a nonprofit who have, or open, accounts at Boiling Springs and designate those accounts to support the nonprofit, the greater a donation Boiling Springs will make. No money is taken from supporters’ accounts and the nonprofit never knows whose accounts have been designated to support them. They merely receive a check from Boiling Springs every quarter. As of the end of 2015, 372 organizations had joined CAP and 137 nonprofits received a check at the end of December, totaling over $101,000. To date, Boiling Springs has donated almost $2.3 million to nonprofits in their communities over a nine-year period. In fact, one local senior center has received $244,000 since joining CAP. The success of CAP has been widely recognized and Boiling Springs has received acclaim from various sources. The program was recognized nationally when the American Bankers Association honored Boiling Springs at its 2010 National Conference of Community Bankers with an award in the category of Fundraising for Foundations and Local Groups. CAP was chosen for the award from among more than 100 entries nationwide. The Boiling Springs staff is also deeply involved in community support and volunteerism. They continue to serve as directors, officers and members of local service organizations in all of their branch communities and they sponsor concerts, holiday celebrations, sports teams and many other local events. As an example,
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“Come Home to Better Banking is not just a slogan – it is a commitment.” Boiling Springs Savings Bank President and CEO Robert E. Stillwell, along with the board and senior management, joined forces to paint and install flooring with Habitat for Humanity of Bergen County in Little Ferry and Moonachie as part of the New Jersey Bankers Association’s Bankers Build program. Boiling Springs is dedicated to making their communities a better place to live, work and play. But community support and corporate citizenship sometimes requires us to go above and beyond the normal day-to-day support. Through the efforts of two Boiling Springs vice presidents, Oasis, a Haven for Women and Children, located in Paterson, was able to launch the American Bankers Association Bank Teller Certificate Program. Oasis is focused on helping women rise out of poverty and achieve economic independence. This certificate program is a culmination of volunteer efforts by these two officers, inspired by an “empowerment ceremony” they attended, where they heard compelling stories from young women who had survived homelessness and found in
Oasis an opportunity to break the cycle of poverty. Together, the VPs brainstormed how they could bring the necessary training to Oasis. The program also incorporates guest lectures from bankers in the community and visits to local branches. A ceremony was held for the first graduating class, which consisted of nine graduates. A second class is now underway. The ABA recognized the innovation of this program in their national publications. As a community bank, Boiling Springs feels a responsibility
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We assist banks, attorneys and title agencies with Corporate and UCC searches in NJ and PA. to help the schools within our neighborhoods meet the state-mandated Personal Financial Literacy Standard, requiring that students take a semester-long personal finance course. Since 2013 Boiling Springs has provided this education at no cost to area high schools. In partnership with EverFi, a leading education technology company endorsed by NJBankers, Boiling Springs has brought the interactive, webbased financial management program to more than 5,500 students since the program’s inception in 2013. In 2015 alone, Boiling Springs partnered with 13 high schools and reached 2,933 students. The eight-hour web program tracks individual student progress and knowledge gain, providing students who successfully complete the course with a Certification in Financial Literacy. The certification can be a powerful tool for job applications, college search and internships. Boiling Springs Savings Bank was again named as one of the top 100 Best Places to Work in 2015 by NJBIZ, the fourth consecutive year the bank was chosen for the award. Additionally, the bank has been named one of the Best Banks to Work For in the nation by American Banker Magazine for the last three years. Boiling Springs Savings Bank was the only bank in New Jersey listed for this prestigious award. Both of these awards are a real source of pride for their board of directors, management and staff. At Boiling Springs, the customers have the security of dealing with senior officers and directors who are their friends and neighbors. Boiling Springs is dedicated to maintaining its local values, local roots and local management. Come Home to Better Banking is not just a slogan – it is a commitment. Boiling Springs Savings Bank is grateful for the opportunity to show what a community bank is all about. ■
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Spring 2016 New Jersey Banker
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Cover
WHAT YOU NEED TO KNOW
By Raji Sathappan
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he National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 (FDPA), as amended, govern the National Flood Insurance Program (NFIP). Among other things, these statutes require the purchase of flood insurance on certain properties and make available federally subsidized flood insurance to owners of improved real estate or mobile homes located in special flood hazard areas if the community where the improved real estate or mobile home is located participates in the NFIP. The Mandatory Purchase Requirement states that a national bank or federal savings association shall not make, increase, extend or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The Biggert-Waters Act significantly amended the FDPA’s requirements including by revising the escrow and force placement provisions and by directing regulated lending institutions to accept private flood insurance as defined by the Biggert-Waters Act. On Oct. 30, 2013, the agencies jointly issued a proposed rule to implement these provisions. On March 21, 2014, President Obama signed into law the Homeowner Flood Insurance Affordability Act (HFIAA), which amended the Biggert-Waters Act, including the escrow provisions. On Oct. 30,
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2014, the agencies jointly issued a notice of proposed rulemaking to implement these changes. There are three key changes of which you need to be aware. The final rule amends existing regulations to: 1) incorporate a statutory exemption to the general mandatory flood insurance purchase requirement for detached structures; 2) establish requirements for national banks and federal savings associations (collectively, banks) to escrow flood insurance payments on residential improved real estate securing a loan; and 3) incorporate statutory amendments related to the force placement of flood insurance. The statutory force-placed insurance provision took effect upon the enactment of the Biggert-Waters Act on July 6, 2012. The statutory detached structure exemption took effect upon enactment of the HFIAA on March 21, 2014. The regulatory changes made by this final rule to incorporate these provisions are effective on Oct. 1, 2015. The statutory and regulatory escrow-related provisions are effective on Jan. 1, 2016, as required by the HFIAA.
