New Jersey Banker 3Q Fall 2016

NEW

JERSEY

FALL 2 0 1 6

B A N K E R

A Professional Development Opportunity

What Does Brexit Mean for Community Banks? | NJBankers Connects | Is CRA Working?

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NJBankers Board of Directors Gerard Banmiller President/CEO 1st Colonial Community Bank Frederick Bertoldo EVP/Regional President, Northern New Jersey Wells Fargo Bank, N.A. Louis Anthony Costantino Managing Director, Industry Manager JP Morgan Chase Edward Dietzler President The Bank of Princeton John S. Fitzgerald President/CEO Magyar Bank

Dianne M. Grenz Executive Vice President/ Director of Sales, Marketing and Advertising Valley National Bank David J. Hemple President/CEO Century Savings Bank

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

Kathleen A. Stone Senior Vice President/Senior Business Banking Executive BB&T Nicholas J. Tedesco Jr. President/CEO GSL Savings Bank

NJBankers Officers

Claire Anello Office Manager, Database and Website Manager ext. 631 canello@njbankers.com

Contributing Editor

Thomas Shara President/CEO Lakeland Bank

Michael O’Brien* Senior Vice President/Market Manager Bank of America

Thomas Lupo President/CEO Regal Bank

James M. Meredith Executive Vice President and Chief Operating Officer ext. 614 jmeredith@njbankers.com

Wendy C. Mandelbaum Controller ext. 603 wmandelbaum@njbankers.com

Christopher Martin Chairman/President/CEO The Provident Bank

Craig L. Montanaro President/CEO Kearny Bank

Anthony Labozzetta* President/CEO Sussex Bank

John E. McWeeney Jr. President and CEO ext. 627 jmcweeney@njbankers.com

Emily T. DeMasi Vice President and Director of Communications ext. 610 edemasi@njbankers.com

Gerald L. Reeves* President/CEO Sturdy Savings Bank NJBankers Immediate Former Chairman

Peter Michelotti* President/CEO Community Bank of Bergen County

Stanley J. Koreyva Jr. Executive Vice President/COO Amboy Bank

NJBankers Staff

Jenn Zorn Senior Vice President and Director of Education & Business Development ext. 611 jzorn@njbankers.com

Christopher Maher President/CEO OceanFirst Bank

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

Angela Snyder * Chairwoman Chairwoman/CEO Fulton Bank of New Jersey

William D. Moss * Second Vice Chairman President/CEO Two River Community Bank

James S. Vaccaro * First Vice Chairman Chairman/President/CEO Manasquan Bank

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

The Warren Group Design / Production / Advertising custompubs@thewarrengroup.com

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.

Fall 2016 New Jersey Banker

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Table of Contents

Departments 5 Chairwoman’s Platform Defining Leadership 5 Upcoming Events 7 From the President’s Office The Future of the New Jersey Bankers Association

A Professional Development Opportunity

9 Politics & Policy

Where We Can Make a Difference 11 New Associate Members 28 NJBankers Notes

30 NJBankers Shots

Cover 16

The NJBankers Leadership Academy

Features

11

Directors’ Corner NJBankers and FinPro Launch the Directors Certification Program

20

Meet Our Endorsed Service Provider CRA Partners Works Hard in Your Community

12

Behind the Teller Line Evolving HR for the Front Line

22

Feature What Does Brexit Mean for Community Banks?

14

Feature Bank Card Fraud Protection

24

Feature Is CRA Working?

18

Meet Our Endorsed Service Provider The Community Reinvestment Act and Financial Education

26

Feature NJBankers Connects

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New Jersey Banker

Fall 2016

Chairwoman’s Platform

Defining Leadership

By Angela Snyder

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emember when you were a child and learned to play Follow the Leader? For many of us, that was our first experience in understanding the roles of leader and follower. The leader acted, and everyone else in the group did what they did. If you failed to do what the leader did, you were out of the game. The last person standing became the new leader.

Thankfully, we’ve all learned a lot more about leading and Angela Snyder following as we’ve Chairwoman NJBankers grown up. School Chairwoman/CEO activities, family Fulton Bank of New Jersey relationships, volunteer roles and work teams have all shaped our perceptions of the collaborative efforts of leaders and followers. Around us, we see examples of wonderful leaders and, unfortunately, we also see mediocre ones. We experience the

incredible power a good leader has to motivate an entire team to contribute their best. And we see how detrimental bad leadership can be: to engagement, to actions, and ultimately, to outcomes.

Thankfully, we’ve come a long way from the gratuitous type of leadership found in that childhood game. No longer do we need to do exactly what a leader does to be a winner. But as adults, we’ve learned that it’s important to collaborate as a team and to allow someone to step into the driver’s seat to help facilitate team success. Think about the projects you’ve been involved in that did not have adequate leadership – most likely the participants weren’t motivated, activity timetables lengthened, and no one did their best work.

So how do people become effective leaders?

What skills do they need to develop and/or sharpen? And most importantly, how do they do that?

Thankfully, leadership is now an important topic in today’s world. There are numerous books, videos, blogs, workshops and training sessions to help us sharpen our leadership skills.

But how do we learn about what leadership looks like in the banking industry? Thankfully, NJBankers has the answer.

Over the years, NJBankers has added outstanding programming to help bankers develop leadership, management and supervisory skills. This fall, we’ve launched a new effort: Emerging Leaders, a module of the NJBankers Leadership Academy.

This innovative program is designed to help highly motivated managers enhance their organizational, performance and leadership skills to help them become future leaders in the banking industry. The module is a nine-month program, but it is a blended format, meaning that some of the coursework can be completed online to allow more flexibility for busy schedules.