DETACHED STRUCTURES EXEMPTION The final rule provides that flood insurance is not required for any
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structure that is part of a residential property if it is detached from the primary residential structure and does not serve as a residence. Residential does not include structures used for agricultural, commercial, industrial or business purposes. Lenders optionally may require flood insurance coverage. The previous requirement was that any building, even a low-value detached structure, securing a designated loan must be insured. HFIAA recognized that insurance on some such structures adds considerable costs for the borrower but only minimal value, so the exemption is focused on low-value structures. The exemption applies regardless of the purpose of the loan – consumer, business, commercial, or agricultural. The loan must be secured by a residence. Key terms that need to be understood are: Structure that is a part of a residential property – This means that the structure must be used primarily for personal, family or household purposes, and not used primarily for agricultural, commercial, industrial or other business purposes, i.e., both the main structure and the detached structure must be used primarily for personal, family or household purposes. Detached – not joined to the primary residential structure by any structural connection. Detached structures stand alone. Two structures joined by a breezeway or roof would not be considered detached. Reasonable steps should be taken to determine if a structure serves as a residence. For example, the presence of kitchen, sleeping and bathroom facilities may be considered, although their absence does not automatically disqualify a structure from residence status. Monitoring of residential status of detached structures is not required after initial determination unless there is a triggering event (loan is made, increased, renewed or extended). Some factors to consider are as follows: • Is the structure a part of the residential property? • Is the structure detached? • Is the structure intended for or actually used as a residence? • Has the structure been given as collateral, or does it otherwise add significant value to the property? This new exemption is effective March 21, 2014. A bank may choose, however, to require flood insurance on the detached structure to protect the collateral securing the mortgage.
ESCROW OF FLOOD INSURANCE PAYMENTS The final rule generally requires banks, or servicers acting on their behalf, to escrow premiums and fees for flood insurance for any loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed (a triggering event) on or after Jan. 1, 2016. The final rule also contains an exception for small lenders applicable to a bank that has total assets of less than $1 billion and, as of July 6, 2012: (1) was not required by applicable federal or state law to escrow taxes or insurance for the term of the loan and (2) did not have a policy to require escrow of taxes and insurance. The escrow rule was designed primarily for consumer purpose transactions. The following types of loans are exempt from the escrow requirement: • Loans primarily for business, commercial or agricultural purposes • Subordinate liens • Loans secured by residential RE/mobile home that is part of a condo,
cooperative, homeowner association or other group that pays the premiums for the group • HELOCs • Loans with terms 12 months or less • Nonperforming loans If a bank no longer qualifies for the small lender exception, it is required to escrow flood insurance premiums and fees for loans that have a triggering event on or after July 1 of the first calendar year of changed status. Moreover, if a bank determines that an exception is no longer applicable to a loan, the bank must begin escrowing flood insurance premiums and fees as soon as reasonably practicable. Banks subject to the escrow requirement must offer and make available to borrowers the option to escrow flood insurance premiums and fees for loans not subject to the mandatory escrow requirement that are outstanding as of Jan. 1, 2016. Banks must deliver information to borrowers on this escrow option by June 30, 2016, and implement the escrow as soon as reasonably practicable after receiving a borrower’s request to escrow. Certain exceptions may apply. This escrow requirement does not apply to loans that are secured by commercial properties. Hey wait – what about community banks? The escrow requirement for flood insurance premiums does not apply to any bank that has total assets of less than $1 billion provided that, as of July 6, 2012, the bank: (1) was not required by applicable federal or state law to escrow taxes or insurance for the term of the loan; and (2) did not have a policy to require escrow of taxes and insurance. The final rule provides other exceptions to this escrow requirement for certain types of loans. The provisions regarding detached structures and force placement apply to all banks.
FORCE PLACEMENT OF FLOOD INSURANCE The final rule clarifies that banks, or servicers acting on their behalf, have the authority to charge borrowers for the cost of force-placed flood insurance coverage, commencing on the date on which borrowerpurchased coverage lapsed or on which the coverage became insufficient. While Biggert-Waters also contains rules over private insurance, the new regulation does not address this and is expected in future. The final rule also describes the circumstances under which a lender or its servicer must terminate force-placed flood insurance coverage and refund payments to a borrower for any period of overlap in coverage and sets forth the documentary evidence a lender must accept to confirm that a borrower has obtained an appropriate amount of flood insurance coverage. In conclusion, banks, at minimum, should take the following actions to ensure continued compliance: become familiar with key effective dates so as to plan implementation around them; determine applicability of escrow rules to institution; consider the risks and benefits over any of the rules that are optional and decide on the institution’s policy; and provide training and assistance for key lending and other impacted staff. ■ Raji Sathappan, MBA, CRCM, CAMS, CISA is a director with Mercadien P.C. CPAs and has broad-based industry and technical experience in all areas of risk management, regulatory compliance, internal auditing, accounting and finance. She can be reached at rsathappan@mercadien.com or 609-689-9700.
Spring 2016 New Jersey Banker
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Feature
The Importance of Having a Breach Response Plan in Place
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he possibility of a bank’s systems being hacked are increasing, regardless of the size of the bank. In addition to the well-publicized breaches of mega and regional financial institutions, we are witnessing more reports of attacks on smaller community banks. Your bank should have a workable breach response plan in place on which your staff can quickly rely and follow immediately upon the discovery of a breach. As banks continue to refine their methods in securing systems, hackers are fine-tuning their skills as well, finding more ingenious ways to crack into systems and ATMs: Attack through third-party vendors. In the most recent case of the JP Morgan attack, hackers used sophisticated methods to obtain customer data through infiltrating both the bank’s systems through a corporate event website they sponsor, the
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JP Morgan Corporate Challenge. According to reports, the Russian hacking gang obtained the website certificate for the site’s third-party vendor which allowed them to access communications between visitors and the site, including passwords and email addresses. Direct infiltration of ATMs. Another creative and emerging form of attack is on ATMs where criminals gain physical access to the machine, typically by posing as repair technicians – complete with uniforms and fake credentials – and install malware by plugging a USB directly into the machine. The thief is able to walk up to a machine, open the enclosure with a universal key or passcode (similar to hacking fuel pumps at gas stations to skim credit card information) and install malware that compromises the software. This form of attack is being used increasingly more because it is more profitable
than attaching skimming hardware. The malware can sit undetected in the system for a longer period of time, thereby allowing the thieves to thoroughly and quickly drain an ATM before it is noticed or serviced by official bank personnel. Malware installed by email attachment. Recently, a community bank’s system was accessed due to malware delivered by email to a teller. From all appearances, the email from a spoofed government site looked legitimate so the teller opened the attachment. The attachment masked a virus which snaked through the bank’s network, installing malware which allowed the hackers access to various systems and files (including a Microsoft Office language pack translator which was manipulated and activated by the malware, most likely to translate English key strokes into a foreign language). The hackers were able to access and make changes to a number of customer accounts. Luckily for the bank, a customer noticed a simple discrepancy on their statement and notified the bank, which was able to act quickly to the attack before loss of any customer funds. This bank’s staff was able to respond efficiently because a breach response program was in place. Below is a brief overview of the bank’s actions which helped them succeed in handling the breach and communicating to customers what had occurred: • Bank staff assessed the situation, notified senior management and began an initial analysis to determine the potential issue as soon as they were notified by the customer.