There are also some full-day, onsite programs, and between these sessions participants have a chance to go back to their workplace and apply their newly acquired skills. As we know, best practices don’t always work out in every realcontinued on page 6

Upcoming Events Oct. 13, 2016

BSA 101: BSA-AML Compliance Management Hotel Woodbridge at Metropark, Iselin Oct. 14, 2016

Advanced BSA: BSA/AML “Hot Topics” Seminar Hotel Woodbridge at Metropark, Iselin Oct. 19, 2016

2016 Advanced IRA With PMC

NJBankers Office, Cranford Oct. 20, 2016

Annual Human Resources Conference

Caesars Resort, Atlantic City

Oct. 25, 2016

11th Annual Delaware Trust Conference

Dec. 1, 2016

2016 New Leaders in Banking

Ocean Place Hotel, Long Branch

Chase Center on the Riverfront, Wilmington, DE

Dec. 2, 2016

Nov. 1, 2016

Ocean Place Hotel, Long Branch

Annual Senior Management Conference Borgata Hotel and Casino, Atlantic City Nov. 8, 2016

Operations & Technology Roundtable

Crowne Plaza Monroe, Monroe Township

BankHorizons 2016

Jan. 20, 2017

Economic Leadership Forum

The Palace at Somerset Park, Somerset May 17, 2017

113th Annual Conference

The Breakers, Palm Beach, Florida

Nov. 15, 2016

CFO Conference W/FMS, NY/NJ

Hotel Woodbridge at Metropark, Iselin

Fall 2016 New Jersey Banker

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New Jersey Banker

continued from page 5

life situation, and that’s why NJBankers has incorporated feedback and advice from mentors and classmates to help participants become even more effective in applying what they’ve learned in their work environment.

Emerging Leaders participants will be able to see their growth in just nine months. There won’t be any more guessing about what makes a good leader, and no more need to try piecing together learning opportunities on your own.

It will provide a tried-and-true road map and sustained support to build leadership skills in a focused, deliberate and hands-on manner. It’s a win-win situation: participants benefit and their companies benefit as well, since as employees’ leadership skills grow, they will be ready to handle greater responsibility and will be more effective in leading team efforts.

When I became chairwoman of NJBankers last spring, I wanted to choose a single issue that I felt passionate about – let’s call it my “platform” – and dedicate my year of leadership to furthering that issue. Developing emerging leaders is passion, driven, in part, by what I’ve heard from all of you over the years about the importance of leadership and the question about who will guide our industry next year, next decade and next century.

The need for financial services is here to stay for the foreseeable future, but how we fill that need continues to evolve. We need smart, creative, dedicated people who want to succeed in this business. We need them to motivate others to work together to achieve company goals. And we need to provide them with support, mentoring, learning and leadership opportunities for their personal success as well as the future strength and stability of the financial services industry.

I have one request: after you read this letter, don’t immediately turn to the next task on your To Do list. Take five minutes, maybe 10, and identify one or two people in your organization who you feel are emerging leaders. Maybe it’s you; maybe it is a member of your team. Then connect the person or people you have identified with NJBankers and make it your personal goal to include them in a future NJBankers Leadership Academy development program.

You’ll be glad you did!

■ Angela Snyder is chairwoman of the New Jersey Bankers Association and chairwoman and CEO of Fulton Bank of New Jersey. She can be reached at asnyder@fultonbanknj.com.

Fall 2016

From the President’s Office

The Future of the New Jersey Bankers Association

By John E. McWeeney Jr.

I

n late August I had the opportunity to attend a meeting of 19 other state banker association executives. I usually get the opportunity to meet with my peers twice a year for meetings where we focus almost exclusively on the business of running our associations. They’re my favorite meetings of John E. McWeeney Jr. the year because I President/CEO NJBankers always come away with pages full of new ideas to try in New Jersey plus I deeply value the time spent with my peers. It’s a very collegial group that’s always willing to share best practices and lessons learned. It’s also a diverse group in terms of our personal backgrounds and experience which usually leads to some spirited dialogue about our organizations and the banking industry at large.

I’d say that overall as a group, the state banker associations continue to perform well and are fiscally sound. Dues and education revenue, attendance at events, associate member engagement and support have held up despite industry consolidation. That said, though, we all recognize the ongoing and growing challenge that fewer banks means to our future. I believe it’s fair to say that our collective sense of urgency is increasing as we work to position our organizations for the future.

NJBankers is now in its 113th year of operations serving the advocacy, education and other needs of our member banks. Most of our sister organizations are of a similar vintage, some even older. Like New Jersey, most, but not all states have combined multiple trade groups into one statewide association.

Also like New Jersey, all of them are making strategic decisions about their business models, staffing levels, employee benefits and operating efficiency with one single purpose in mind, ensure that we’re around for the next 100 years to meet the advocacy needs of our

bank members. If there’s one principle that I believe everyone agrees on, it’s that our core mission is to represent our member banks with legislators and regulators in our respective state capitals. No one can do that more effectively than the state association.

Individual banks or small groups of banks working together or with contract lobbyists can add value, but they simply cannot be as effective as a united banking industry speaking with one strong voice. I believe the same holds true at the national level as well. The foundation of successful advocacy in Washington, D.C. by national trade groups like the ABA and the ICBA is built upon strong and vibrant state associations. NJBankers is a proud member of both the ABA and ICBA and greatly values our partnership with each.

Given this one core principle, that banks need representation in their state capitals and that no one can perform that role more effectively than the state bankers association, means that all banks have a vested interest in the continued success of the state association.

I suppose it’s debatable whether banks could identify suitable alternative providers for education, employee benefits and the other services that we provide our members but there’s no substitution for the state association when it comes to advocacy.

When we analyze consolidation, it’s noteworthy to point out that while the number of banks may be declining the size of the industry is actually growing in terms of deposits, loans, capital and a host of other categories.

So despite massive regulatory burden, increased competition from players not playing by the same rules and moderate economic growth, the banking industry is expanding and continues to be the engine of growth for the American economy. Thus the need for advocacy at both the state and national level has never been greater.

So how do we move forward to maintain a vibrant state banker association in the face of a rapidly consolidating industry? Just like our bank members are different, there’s no playbook that says all state banker asso-

ciations must look alike either. There’s also plenty of room for independent local governance as well as innovation. With that as a backdrop, these are some of the issues we need to be thinking about as we try to position NJBankers for the future: • The banking industry needs to circle the wagons and more fully embrace membership in our state bankers associations.

While the vast amount of banks do belong in our respective states, there are outliers, both community and larger banks that choose not to join. While it’s incumbent upon us to demonstrate value, these nonmembers have a responsibility to support the industry that they’re a part of and should view their annual dues payment as a long-term investment.

• National trade groups like ABA and ICBA obviously have a vested interest in the future success of the state associations. They can play an important role in providing support, beyond just advocacy, in the areas of education and for profit services.

To the extent possible, we should collaborate and not compete.

• For the banks that are members, we need your active engagement in all that we do; advocacy, education and other member services. We have a core group of members that we see at all of our events and programs but others that we see hardly at all. Take advantage of all that NJBankers has to offer and realize a better return on your investment in us while at the same time supporting our operations which help fund our advocacy efforts. This includes active engagement in our political efforts as well.

• We need to continually recalibrate our business model and staffing levels to survive in an environment going forward with fewer banks. In fact, most if not all associations have been doing this. In New Jersey, we’ve reduced staffing, modified or eliminated some legacy employee/retiree continued on page 8

Fall 2016 New Jersey Banker

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From the President’s Office continued from page 7 benefits that were too rich and reviewed all of our vendor relationships just to name a few things. Achieving and maintaining maximum operating efficiency going forward is crucial.

• Maximizing existing revenue opportunities and/or finding new ones is also critically important. At our meeting it was interesting to hear my peers share all of their ideas for increasing non-dues revenue. Each of us have our own strengths and we’re attempting to leverage them accordingly in service to our members.

• We should embrace our associate members and build stronger partnerships with them. These service providers bring solutions to our bank members, participate in our education programs and provide valuable financial support to us through their dues, attendance, exhibiting and sponsorships. At the past few NJBankers annual conferences we’ve calculated that associate members contribute more than 60 percent of total conference revenues.

• We need to continue building strong partnerships and alliances among the state associations to serve our members and at the same time drive revenue growth and improve operating efficiencies. Some great examples of this already exist in the areas of compliance and insurance. There are also a number of states that are doing joint annual conferences, Washington trips and other events. NJBankers is entering into an active dialogue with our colleagues at the New York Bankers Association and Pennsylvania Bankers Association to explore ways that we can begin to partner more together. We hope to identify some tangible ways to do that.

• Finally, NJBankers should keep an open mind about the possibility of some form of future consolidation with other state associations. I know there are some who feel that’s where we’re headed and others who are fiercely independent-minded. There are a lot ways we can structure ourselves and still perform our primary mission of

state advocacy while also providing other needed member services.

These are just a few thoughts on the future of our association. As we move forward, please know that our board and our management team are focused on these strategic issues. As stewards, we want to ensure that NJBankers is able to meet the advocacy and other needs of our members well into the future, regardless of the number of banks there are.

In closing, I want to call your attention to the article in this edition of New Jersey Banker about our refreshed brand and logo.

We’re very excited and proud of our new look. Kudos to Emily DeMasi, Erin Suckiel and our friends at Christensen Tamburri Communications for all of their efforts in “Making Connections” become a reality. ■ John E. McWeeney, Jr., is president and CEO of the New Jersey Bankers Association, and can be reached at jmcweeney@njbankers.com.

We’ve been busy.

For 70 years, we’ve been keeping our clients on track – growing their bottom lines with personal, proactive, evolving leadership in the financial services industry.

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New Jersey Banker

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Fall 2016

CERTIFIED PUBLIC ACCOUNTANTS & CONSU

Politics and Policy

Where We Can Make a Difference

By Michael P. Affuso, Esq.

P

ut a group of bankers in a room and you are guaranteed to hear the lamentation of margin compression due to FOMC policy or the cost of regulation. One of the roots of this critique is the deep frustration to affect change due to forces largely beyond our ability to control. Though we have collectively met, wrote and discussed at length with these entities, our concerns often go unheeded or Michael P. Affuso unheard.

Executive Vice President/ Director of Government Relations While NJBankNJBankers ers will continue the efforts on behalf of our industry, I will suggest two more satisfying endeavors that are totally within our ability to control – great customer experience and stronger political participation.

A source of great satisfaction in my position at NJBankers is the ability to assist people.

Often elected officials seek assistance for constituents who find themselves in quandaries.

Every week, I turn to bankers for assistance on these constituent issues. Rarely am I ever let down. You have helped ensure that businesses function, payroll is made and home purchases happen. I thank you for what you’ve done in the past and I urge you to continue.

There is one urge however that I beg you not to succumb. It is the urge to blame the regulator for every issue that arises. While customers no doubt feel the annoyance of TILA, RESPA and TRID, not to mention, BSA/AML and ATR, we must be very cautious not to blame internal bank issues on a regulatory regime. We must respect our customers enough to admit our own shortcomings and not seek refuge in the alphabet soup of regulations assuming customers won’t know. It is this candor that will demonstrate to the customer that the relationship that they have with you is not like dealing with the cable company or the DMV. And with that, our customers win and we win. Another area where we have complete control and where we have work to do is in political action. The ABA and ICBA are independently attempting to get additional banker focus on political fundraising. Comparing

banker support of both state and federal political action committees designed to promote banking verses a labor PAC and the Realtors is like comparing a walnut to a pumpkin. This is not good. Elected officials not only look at who attends events and who supports them in

involved in the banking industry. If each one of those people supported national political action with one dollar per paycheck, the industry could raise over $26 million. In New Jersey, according to a Rutgers survey, there are 80,000 employees of financial services firms. If each

A source of great satisfaction in my position at NJBankers is the ability to assist people. particular, they also look at what the overall political participation level is for an industry as a whole. In both Trenton and Washington, banker related PAC’s are not faring well. Nationally, there are nearly two million people

of them gave just one lunch ($10) there would be $800,000 available for political participation in New Jersey. That would allow EVERY cancontinued on page 10

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Politics and Policy continued from page 9

didate for state office to receive a maximum contribution in a general election, over a two year cycle.

If you are reading this you may be a bank executive. There are nearly 100 NJBankers bank members. If each member contributed $300 and was able to convince the other top four employees in the organization to match the contribution as well as receive the same from five board members, each institution would raise $3,000 for the cause. Three hundred thousand dollars for political advocacy at both the state and federal level would be sufficient. Last year, according to the NJ Election Law Enforcement Commission and The Federal Election Commission, bankers from New Jersey did barely 40 percent of that $300,000.

As an industry, we must do better. While failure is not an option, it is a distinct possibility. â– 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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10 New Jersey Banker

Fall 2016

Director’s Corner

NJBankers and FinPro Launch the Directors Certification Program

R

ecognizing that knowledge and continued learning are indispensable for bank directors to properly fill their roles at financial institutions, NJBankers has partnered with FinPro Inc., a leading strategic consulting and capital markets firm, to develop a multifaceted educational program, the Directors Certification Program.

NJBankers and FinPro are committed to contributing to the professional development and continuing education needs of New Jersey bankers and directors. This year, NJBankers launched The NJBankers Leadership Academy, a comprehensive program that provides the tools for all levels of bankers and directors to succeed in their careers, support their financial institution, and advocate for the banking industry.