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• Once it was determined that there was a potential breach, management met, formed a response team and consulted their formal breach response program for next steps. • More in-depth analysis and forensic reviews of all bank and vendor systems were conducted by the bank’s IT in coordination with external vendors to determine the breadth and scope of the breach. Affected computers and systems were taken offline to prevent further spread. • In addition to the spoofed government agency, other parties were immediately notified, including potentially affected vendors as well as the bank’s accounting and legal advisors. • Law enforcement divisions were contacted, including the Secret Service and state/local police departments. • Once it was determined to what extent external communications were needed, it was decided that only the affected customers needed to be contacted. These customers were promptly contacted by a specially trained team of customer service reps, formed specifically to handle this situation. Each CSR was paired with a bank officer or manager and provided with a phone script, including an explanation to the customer of what occurred and next steps. Additionally, notifications were mailed to these customers. • To establish new accounts for the affected customers, meetings were held at times and branches convenient for the customer. Accordingly, branch office hours were extended to accommodate these customers, who were also provided an identity protection package. • Afterwards, the bank made what they felt were necessary changes to certain systems, software and protocols in order to decrease the potential occurrence of future breaches. • Overall, the bank was able to determine, isolate and shut down the breach and send out initial customer communication within five days after the initial customer alert. Because they
had the foresight to develop and institute a breach response plan, the bank’s staff was able to effectively handle this crisis.
DOES YOUR BANK HAVE A BREACH RESPONSE PLAN? Resources are available for you and your staff to develop and implement a breach response plan. If your bank is a member of the American Bankers Association, you can learn more or access materials such as a Full Communication Tool Kit at aba.com/cybersecurity or contact ABA’s Doug Johnson (djohnson@aba.com) or Heather Wyson (hwyson@aba.com) at 800-BANKERS. Also, if your bank is not a member already, consider joining FS-ISAC (The Financial Sharing and Analysis Center), a nonprofit organization uniquely dedicated to the financial industry as a go-to resource for cyber and physical threat intelligence and information sharing. Visit
fsisac.com or call Member Services at 877-612-2622 for more information.
ABOUT ABA INSURANCE SERVICES Endorsed by New Jersey Bankers Association and American Bankers Association, ABA Insurance Services offers a Cyber Program to New Jersey banks which includes a new policy, Cyber Cover and the loss control/data breach resources of Cyber Care. Backed by the financial strength and stability of American Bankers Mutual Insurance Ltd. (ABMI), this unique bank-owned and banker-directed program offers D&O, bond and P&C insurance to financial institutions countrywide and has been recognized for underwriting and claims handling expertise for nearly 30 years. For more information, please visit abais.com/cybercare or contact ABA Insurance Services’ Patricia P. Williams at 800-274-5222 or pwilliams@ abais.com. ■
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Spring 2016 New Jersey Banker
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Feature
Commercial Lending Beyond the Bank Loan By Michael Banasiak
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n the aftermath of the big recession that hit in 2007, the financial landscape for small business lending is forever changed. Nonprofit organizations such as the SBA, UCEDC, SBDC, SCORE and others, that help small businesses through consultations, workshops, seminars, obtaining loans, etc. as well as non-bank commercial lenders are becoming much more prevalent working closely with banks. Commercial bankers realize they cannot lend to every business customer Michael Banasiak and understand the importance of having working capital to grow business. Small businesses are the breadth and depth of the U.S. economy making up the largest portion of the business marketplace. And their survival hinges on their access to credit. However, there are small companies that do not qualify for business loan amounts requested due to tenure requirements, collateral requirements, financial ratio criteria, personal credit scores, among other reasons. International financing for import/export often is another area of need. Commercial bankers care about their customers and place great value on the relationship, which they do not want to lose. These business customers often provide large banking deposits that are sought after by many banks, so retaining, cultivating and growing such business accounts is vital to them. They would like to lend to as many viable small-tomedium businesses as they can to meet their objectives, increase the return on equity for their shareholders, help support their business customers’ growth and the local economy. So what does a commercial banking lender do when they cannot say yes? More and more are turning to non-bank commercial financers or second-tier lenders. Commercial bankers realize these alternative lenders are not in
20 New Jersey Banker
competition with them and actually offer a value added service by funding their business customers’ working capital needs and they retain their business banking relationship. In the meantime, their customer is happy, grateful and has the opportunity to grow business to become more bankable, which ultimately results in the bank growing its business relationship. It’s a “win, win.”
WHAT IS NON-BANK COMMERCIAL FINANCING? Non-bank commercial financing refers to second-tier lenders that provide a variety of international and domestic financing options to businesses when traditional bank lending is not available. There are many types of secondary, non-competitive commercial lending solutions readily available in the market from trustworthy sources. Rates are higher than bank lines (risk-based), SBA, UCEDC or other nonprofit based loans, but is less than private equity. They do not take deposits or provide any other traditional bank services. Generally these facilities are asset-based relying on accounts receivable, inventory and sometimes machinery and equipment as collateral. Credit insurance often is used as a form of collateral. They typically do not rely on traditional credit metrics, such as tenure, credit scores and financial ratios for credit qualification allowing start-ups, companies with low credit scores, negative net worth and losses to be approved. Also there are other financing programs available for companies that have used up their bank loan and need additional capital. Decision turnaround is quick, often one to three days. Added benefits to the business owner are credit and collection services which can be time-consuming, resource intense tasks and sometimes costly. Services usually include processing and ledgering accounts receivable, credit review and assessment, collections and reporting. Cloud-based systems are provided allowing full transparency into their account. They know what is going on with their financing program 24/7.
TYPES OF NON-BANK COMMERCIAL FINANCE PROGRAMS Private Equity Lender – Takes more risk, expects higher returns and will ask for a structure that allows them to convert to equity if loan conditions are not met. Merchant Cash Advance – Offers businesses a lump sum payment in exchange for a share of future sales primarily from credit cards. Best suited for business to consumer companies. Payback periods typically range from three to 12 months. Non-Bank Financing Lender – International or Domestic – Does not invest in equity or take equity from the business. There are diverse financing options that cover a broad spectrum of financing needs for B2B companies. There is no one size fits all for borrowers and lenders. However, the non-bank lender offers B2B companies the best options for obtaining working capital quickly without having to give up decision making rights or equity in their business. And, they offer international services. The following are some non-bank financing programs: Asset-Based Lending (ABL) Facility – Provides business funding secured by business assets. The line of credit generally is secured by accounts receivable, inventory, equipment and/or machinery. Best suited for companies with sales greater than $5 million that have substantial assets in inventory or equipment. Credit lines are over $1 million. Accounts Receivable (A/R) Factoring – The most common credit facility, since it’s the simplest and quickest influx to cash flow improvement. The lender buys the business’s creditworthy A/R at a discount. Generally advance rates range from 70 to 90 percent and retain reserves for chargebacks; once invoices are paid reserves are released. Often companies can choose which customers they want to factor. Many commercial bankers will want to have their customers’ factor A/R concentrations and/or international credits to reduce the bank’s risk. Requires subordination of specific
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A/R collateral. Credit lines are over $50,000. Purchase Order – Company has a purchase order from a creditworthy customer often exceeding the availability of the bank line. It is used to fund 100 percent of the 3rd party manufacturing or wholesale cost of the goods through a letter of credit. This assures suppliers they will be paid and company does not have to forgo new business that would have been unattainable due to not having capital to fulfill the order. If there is a secured bank line in place, subordination is required of the purchased goods and associated A/R. Credit lines are over $100,000. Trade Credit Finance – This program is unique to the secondary lending industry. It is for companies that need additional capital beyond their bank lines. Generally, the company is profitable and has positive net worth, but the bank credit line cannot be increased. Businesses use the facility to buy goods for resale, inventory or consumption – finished or unfinished; it does not require a purchase order. Also, it does not affect the existing bank credit lines since it’s incremental to any bank loans or credit lines. Lender takes a 2nd UCC position therefore whatever is financed becomes the bank’s collateral. It works like a revolving credit line allowing for longer credit terms typically 60 to 90 days providing time for revenue generation. Credit lines start at $50,000.
SITUATIONS WHERE NON-BANK COMMERCIAL FINANCE FITS Additional funding when credit line utilization is high • Trade Credit Finance – Allows for additional capital to purchase goods for inventory, resale or consumption; finished or unfinished. Take 2nd UCC, so it’s the bank’s collateral. Must be good credit risk, product relies on credit insurance. • Purchase Order Finance – Allows for the purchase of goods to fulfill a purchase order. Requires a carve-out of security for the purchase of the inventory and the associated A/R. Take-out of existing non-performing loan • A/R Factoring – Funding against accounts receivable often will take out a non-performing loan. Sometimes the bank will term out a portion of the existing facility. • ABL Facility – May be outside covenant with bank. Fund against A/R, inventory,
machinery, equipment and sometimes real estate. Must have a perpetual inventory system. Sometimes the bank will term out a portion of the existing facility. Retain business customer relationship when lending is declined • A/R Factoring • ABL Facility • Purchase Order Finance
eral and the commercial finance company funds against the concentrated receivables.
WHY NON-BANK COMMERCIAL FINANCING WORKS FOR BANKS AND THEIR CUSTOMERS
Export Financing – Allows for additional cash flow lending beyond domestic bank line • A/R Factoring – Fund against international receivables often using credit insurance. Requires a carve-out of collateral associated with the purchased international receivables.
Small businesses need access to capital to grow, but attaining a traditional bank credit line or the additional funds necessary to meet business objectives is not always possible from the bank. However, the good news for bankers and businesses is there are viable nonbank, debt financing solutions for international and domestic transactions. These businesses can now afford opportunities to increase cash flow, grow revenue and business. And an added bonus is having financial management services included no longer constraining business owners’ time and money costs associated with administrative duties, credit, collections and paperwork. Businesses that “go outside the traditional lending box” often improve their credit score, ability to seek new business, relationships with suppliers and grow to the next level – becoming more bankable. These business customers that once had to be turned down are now a “YES!” ■
Concentration Risk • A/R Factoring – Can be used to minimize accounts receivable concentration risk by carving out receivables to a commercial finance company that do not meet the bank’s concentration criteria. The bank lends traditionally against the nonconcentrated receivables and other collat-
Michael Banasiak, is managing director and owner of Liquid Capital Express, a secondary commercial financing company that is part of an organization that has 85 offices in North America, Hong Kong, China and Australia. He is an active member of NJBankers’ Commercial Lending Committee. Banasiak can be reached at Michael.Banasiak@LiquidCapitalExpress.com.
Import Financing – Allows for additional cash flow lending specifically to fund international purchases. • Purchase Order – Offer letter of credit to international vendor to obtain goods. Requires a carve-out of collateral associated with purchased goods. • Trade Credit Finance – Purchase inventory from international vendor on behalf of customer.