The NJBankers Leadership Academy is composed of five modules designed to develop successful supervisors, managers, emerging leaders, communication skills for women in banking and bank directors.

The Directors Certification Program is an extension of FinPro’s Leadership and Education division.

The responsibilities of a bank director have changed significantly in recent decades and directors are expected to be conversant in a growing list of regulatory matters and face a plethora of decisions each month relating to matters on the business of banking – from financial to lending to technology to marketplace competition. The Directors Certification Program addresses these issues through in-person conferences, web-based training, new board member training, and customized full board training.

IN-PERSON CONFERENCES There is nothing like being in a room with like-minded people who share the same goal of ensuring vigilant board governance for their bank. In person conferences facilitate connections between attendees

and expert instructors. Hearing from a “live” instructor also enables attendees to ask questions right then and there. Directors Certification Training conferences will energize a board so they come away with actionable tools for leading a bank prudently.

WEB-BASED TRAINING

In this fast-paced world, time is valuable. Web-based training provides flexibility and mobility – directors can take their courses anytime, from anywhere. This means they can decide when they are best able to focus on the program to get the training they need, based on their own schedules. Participation in the Directors Certification Program can be accomplished on a train, on a cruise or any other time, as the whole world would now be a classroom!

NEW BOARD MEMBER TRAINING New directors are likely to require some key information and training when they are first appointed to the board. The Directors Certification Training Program provides the resources and connections new board members will need to maximize their understanding of their responsibilities for prudent corporate governance. The program creates a platform where new directors can seize opportunities for sharpening their leadership skills and come away with actionable insights and tools for leading their bank into the future.

The Directors Certification Program can also be developed on a customized basis, based on the needs of the institution and typically offered in a group setting.

With the Director Certification Program, directors have the opportunity to demonstrate that they are keeping abreast of industry developments and trends by participating in a variety of learning platforms.

For more information on the Directors Certification Program, visit www.njbankers.com.

■

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Fall 2016 New Jersey Banker

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Behind the Teller Line

Evolving HR for the Front Line

C

elebrating its 90th anniversary of serving ent sites on social media, as most companies do, but customers, Investors Bank is a full-service here at Investors we also believe strongly in promotcommunity bank headquartered in Short ing from within. “We are able to fill more than 50 Hills, New Jersey. Investors has more than 145 retail percent of our openings with our own employees,” branches in New Jersey, New York City and Long Island, noted Rizzo. and assets in excess of $21 billion.

“I am proud of the work being done by our HR Investors is experiencing significant growth and is strivgroup,” said Kevin Cummings, president and CEO of ing to attract and retain the right talent. “This is a critical Investors. “Elaine and her team have helped make Investime for us in terms of acquiring and retaining great taltors one of the best places to work in New Jersey and New ent,” said Elaine Rizzo, senior vice president and director of York.” human resources at Investors. “Our needs are evolving, and To support our internal growth and development, earour infrastructure is being built to stay ahead of the growth lier this year, we launched an employee development proElaine Rizzo and the changing needs of the business.” gram called “EDGE” – Education, Development, Growth Senior Vice President and Since joining Investors in 2014, Rizzo and her team and Enrichment. Rizzo explained that within the frameDirector of Human Resources Investors Bank have worked hard to re-engineer the bank’s human rework of EDGE, Investors has implemented training and sources function and become a strategic partner to each development classes that are designed to improve both business unit. The team prides itself on transforming strategic vision leadership and job skills for employees within their current role. into organizational results and delivering value for the bank every day.

EDGE, though, is just one element of Investors’ efforts to meet “Our culture plays the most important role in the hiring and rethe personal and career needs of its employees. Investors provides tention of our employees,” explained Rizzo. “We care deeply about our competitive benefits including tuition reimbursement, flexible work community, our customers and our employees.” Rizzo said the culture arrangements ranging from job sharing, flex time and remote workstarts at the top with our CEO, Kevin Cummings and the rest of the ing, as well as more traditional programs such as a pension, 401k, an Executive Leadership Team. “They are role models,” notes Rizzo. “And ESOP and low cost choices in healthcare, including a wellness initiabelieve it is their responsibility to not only create a work environment tive designed to get employees to commit to a healthy lifestyle. that encourages cooperation and teamwork, but one that fosters a “It’s not just one program, a particular training plan, or a recruitsense of mutual respect and caring for each other.” ing effort that makes Investors the bank it is today,” noted Rizzo. “It’s As we look for additional talent, achieving a “cultural fit” is very our culture,” said Rizzo “and it comes from our leadership team who important to Investors. She said Investors “values people who care truly believes in serving our employees, who in turn serve our cusabout their communities, what they do, and how they do it.” tomers and communities. Doing this benefits everyone, including In looking for external talent we use all of the conventional talour shareholders.”

■

12 New Jersey Banker

Fall 2016

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Feature

Bank Card Fraud Protection “DON’T WAIT FOR FRAUD...FIGHT IT!”

By Tom Mulligan

M

ost agents and brokers lack the experience of underwriting specialty lines coverages for banks. This is primarily due to the fact that they have few bank clients for developing their skills and keeping on top of banking issues. Additionally, their commercial package background is not equally transferrable to the specialty lines discipline for identifying gaps and proposing solutions.

In 1994, Bankers Cooperative Group (BCG) entered into a mutual cooperation agreement with Gronczniak Specialty Lines Inc. (GSLI) to act as a wholesale broker and centralize Tom Mulligan specialty lines marketing, consulting and proposal writing services for NJBankers members. Together, BCG/GSLI have provided directors and officers, fidelity bond, employment practices liability, internet liability, debit card, mortgage impairment and related programs to more than 40 banks.

FRATES INSURANCE AND RISK MANAGEMENT In these times of savvy technology and elusive online criminal activity, battling fraudulent digital transactions is at the forefront more than ever for financial institutions and their customers.

14 New Jersey Banker

Banks of every size, both in the United States and overseas, continue to express two major concerns regarding fighting fraud.

First, is simply how to predict fraud, while understanding the ever-evolving technology that makes it possible. Secondly, finding comprehensive, affordable solutions to integrate into current operations and accounts that protect and foster pro-active behavior among bank staff, customers and associated partners.

The Bank Card Protector Policy offers extensive fraud insurance designed exclusively for bank’s niche plastic card services. As a participating bank in the Bank Card Protector Policy, your bank will be relieved of the fraud losses arising from the fraudulent use of credit cards or debit cards they issue.