Spring 2016 New Jersey Banker
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Feature
NJBankers Releases 2015 – 2016 Economic Survey Member CEOs Weigh in on National and Garden State Economies
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he New Jersey Bankers Association in conjunction with the Edward J. Bloustein School of Planning and Public Policy at Rutgers University have released the results of the sixth annual NJBankers Economic Survey of Bank CEOs. NJBankers began to survey banker’s opinions in 2012 because we felt who better than bankers to gauge the economy? Bankers are economic yardsticks with an excellent, firsthand view of the New Jersey market. For the past three years, the Association has collaborated with the Bloustein School to create and conduct an expanded and more comprehensive economic survey. NJBankers is thankful to FinPro Inc. for sponsoring and underwriting the survey. The 2015 – 2016 survey inquired about national and state current economic assessments, as well as six-month projections; expectations about long-term and short-term interest rates; commercial real estate and business loan demand; and residential loan demand. The survey also explored changing demographics, including a large portion of respondents who indicated that there is a trend of outmigration of Baby Boomers from New Jersey to other states. The survey was conducted under the direction of James W. Hughes, Ph.D., distinguished professor and dean of the Bloustein School; Marc D. Weiner, J.D., Ph.D., also of the Bloustein School; and Data Analyst Paul Siracusa, M.P.P., research associate of the Alan M. Voorhees Transportation Center. The survey sampled all 101 members of NJBankers. Of the 101 banks in the panel, 82 completed the survey questionnaire for an overall response rate of 81.2 percent. Highlights of the survey include: For the history of this survey no respondent has ever selected “excellent” in rating the current health of either the United States or New Jersey economies. Still, responses from 2012 to 2015 generally indicate the perception of an improving national economy, with eight out of 10 of the most recent survey respondents believing that the improving national economy will “remain unchanged” over the next six months. However, compared to the prior year’s survey outcomes, six-month expectations for New Jersey’s economy weakened and so recent optimism at the national level does not necessarily translate to the state level. Again, 80 percent of the most recent survey respondents believe the state economy will, over the next six months, “remain unchanged” in that weakened condition. A slight majority of survey respondents expect long-term interest rates to “remain unchanged,” with more than 40 percent of respondents anticipating an increase. For short-term interest rates, there is a pronounced growing expectation of increase over the next six months. Over half of respondents still rate current demand for business loans as only “fair,” a measure that has been generally stable since 2010.
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Nonetheless, those indicating current business loan demand as “good” has grown steadily each year since 2012 to slightly over a third of respondents, suggesting a cautious optimism. This survey year continued to show general improvement in demand for in-market commercial real estate loans, with the same pattern holding for in-market residential loans. For residential loans, this was the first year that the “good” rating exceeded the “fair” rating (by a full 8 percentage points). Overall, from 2012 to 2015, current demand for in-market residential refinances appears to have weakened. Still, there may be cause for cautious optimism as the share of respondents indicating that demand for in-market residential refinances was “good” doubled from 2014 to 13.5 percent in 2015, while the “fair” rating flattened out. Expectations for in-market home values was first asked in 2013; since then the majority of respondents continue to expect no change over a six-month projection. From 2014 to 2015, however, there was a bit more optimism with the proportion anticipating an increase growing to approximately one out of three respondents. A majority of respondents indicated that they were as confident in multifamily rental housing lending in 2015 as they were in 2014. In 2014 and 2015, a majority of respondents reported that the number of residential and commercial customer foreclosures “remained unchanged.” That majority, however, increased by about 10 percentage points for each category to just under 68 percent for residential, and just over 71 percent for commercial customers. Stability marked the ratings for both the commercial and residential foreclosure processes, with strong majorities indicating those processes remained “unchanged.” However, rating of both processes showed slight increases in the proportion of respondents indicating improvement. For the most recent survey year, a non-zero but trivial percent of respondents reported the abandonment of residential properties by consumers has been a “serious problem,” compared to 5 percent a year earlier. This year saw a slight increase in the percentage of respondents indicating that the abandonment of residential proprieties by consumers was “not a problem at all” with those characterizing it as “moderate” or “minor” problem remaining stable. It seems, then, that the abandonment of properties is a slowly abating problem. Asked for the first time during this most recent survey cycle, more than 70 percent of respondents indicated that they had incurred maintenance or repair costs over the past six months for properties upon which their bank had foreclosed. Nearly 40 percent indicated incurring such costs on properties to which their bank had not yet taken title in foreclosure. The two frequently mentioned costs of foreclosed or abandoned and properties in foreclosure were general maintenance and landscaping. The “Common Obstacles to Lending” set of questions was first asked in 2013 at which time the leading concerns for consumer lending
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were the regulatory environment, followed closely by lack of demand. Despite some changes in the distribution during the 2014 survey cycle, this field period showed, again, the key obstacles to consumer lending to be regulatory concerns and lack of demand, indicating stability in those concerns. In 2013, the most significant obstacle to business lending, however, was lack of demand, followed by a lack of qualified borrowers. As with consumer lending, despite some distributional changes in the intervening year, this survey cycle saw lack of demand and a lack of qualified buyers as the key obstacles to business lending, also indicating stability in barriers and constraints. The vast majority of respondents (over 80 percent) confirmed that their institution was now fully staffed for ongoing compliance with Dodd-Frank’s requirements. The three most frequently reported expenditures vis-à-vis Dodd-Frank were for compliance, consultants and training; the data also show significant hiring related to both legal and regulatory compliance, as well as document and process security. Asked for the first time this year, the most reported type of cyber protection was an IT employee who focused specifically on cybersecurity (72 percent), followed by a contract with a third-party vendor that focuses on cybersecurity (67 percent). Beyond dedicating an IT employee, approximately 25 percent of respondent institutions have, separate from IT per se, a full-time person dedicated to cybersecurity and another approximately 13 percent have a part-time person so dedicated. Over the next 12 months, 55 percent of respondents indicated it was very or somewhat unlikely their bank would acquire another institution, while 71 percent noted that it was very or somewhat unlikely another institution would acquire them. By contrast, nearly 24 percent indicated that over the next 12 months it was very or somewhat likely their bank would acquire another, with slightly over 15 percent indicating it was very or somewhat likely they would be acquired. Compared to the prior survey period, these results show a 9 percentage point increase in the net likelihood expectation of being acquired, and an approximately 1.5 percentage point increase in the net likelihood of acquisition. Respondents report that factors driving the consolidation of banks in New Jersey were rising regulatory compliance costs (90 percent), satisfactory shareholder returns (60 percent), and a lack of management succession (50 percent). A majority of respondents did not foresee a need for their bank to adapt business practices in order to accommodate the needs of the Baby Boomer generation. Similarly, 70 percent did not report noticing a trend in the transfer of wealth from older generations to younger ones. Among those who did notice just a trend, about 60 percent reported it had no effect on their deposit base or their bank’s operations. A large portion – almost 80 percent – observed a trend of out-migration of Baby Boomers from New Jersey to other states. Among those,
more than 60 percent noted that trend had decreased their deposit base, but 80 percent reported no other impact on their bank’s operations. Most respondents believe that Gen X (those now 39 to 50 years old), are sufficiently experienced to assume strategic leadership and upper management positions in the banking industry. Indeed, over three quarters of the sample reported having a specific succession plan for leadership transition. In terms of recruiting for entry-level positions, the approaches cited at greater than 50 percent frequency were, in order, employee referrals, informal networking and internal transfers. The next most popular approaches were, again, in order, local popular press advertising, social networks, recruiting firms, intern-to-hire and corporate career site. Recruiting for upper-level leadership and senior management positions was similar, except that the most frequent response was the use of recruiting firms. Then, as with entry-level positions, employee referrals, informal networking, and internal transfers were the next most cited. At the more senior level, the other recruiting options were substantially less frequently deployed. The vast majority of respondents reported that over the last two years their bank has not experienced a director resignation due to concerns about potential directors’ liability exposure. Similarly, over the last two years, the vast majority indicated their bank had not experienced difficulty in securing qualified candidates for a vacant director’s seat due to concerns about potential liability exposure. According to survey director Weiner, “The survey was conducted under best practices of methodologically rigorous survey research. Thanks to the strong cooperation of the New Jersey Bankers Association’s membership, we achieved just over an 80 percent response rate and now have six years of data points on many vital economic indicators, on which Dr. Hughes has conducted an in-depth analysis.” “This year’s NJBankers survey reveals optimism about the continuation of the economic expansion, and economic conditions, in the United States and New Jersey,” Hughes said. “Many of the individual metrics of the survey indicate that improvements in the state’s banking industry took place in 2015, and that they will continue into 2016.” John E. McWeeney Jr., president/CEO of NJBankers, added, “We conduct this annual survey of our member bank CEOs because we feel that they, better than most, really have their hands on the pulse of New Jersey’s economy. This year’s survey reflects their general view that things have continued to steadily improve as well as a sense of optimism for the future.” NJBankers thanks Associate Member FinPro for sponsoring this valuable research for the past three surveys. ■ For a copy of the survey, contact Emily T. DeMasi, vice president/director of communications, at edemasi@njbankers.com
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Feature
Economic Leadership Forum Draws More Than 500 Attendees
The real estate panel, presented by Marcus & Millichap, included: Brian Hosey, regional manager, Marcus & Millichap; Eric Seidel Jr., associate director of capital markets, Marcus & Millichap Capital Corp.; Nat Gambuzza, Marcus & Millichap; and Debra Tantleff, founding principal, TANTUM Real Estate.
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he NJBankers Economic Leadership Forum on Jan. 15 at The Palace at Somerset Park in Somerset drew more than 500 attendees. The Forum was a huge success, boasting an impressive lineup of guest speakers and panelists and was also covered by the media. Attendees were welcomed by NJBankers President/CEO John E. McWeeney Jr. and Robert H. Doherty, New Jersey state president, Bank of America, and senior vice president/co-leader BoA Specialized Industries Group for the Northeast Region. Bank of America was the Forum Presenting Sponsor. The Forum’s speakers included William Dudley, New York Federal Reserve president/CEO; Michele Siekerka, president of the New Jersey Business and Industry Association; Andrew Sieg, managing director, head of global wealth and retirement solutions, Bank of America Merrill Lynch; Robert Musso, cofounder/CEO of Stonehall Innovations and director at FinPro; and Teal Nicholson, founder/CEO, TEM. As 2016 is an election year, the keynote speaker was Charlie Cook, founder of the Cook Political Report and considered one of the nation’s authorities on American politics and U.S. elections. The panel discussions included a real estate session, health care session and a discussion on “Millennials.” At the closing of the Forum the New Jersey Bankers Charitable Foundation made a generous contribution to Rider University – veteran entrepreneurial programs. ■
New York Federal Reserve President/CEO William Dudley, who is also vice chairman of the FOMC, the committee responsible for formulating monetary policy, gave his remarks.
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Michele Siekerka, president of NJBIA, which represents more than 20,000 members comprising every industry in the state, discussed outmigration by the numbers, and how we can stop the exodus.
The Healthcare Panel, presented by Aetna, consisted of: Moderator Michael Costa, executive director, Aetna; Robert Garrett, president/CEO, Hackensack University Health Network; Richard Miller, president/CEO, Virtua; and Dr. Delanor Doyle, senior medical director, Aetna.
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“Attracting and Retaining Talent in the Millennial Generation,” presented by Crowe Horwath, included on the panel Wendy Cama, partner, Crowe Horwath; Bret Morgan, cofounder, Cowerks; Meg Fry, business reporter and blogger, NJBIZ; and Glen Wilson, director of talent, Internet Creations.
With 2016 an election year, Charlie Cook, founder of the Cook Political Report and considered one of the nation’s authorities on American politics and U.S. elections, was the keynote speaker.
Robert Musso, cofounder and CEO, Stonehall Innovations, and Teal Nicholson, founder and CEO, TEM, spoke on the Stonehall Innovations Entrepreneurial Program.
Andrew Sieg, managing director, head of global wealth and retirement solutions, Bank of America Merrill Lynch, spoke on multigenerational change.
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Meet Our Endorsed Service Providers
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FS Group is setting the standard as the industry’s leading professional in assisting banks in all facets related to bankowned life insurance (BOLI), as well as executive/director compensation benefit plans. Our consultative approach to education, evaluation, implementation and regulatory compliance is unmatched. For over two decades, banks have turned to our documented expertise and process to assist them in enhancing earnings through the implementation of an effective BOLI plan. BFS Group is a national firm with 10 regional offices serving community banks across the country. BFS Group continues to demonstrate extraordinary customer service with a proactive approach to all aspects associated with BOLI and executive/director benefit compensation strategies. We understand and live the world of banking. With our expertise and vast experience we are able to generate efficient turnkey solutions unrivaled in the industry.
BFS Group is fully committed to clients and the banking industry through support and participation in state and national banking associations. Our implemented succession planning provides continuity for the life of all plans. We are proud of our national philanthropic partnership with community banks through our Drive to 125 charitable programs. BFS Group is your bank’s partner, not just another vendor. For more information please contact Regional Managing Directors Steve Goldberg at (267) 291-2130 ext. 136 or sgoldberg@ bfsgroup.com, or Arnie Winick at (267) 291-2130 ext. 106 or awinick@bfsgroup.com. ■
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Spring 2016
Meet Our Endorsed Service Providers
Is Your Bank ‘Future Proof?’