When considering purchasing this new fraud protection policy, there are a variety of questions you should ask yourself: 1) Does the policy/program require banks to obtain reimbursement from cardholders?

2) Does the policy/program exclude coverage if the bank doesn’t have a signed application (BIN hits are still possible).

3) Does the policy/program have an exclusion for signing the cardholder’s own name by an unauthorized person, thereby excluding all forged card present sales transactions?

4) Does the policy/program exclude all loans including loans associated with an overdraft line associated with a debit card?

5) Does the policy/program exclude coverage if the loss resulted from authorized transactions in which CVV or CVC was not verified?

6) Does the policy/program exclude losses from card transactions without card expiration and card account number verification?

7) Does the policy/program exclude fraud losses related to an account that has been placed in a VIP status?

If your policy or program from your processor has any of the above restrictions you should consider the Bank Card Protector Policy since the entire above questions are covered.

Next when buying fraud protection you must purchase an insurance policy issued by a reputable insurance carrier that can legally stand behind their policy. We see some ‘programs’ offered by card processors that are not backed by an insurance company they can be very problematic. In one case the program has an overall limit of the program of $1.5 million for all participating banks. That is very alarming as they cover about 1,000 banks. The Bank Card Protector Policy can provide up to $1 million per bank.

Fall 2016

In addition, look at the deductibles very carefully as they can be quite different. Do business cards have a separate deductible?

The Bank Card Protector Policy is the same for all cards.

How does the deductible react to a multicard fraud such as a skimming event or a card compromise? Some policies/program may offer lower deductibles but will not provide much (if any) coverage when many cards are affected. An example, a bank has fraud losses on 50 cards as a result of a skimming event. Each card has $700 in fraud losses. That would be a $35,000 (50 x $700) loss to the bank. One program we examined had lower per card deductible of $500 with a 50 percent copay, which, in the example, would pay $100 per card, or $5,000. The Bank Card Protector Policy would trigger the per loss maximum deductible of $10,000 and would pay $25,000.

A great example is the recent $45 million fraudulent activity masterminded by just one criminal and the reality of how quickly and devastating fraud can be. Perhaps the biggest ally of fraud is time. Since fraud activity occurs in real-time, most victims won’t even know they’ve been hit until the money is gone and the trail has begun to disappear. So in a case like this, prevention isn’t the key, as much as the process and ability to recover in a timely and consolidated manner.

So now that you’re armed with education, what does the Bank Card Protector Policy actually cover?

• Lost cards • Stolen cards • Counterfeit (including skimmed counterfeit cards) • Unauthorized use of the card number • Account takeover card loss (including identity theft, phishing, pharming, vishing) We invite you to contact Bankers Cooperative, Don Gronczniak (570-894-4459) to take a closer look at the Bank Card Protector Policy to design a policy and plan specifically for your financial institution.

■ Tom Mulligan is the financial institutions manager for Frates Insurance & Risk Management. He can be reached at 405.290.5609 or visit www.fratesinsurance.com.

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Fall 2016 New Jersey Banker

15

Cover Story

The NJBankers Leadership Academy is a Win – Win - Win!

16 New Jersey Banker

Fall 2016

T

he NJBankers Leadership Academy is a comprehensive program which provides the tools for all levels of bankers to succeed in their careers, support their financial institution and advocate for the banking industry. Participation in the educational modules of the NJBankers Leadership Academy is a win-win-win opportunity for all; the student banker, the bank and the industry! The academy was designed by Performance Management Solutions in partnership with The Center for Financial Training.

The NJBankers Leadership Academy is composed of five modules that address the necessary skills for moving one’s career forward and moving the bank into the future.

These modules include: • Success Through Effective Management (STEM); • Success Through Effective Practices of Supervision (STEPS); • Emerging Leaders certification for the next generation of managers who will guide the success of a financial institution’s future; • a Bootcamp for Women in Banking which will cultivate expression leading to better communication; and • a Directors Certification Program for ensuring bank directors are prepared to successfully deal with the multitude of issues facing directors today.

STEM is a three-day program with classes on management fundamentals, coaching for success and planning and conducting effective performance evaluations. The prerequisite is that participants are assistant branch managers, branch managers and/or department managers.

STEPS is also a three-day program with classes on critical skills for supervisors, coaching for high performance and time management and delegation. This module is for head tellers, teller supervisors and/or departmental first-line supervisors.

The Women’s Leadership in the 21st Century is a Communication Boot Camp. This module is an intensive, practical, highly interactive boot camp which focuses candidly and analytically on the communication challenges facing women in banking today. This is a full-day program for women wishing to develop the ultimate career advantage, being a stronger communicator at work. All levels of bankers may participate.

The Emerging Leaders Program, funded by Fulton Bank of New Jersey, is designed to enhance the organizational, performance and leadership skills of highly motivated managers who have the potential to become future leaders in the banking industry. The program’s content is designed to develop emerging leaders in the areas of leading change, maximizing team development, talent development/performance management, communication effectiveness, strategic banking and individual development planning. As the prerequisite for this module, participants should have direct reports and three to five years of management experience with potential for leadership.

This program is a nine-month blended learning program. Participants will be required to participate in an online program (which provides flexibility for their schedules) as well as attend full-day programs as scheduled. Between sessions, participants will be required to practically apply newly acquired skills, get feedback from their institutional mentor and then discuss what worked or did not work as part of the next learning session. Students will be required to complete a “leadership challenge” project that will not only foster their own development, but benefit their institution.

As highlighted on page 11, The Director Certification Training Program is designed to provide valuable learning and networking opportunities for bank directors. A board’s responsibility includes staying abreast of any bank issues, regulatory requirements and establishing a corporate culture that prevents the circumvention of safe and sound policies and procedures. An engaged, attentive board must adopt prudent corporate governance practices.

The program was developed by FinPro Inc., in order to provide broad exposure to the challenges and opportunities faced by today’s financial institutions. The program’s components include web-based training, in-person conferences, new board member training and customized full board training. The program provides an annual certification designation to those directors that meet participation criteria.

FinPro Inc., a leading strategic consulting and capital markets firm, has partnered with NJBankers in this multifaceted educational program. The program is an extension of FinPro’s Leadership and Education division.