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ommunity banks have always relied on superior customer service as one of their key competitive advantages. However, technology is changing the way your current and future customers prefer to bank. As the pace of technology continues to accelerate, your bank is depending on executives to lead the pack! Ingraining technology within your bank’s culture will form the foundation to embrace the technology changes that enable you to retain your customer base and attract the next generation of customers, for whom technology is always present. Consumers now not only require, but expect, 24/7, anytime, anywhere banking – and from any device. Additionally, there is an increasing need for familiarity and stellar customer service. In fact, it’s safe to argue that community banks are in a unique position to outshine larger banks. Using technology properly and effectively, community banks can minimize a multitude of problems, while taking advantage of the opportunities to deliver outstanding value in these future bank environments. A rock-solid infrastructure is the foundation for community banks to springboard to the future. The more flexible the infrastructure, the easier it will be to adapt. However, most community banks will struggle to implement this level of service themselves due to significant upfront
CapEx and ongoing OpEx. In addition, managing equipment and multiple vendors is a costly and stressful ongoing exercise. Community banks should look to a network service provider that has multiple redundant connections to all core processors to have the flexibility to quickly connect to the service provider that best meets their needs. Having a service provider that can manage networks, security and telephony across a rapidly changing environment will make it easier for the banker to focus their efforts on providing outstanding customer service. Finally, banks must have the ability to allow for economic yet effective disaster recovery and business continuity. BITS provides banking infrastructure services to community banks, including full managed network and telephony services, security, data center colocation and managed services without the significant upfront CapEx and OpEx. BITS uses the latest technology with industry-leading experts, so bankers can focus their efforts on providing premium financial services. BITS would be happy to show how it can prepare your infrastructure for tomorrow’s banking needs. For more information about how BITS can help your bank network prepare for the future, please visit www.bitsnetwork.com or contact Christian Ericson at christian.ericson@bitsnetwork.com, or 973-474-1828. ■
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Spring 2016 New Jersey Banker
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Bank Notes
William S. Clement
Andriette Mathews
Ronald E. Schwarz
GLEN ROCK SAVINGS BANK Glen Rock Savings Bank has hired Andriette Mathews as executive vice president and CFO. Mathews joined Glen Rock Savings Bank just one month after its successful merger with Llewellyn-Edison Savings Bank. She will serve as Glen Rock Savings Bank’s lead financial executive. Mathews will oversee and represent all financial and accounting operations, and assist the bank in formulating and meeting its overall strategic business plans and goals. She has also served as the 2015 president of the New York New Jersey Chapter of the Financial Manager Society and is currently the vice president of HomeSharing Inc.
Ellen Lalwani
LAKELAND BANK
John F. Rath III
Justin Adam
Todd Sciore
Lisa C. Gruner
ATLANTIC STEWARDSHIP BANK Atlantic Stewardship Bank announced the appointment of William S. Clement to senior vice president and chief lending officer in the Midland Park office. Clement has over 35 years of experience in the banking industry, primarily in commercial lending with an expertise in portfolio management, new business development, risk management as well as financial analysis.
BOILING SPRINGS SAVINGS BANK After 45 years of service in the banking industry, Louis S. Paulter, senior executive vice president and chief operating officer, has announced that he will be retiring on May 1. He began at the bank in 1971 as a management trainee and throughout his career he has worked in numerous departments including mortgage services, IRA, human resources and information services. He is a past president of the Rutherford and East Rutherford Kiwanis Club and a former president of the Institute of Financial Education of North Jersey, Chapter 111. Kenneth G. Emerson has been appointed to the revised position of chief operations and strategy officer. He currently serves as a trustee and treasurer of the Montclair Historical Society, a nonprofit promoting preservation, study and appreciation of local history. Additional promotions included MaryEllen Doster to senior executive vice president; Frank Weber to executive vice president; and Acela Roselle to first senior vice president.
COLUMBIA BANK Columbia Bank announced that Josephine Moran has been appointed executive vice president and director of retail banking. She will be responsible for developing, implementing and managing the bank’s retail banking strategies. Prior to joining Columbia, she served as executive vice president and regional president at Santander Bank with responsibility for their branch network within the Metro NY/NJ area. Prior to that, she served as senior vice president and community banking president at Wells Fargo Bank and as senior vice president and retail bank director for Wachovia Bank.
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Lakeland Bank announced the promotions of Ronald E. Schwarz to senior vice president and chief revenue officer, Ellen Lalwani to first senior vice president and chief retail officer and John F. Rath III to first senior vice president, group manager New York commercial and middle market lending. Schwarz joined Lakeland Bank in 2009 as chief retail officer and has over 40 years of retail banking experience in Northern New Jersey. In this new role, Schwarz will oversee retail banking, commercial lending and marketing. Lalwani joined Lakeland Bank in August 2008 as senior vice president and director of retail sales and has more than 20 years of retail banking experience. Rath joined Lakeland in March 2015 as senior vice president and group leader of the Hudson Valley loan production office and middle market commercial and industrial lending. He has been an advisory board member for the Food Bank of the Hudson Valley for 25 years and was co-chairman of the Capital Campaign.
NEWFIELD NATIONAL BANK Newfield National Bank welcomed Todd Sciore and Justin Adams to the commercial lending staff as vice president and commercial loan officer. Sciore has 18 years of experience in banking, 16 in lending. He earned his bachelor’s degree in finance from Richard Stockton University. Sciore presently sits on the grant review panel for the Cumberland County Cultural & Heritage Commission. His responsibilities will be to manage an existing loan portfolio, as well as to develop new business. Adams began his banking career as a credit analyst and became a commercial lender in 2007. He comes to Newfield National Bank with a total of 12 years banking experience. Adams is currently a member of the Franklin Township Planning Board. His responsibilities will be to develop new business and manage an existing loan portfolio.
TD BANK TD Bank promoted Rick Waxman to senior vice president and product marketing director in corporate marketing and Lisa C. Gruner to senior vice president and product marketing director, both based in Mt. Laurel. Waxman will lead product marketing for mortgage, home equity, wealth, corporate and specialty banking and TD auto finance, including development and overall management of annual product marketing plans and budget, program execution, optimization and tracking. Waxman is a strategic marketing executive with 20 years of experience in banking and marketing. Gruner will lead product marketing for retail money in, unsecured lending, small business and commercial banking, including development and overall management of annual product marketing plans and budget, program execution, optimization and tracking. She has 16 years of overall experience in marketing, advertising and bank management. ■
Spring 2016
REACH. CONNECT. ENGAGE. POSITION YOUR COMPANY WITH CONFIDENCE.
Start Building Stronger Business Relationships Today. New Jersey Banker is one of the most widely distributed state banking magazines in the United States, giving your brand unparalleled access to a widespread audience of C-level executives. As the official quarterly magazine of the New Jersey Bankers Association, the publication reaches more than 15,000 bankers at 101s banking institutions across the Garden State. The New Jersey Bankers Association’s primary goal is to promote the free exchange of ideas and experiences, and New Jersey Banker is its main outlet. Executive level bankers throughout New Jersey rely on the local, in-depth facts, research and analysis to make crucial decisions every day. With such a broad audience, New Jersey Banker is the only choice for companies looking to strengthen their brand and identify new opportunities in the New Jersey banking community. By utilizing a targeted marketing program with the help of The Warren Group, you can connect with leaders of the banking community to increase your market share and grow your business.
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Bank Shots
Three different teams of volunteers from Somerset Savings Bank spent time this fall working with Raritan Valley Habitat for Humanity (RVHFH) on two new homes in Somerset. A total of 24 employees traded in their day jobs to volunteer. Over the course of three days, the teams rolled up their sleeves to complete foundation work and begin installation of flooring while also performing general site cleanup. In addition to the sweat equity provided by employees, the bank contributed $3,000 to RVHFH to aid in the purchase of construction materials and cover labor expenses incurred by the organization.
Tom Coughlin, president and chief executive officer of BCB Bancorp, parent of BCB Community Bank, was surrounded by members of the board of directors as they prepare to ring the closing bell at the NASDAQ stock market. Ringing the bell provides companies listed on NASDAQ with an excellent opportunity to raise their visibility, as the ceremony is carried live on the NASDAQ webcam, marketsite tower and participating television networks such as CNBC, Bloomberg TV, Fox Business News and many others.
A volunteer crew of Columbia Bank employees teamed up with Cathedral Kitchen to help feed poor and homeless individuals within the greater Camden area. Throughout their lunchtime shift, the “Team Columbia” volunteers helped serve approximately 250 hot meals. Pictured, from left: Mark Schott, regional vice president; Delores McGuire, branch manager, Mt. Laurel; Bob Dorsey, commercial lender; and Nicholas Barbetta, head teller, Mt. Laurel.
Through a month-long program of promoting breast cancer awareness and fundraising, PeapackGladstone Bank collected and matched donations totaling $5,615 to support Hunterdon Healthcare Foundation’s wide range of cancer treatment programs and local patients and families in need who are fighting cancer. Pictured, from left: Christina O’Malley, interim executive vice president, Hunterdon Healthcare Foundation; Barbara Tofani, MSN, administrative director, Hunterdon Regional Cancer Center; Rachel Fyock, vice president, benefits manager, Peapack-Gladstone Bank; Ann Henning, benefits assistant, Peapack-Gladstone Bank; Joseph Serzan, senior managing director, institutional private banking, Peapack-Gladstone Bank; and Robert Wise, president and CEO, Hunterdon Healthcare Foundation.
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Kearny Bank held a book drive through the 2015 holiday season collecting new or gently used books to support the Caldwell Public Library. Kearny Bank customers and staff donated a generous amount of books that will benefit the local library and its members. Pictured, from left: Jaqueline Innarella, customer service representative, Kearny Bank’s Caldwell office; Claudine Pascale, Caldwell Library director; and Anthony DeLuca, assistant vice president and branch manager, Caldwell.
Spencer Savings Bank reelected three members to serve on its board of directors through January 2019. Albert Chamberlain, José B. Guerrero and John S. Sturges each accepted their offers for reelection at the bank’s 2016 Annual Meeting in Elmwood Park. Chamberlain has served as director of Spencer Savings Bank since 2006. He was previously employed with the bank as a vice president and treasurer from August 2003 to March 2005. Chamberlain brings years of experience in banking and treasury. Guerrero has been with Spencer Savings Bank for more than 35 years. He has served as chairman of the board since January 2005, and as president and CEO of Spencer Savings Bank since January 1995. He became a director of the board in 1991. Guerrero is also an active member of NJBankers. Sturges has served as director of Spencer Savings Bank since 2007. He was previously the president of Siebrand-Wilton Associates Inc., and also served as managing principal of the company’s Benefits and Compensation Design Group. Sturges is an active member of the Human Resource Planning Society, Society for Human Resource Management, World at Work and International Foundation of Employee Benefits Plans.
The New Jersey Bankers Charitable Foundation made a $10,000 contribution to Rider University’s veteran entrepreneurial programs. The trustees and members of the New Jersey Bankers Association are happy to be able to step up our support for this innovative program to assist our veterans. Pictured, from left: Daniel Klashner, Rider University; Jorge Ditren, Rider University; John S. Fitzgerald, president and CEO, Magyar Bank; Ron Cook, Rider University; Gerald L. Reeves, president and CEO, Sturdy Savings Bank; Robert Stillwell, president and CEO, Boiling Springs Savings Bank; James R. Silkensen; Angela Snyder, chairwoman and CEO, Fulton Bank of New Jersey; John E. McWeeney, Jr., president and CEO, NJBankers; and James M. Meredith, executive vice president and COO, NJBankers.
Spring 2016
THE POWER OF AN ADVANCE
One advance can help fund hundreds of neighborhood needs. FHLBNY advances are a reliable liquidity source for our member lenders to finance home mortgage, small business, and economic development activities. Century Savings Bank, an FHLBNY member, used an advance to help finance the expansion of Swanson Hardware Supply, a family-owned and operated full-service hardware store located in Vineland, New Jersey. The project created four permanent jobs, as well as 12 construction jobs, and enabled Swanson Hardware to grow their business in order to better meet the needs of its consumer, commercial, and industrial clients. Contact us to see how the power of an advance can improve your community.
101 Park Avenue, New York, NY 10178 | (212) 441- 6700 | www.fhlbny.com Note: The Federal Home Loan Bank of New York uses the word “advances� to refer to the loans it provides to our member lenders.
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