■ For detailed information on each module, please visit www.njbankers.com

Fall 2016 New Jersey Banker

17

Meet Our Endorsed Service Providers

The Community Reinvestment Act and Financial Education 10 BIG IDEAS TO IMPROVE YOUR CRA OUTCOMES 1. STANDARDS ARE EVOLVING UP During the recent economic downturn, regulators were often lenient with alreadystruggling banks. That is changing: they’re refocusing and raising the bar. A satisfactory rating on your last CRA exam does not guarantee a pass on your next one. By looking at CRA as an opportunity, you can develop innovative programs that meet and exceed regulators’ expectations.

2. INVEST IN FINANCIAL EDUCATION For regulators, financial education ranks as high as affordable housing initiatives, but education can make a much bigger impact for banks for the money spent. A $15 million

housing program might help 40 families; however, spent wisely, that same investment can improve the lives of 25,000 or more families through financial literacy programs.

3. SET MEASURABLE OUTCOMES Regulators are not impressed by good intentions. Measurable outcomes matter.

How many underserved customers did you actually reach? Can you prove that your program was effective? In the past, dedicating budget towards CRA might have been enough to earn a “satisfactory” rating; but now that money has to actually accomplish something.

4. GO INTERACTIVE If you want to reach new and underserved customers, don’t show them a PowerPoint or offer them a brochure.

Engage, excite, interact. The new world of communication is videos, games and other digital channels. Find out what is most compelling to your target audiences, and then do it.

5. REQUIRE EFFECTIVE RESULTS Financial education is about effective results. For instance, EverFi’s results demonstrate that the average student’s preeducation score is 42 percent. At the end of a six-week course, the average test score

See eye-to-eye with industry-focused professionals.

Banks face unique challenges and significant regulation. Our specialized professionals understand the financial sector and will help you identify and mitigate risk, proactively avoid issues, and implement tax-saving strategies.

Connect with us: bakertilly.com/industries/banking

Sign up to receive timely alerts and articles: bakertilly.com/insights/subscribe Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. © 2016 Baker Tilly Virchow Krause, LLP

18 New Jersey Banker

Fall 2016

is 89 percent, with many students scoring 100 percent. That’s more than a doubling of students’ financial literacy!

6. INVEST IN DATA PLATFORMS When CRA regulators ask for financial education outcomes, will you have the data on hand? Invest in platforms that give you customized, real-time and aggregated data that can be summarized and reported as necessary. This will make exam submissions easier for you –regulators will have more than they need – plus you’ll have valuable marketing metrics as well.

7. GO DIGITAL TO SCALE How many LMI households are you currently reaching, and at what cost? It costs roughly the same amount of investment

to talk to 25 students in a classroom for 45 minutes as is does to educate and test 1,000 students online in 12 modules. Once an online course is set up, it costs virtually nothing to add additional learners.

8. STAY AHEAD OF THE CURVE: PREVENTION IS THE BEST CURE Just in time is too late. Setting up or improving your CRA program just before your exam – or worse, after it – is not a winning strategy. Don’t wait until regulators rate you as “needs improvement” or “failure” before you develop an outcome-driven CRA plan.

9. JOIN THE 21ST CENTURY This is the second decade of the 21st century, and banks that are not engaged

in the new world are not going to make it. This is true in entertainment, in news coverage, in sports, in retail—and it’s true for financial institutions as well. Most of what we read these days is on screens. If your CRA program isn’t online, no one is going to engage with it.

10. MAXIMIZE YOUR INVESTMENT Do well by doing good. Giving back to the community doesn’t have to mean you don’t make a return. With online learning tools, there’s a definite return on investment—for students, it means a stronger ability to handle their finances; for the bank, that ROI comes from brand loyalty and newly bankable customers. Everyone wins.

The full report can be viewed at: http:// info.everfi.com/TheCRA.html.

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Building strong communities, one point at a time™ Fall 2016 New Jersey Banker

19

Meet Our Endorsed Service Providers

CRA Partners Works Hard in Your Community NEW LOOK, NEW NAME, SAME MEANINGFUL MISSION

C

RA Partners is a compliance program you can feel good about.

The Senior Housing Crime Prevention Foundation, a trusted brand for over 15 years, has been providing protection and an enhanced quality of life for vulnerable senior housing residents through a turn-key CRA compliance solution for community focused banks. Now we have a new name and a new look but the same meaningful mission.

Funded exclusively by the banking industry, we have 225 national bank partners who have purchased collateral on behalf of our programs that have made a cumulative positive community impact of $283 million to low- and moderate-income communities.

It is hard to overstate the transformative effect a bank can have on the lives of seniors by removing the fear of theft and neglect from their lives while also earning CRA credit for your bank.

We want to thank Regal Bank, Cape Bank, Lakeland Bank, Sturdy Savings Bank, Community Bank of Bergen County, Manasquan Bank, Kearny Bank and Amboy Bank for their participation in our nationwide program. These financial institutions have loaned, invested, or granted more than $14.5 million to help provide safe, crime-free living environments to more than 1,200 New Jersey seniors who reside in nursing homes, HUD senior housing communities, and state Veterans homes. Because these banks are protecting the seniors in their community, the senior housing facilities have experienced a 95 percent reduction in crime incidents.

Banks Enjoy: • Guaranteed CRA credit and flexible funding options on loans, investment and grants

• Opportunity for service test credit using tools including Preventing Elder Abuse Toolkit and the Welcome Home Banking website to provide financial education • Detailed LMI documentation for positive CRA exam reviews • Installation of a turnkey program in senior housing facilities, HUD communities and state Veterans homes with no overhead or administrative burden • Providing enhanced quality of life programs for seniors to enjoy • Positive public relations exposure in the community CRA Partners is your partner every step of the way – from participation through examination!

Involvement in the foundation is easy!

Once the bank’s financial commitment is in place, we collaborate with the bank

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• Credit Risk Process Review • Loan Policy Maintenance

CONTACT US NOW TO LEARN MORE!

888-967-7380 // www.CEISReview.com 20 New Jersey Banker

Fall 2016

Lakeland Bank is pleased to support the mission of the CRA Partners powered by the Senior Housing Crime Prevention Foundation by protecting our community’s most vulnerable citizens in several local nursing homes. This is a continuation of our long tradition of giving back to our local communities. We are committed to preventing fraud and abuse at every level and the Senior Crimestoppers program has proven to be a strong deterrent to crime for those who need it the most.”

— Tom Shara, president and CEO, Lakeland Bank, Oak Ridge, New Jersey

to identify nursing homes or Veterans homes for the bank to sponsor. From there, we do all of the work, in terms of implementing the Senior Crimestoppers program in the facilities, training the staff and coordinating a public event where we announce to the community what the bank has done for its sponsored facility.

Why should a bank get involved in the foundation? Two reasons – it’s the right thing to do and it is good business. The elderly citizens in our society are sometimes frail and vulnerable. In the final stages of their lives, they deserve the very best that we can give them – at minimum they should live in safety and security, without the fear of theft, abuse and other personal violations. It’s also

good business. The elderly seniors, Veterans and their families appreciate businesses and organizations that provide protection for their loved ones and are a lucrative affinity group for a bank to pursue while gaining CRA credit for your bank.

For more information contact Sue Shaffer at Sue.Shaffer@SHCPFoundation.org or call 877232-0859 or visit www.SHCPFoundation.org. ■

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Fall 2016 New Jersey Banker

21

Feature

What Does Brexit Mean for Community Banks?

By James Cole

V

oting results from the U.K. to leave the European Union (EU) – the “Brexit” referendum – came as a major surprise to most political and financial commentators. The general expectation was that U.K. voters would decide to stay in the EU. It appears that the commentators, opinion pollsters, bookies and the financial markets (which had rallied in response to a purported trend toward a “stay” vote) all got it wrong. As with all surprises, the immediate results are confusion and uncertainty regarding the ultimate impacts.

This uncertainty James Cole is the most important impact. Uncertainty not only causes significant market volatility in equities, bonds, and Foreign Exchange (FX) markets, it also imposes a negative effect on the real macroeconomic health of the economies involved.

People and businesses adopt a “wait and see” stance to major purchases and commitments.

22 New Jersey Banker

Thus, the uncertainty will bring some macroeconomic slowing. Mainly that will fall on the U.K. primarily and, to a lesser extent, on the rest of the EU. The U.S. economy should only be slightly impacted, if at all.

These larger, real impacts will likely only be felt after the Brexit actually happens. In the long term, one can expect some significant impacts on U.K. and EU macro-economic trends, which may spill over into the rest of the world, including the U.S. However, the magnitude and direction of the longer term impacts will take time to become clearly visible, and only emerge over the next several years, as negotiations on the exit move forward. In the meantime, we will all have to live with a bit more economic uncertainty and a bit more financial market volatility until the ultimate resolution becomes known.

The first thing to realize is that nothing may happen. The Brexit vote is not a binding action. The U.K. government and Parliament would still have to act on it by requesting withdrawal under Article 50 of the Lisbon Treaty. The details of final exit implementation would then have to be negotiated be-

tween the U.K. and the EU and its member countries. This process is expected to occur within a two-year window, which could, and likely will, be extended over an additional third year. The final agreements are difficult to foresee at present. The exit agreements could well end up looking like an EU-U.K. free trade deal, which would have little economic impact, as there would still be no trade or capital barriers. Such free trade agreements would seem to be in the best interests of all parties.

On the downside, Brexit could lead to a U.K.-EU trade war, which would reduce macro-economic activity in all of the countries involved, and potentially spill over to the rest of the world. The actual final trade and economic landscape in Europe will only become clear as the exit deal is hammered out over the next few years. The hammering out process could be tricky for the U.K., since it has had no need for trade negotiators since it joined the EU in the 1970s. Hence, it is too soon to predict the shape and dimensions of a final economic result.

There is a historical precedent for Brexit, however. When Greenland withdrew from the EU in 1982, the process took three years of negotiation, mainly about fishing rights.

The results from those negotiations were very close to free trade between the EU and Greenland. Greenland was also able to expand other, non-EU trade. If this were to happen following Brexit, the dire economic predictions of the anti-Brexit partisans could be significantly mitigated or reversed. One hopes that all parties are serious and recognize the importance of free trade and capital flows to the entire world economy. Even if the U.K.-EU exit agreement is not a model of free trade, the U.K. could then negotiate with other trade blocks (e.g., NAFTA), opening additional markets to them, which could actually leave the U.K. better off.

The impact in the U.S. will mirror the impact in Europe, but at a much smaller percent-

Fall 2016

age. Since it is too early to predict the macroeconomic impacts on Europe, which impact the world economy and the U.S., we can only watch and wait for the process to unfold over time. Even under the worst-case scenarios, with the U.K. growth getting “hammered,” the impact on our economy would probably not be material. Most analysts no longer seem to accept the extreme “doomsday” view which was so popular with the “Remain in EU” crowd prior to the June vote.

However, one very dire possibility exists in the Brexit vote: the possibility of a snowball effect, in which other countries follow the U.K.’s suit and voting to leave the EU also. This would lead to a reduction in size and scope, or even disintegration of the EU. In this case, the stabilizing influence of the EU would be greatly diminished and European countries could revert to protectionism and nationalism. In such a scenario, trade among the EU countries would have more red tape and restrictions, imposing additional burdens on commerce. In the extreme, Europe could revert to 1930s-style beggarthy-neighbor trade policies, bring retaliation, and lead to a very significant global economic recession. This would have an adverse consequence globally and could lead to even more adverse political and diplomatic developments, as the depression of the 1930s did.

In the meantime, we should remember that the U.K. still has an expanding economy…one of the highest in Europe. It also has its own currency – the Pound. Thus, the U.K.’s departure from the EU would not cause monetary policy disruptions or currency shortages in Britain. The Bank of England still functions as the U.K.’s central bank and will be able to conduct monetary policy to help manage its economy, as before. Other countries using the Euro are more reliant on the European Central Bank (ECB), which means they might be more inclined to stay in the EU. Initially, the Pound has already dropped significantly after the U.K. vote. Just prior to the vote, the pound was at about $1.48. After the vote, it fell to about $1.32, and has stayed at about that level since. To a lesser degree, the value of the Euro was also impacted.

The Euro was at about $1.13 just prior to the vote. It dropped to about $1.10 just after the vote, but has recovered to about $1.12. As noted above, the Pound may remain more volatile, so assets denominated in sterling

will also become more volatile. This may impact the U.K. and European securities, especially financial sector securities, adversely.

Thus, due to both increased “political” (i.e., country) risk and FX risk arising from market volatility, Pound and Euro denominated assets, such as obligations of European and U.K. banks, have become a bit riskier.

Whether the volatility of U.K. and EU currency and asset values remains higher than normal is an open question. Depending on the news (or, more likely, the rumors) concerning the progress of the Brexit negotiation, we may expect to see occasional periods of elevated volatility periodically during the next three years.

One potential banking system result of Brexit could be its impact on the use of Libor as benchmark rates by banks around the world. If the U.K. leaves the EU, the impor-

opinion that the Fed’s gradual rate increase policy will not occur for the rest of 2016.

Indeed there is also discussion, or renewed discussion, of such topics as additional quantitative easing or negative interest rates in Europe to stimulate their economies. Such actions could further impact U.S. monetary policy away from tightening.

In summary, the main short-term results of the Brexit vote are higher economic uncertainty and increased volatility in the markets. In the short term, the dollar has strengthened; U.S. interest rates will probably not increase. The longer-term macroeconomic impacts will emerge slowly over the course of the next three years of negotiation. The actual result of the vote could range from no exit at all, to minor impacts, if the U.K. uses the leverage from the vote to gain concessions from the EU and re-

In the meantime, we should remember that the U.K. still has an expanding economy… one of the highest in Europe. tance of the London financial markets will likely be reduced. Short-term Libor rates (one-to three-month) have been volatile recently, and there were some actors already looking for more stable alternatives. Brexit could, and probably will, increase Libor instability and add further impetus to a shift to other benchmark rates. Considering the wide-spread use of Libor in financial agreements, the increased volatility of Libor rates could impact our U.S. community banks.

Interest rates in the U.S. may also be impacted by the “flight to quality,” which is always generated by global uncertainty. Such increased demand for U.S. assets and dollars will tend to stabilize, or actually reduce, U.S. interest rates in the near term. In addition, the Federal Reserve may be inclined to hold off on rate increases for this year as a response to the possibility of adverse global macro-economic effects from Brexit. Many commentators have already expressed the

main in it, or as new U.K.-EU free trade arrangements evolve. The downside is that the long-term impact could be very severe if the EU disintegrates or an EU-U.K. trade war begins. At present, an “all out” trade war appears unlikely because it is essentially a loselose policy. In the shorter term, we can also expect to see caution in the U.S. monetary policy and stable, if not declining, rates. Finally, Libor rates may become more volatile and the use of Libor benchmark rates may decline in the future. The long-term effects of the Brexit vote seem to be toward increases in economic uncertainty and market volatility while the exit details are negotiated over the next three years.

■ James Cole is a senior manager at P&G Assoc., a risk management firm specializing in outsourced internal audit exclusively dedicated to the banking industry for over 25 years. Cole can be reached at (877) 6511700. Please also visit www.pandgassociates.com.

Fall 2016 New Jersey Banker

23

Feature

Is CRA Working?

By Jeffrey Marsico

I

n Richard J. Parson’s book, “Broke: America’s Banking System,” he suggested that bankers and examiners major in the majors.

By that, he meant sweat the big stuff, and by big stuff, he meant risks that tend to lead to bank failures.

Lead among them, and without a near rival, is credit risk.

Bankers and examiners do spend a fair amount of time mitigating a bank’s credit risk and systemic credit risk.

But a close second in time and resources is the focus on complying with the myriad of laws and regulations on the books that have little to nothing to do with what causes banks to fail.

Many relate to social engineering, ensuring bankers are “fair,” as defined by politicians and bureaucrats. This includes Jeffrey Marsico transparency in the form of disclosures, which few read, and add to the complexity of doing something simple like getting a long-term loan collateralized by your house.

All of the paperwork customers must produce and sign is the result of, you guessed it, bureaucrats.

So we move on, and start dedicating resources, financial and human, to comply, like bankers do with so many other rules, regulations, standards, exam practices and laws that have infiltrated the banking system. Some laws were designed so bankers can be clandestine FBI agents, trolling their customers’ transactions for nefarious activity. Think BSA. On the topic of social engineering, let me paint the bullseye on one that I think, by objective standards, did not work, yet continues to cause much angst amongst bankers and regulators alike: the Community Reinvestment Act (CRA).

THE COMMUNITY REINVESTMENT ACT The Community Reinvestment Act was enacted by Congress in 1977 and was intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderate income neighborhoods, consistent with safe and sound banking operations.

In other words, it encouraged, even compelled, banks to lend to low income individuals under the presumed assumption that if only a low income person could borrow money they would elevate their economic status.

CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically in the form of a CRA exam. That record is taken into account in considering an institution’s application for deposit facilities, including mergers and acquisitions.

The literature I read about CRA states the end goal as lending into low-to-moderate communities. But that is not the goal. It is a means to an end. What end? I recently attended a United Way

24 New Jersey Banker

presentation where the local chapter’s CEO said that one goal of the organization was to “cut our poverty rate in half.” That’s a goal! I’m surmising CRA, similar to United Way, hoped to be an ingredient in reducing the poverty rate.

Do you know how difficult it is to find data when conducting a search on “has the Community Reinvestment Act worked”?

I decided to see what has happened to the poverty rate in New Jersey. The accompanying chart shows poverty rates in the state since 1980, the earliest the Census had the data, and not too distant from when the CRA was passed. You may note that poverty has actually increased. By this standard, CRA hasn’t worked.

Isn’t it time we pulled the plug on CRA? Give it a “Needs to Die” rating, so to speak. In fact, I would propose that any law designed to improve the plight of our citizenry should have a litmus test. If the results don’t pass the litmus test within a given time frame, the law dies. But that’s a larger argument for another day.

Think about how much time and resources are spent on CRA. Wouldn’t our examiners time be better spent on things that are most likely to cause banks to fail, such as credit risk, or interest rate risk? Our system would be safer and more sound, in my opinion.

Banks in general, and community banks in particular, should have their own social improvement programs. Why? Banks are intricately tied to the plight of the communities in which they operate. If the local military base or large manufacturer pick up stakes and leave, the local community bank better be part of the action plan to replace that economic activity.

THREE IDEAS TO REPLACE CRA If CRA were to be pulled, here are more productive things I think community financial institutions could do with their newfound available resources.

1) Build a scholarship fund for skills transition. Technology has accelerated economic change and the skills needed to succeed in our new world. We don’t need a riveter that affixes car doors, and the union prevents them from moving to help out the dashboard installer. Instead, we need workers that can operate and repair robotic arms. This is only one example of the skills transition needed in today’s rapidly changing economy. Banks can be a part of helping residents make those transitions.

2) Train employees to be concierges to help local residents access private and public assistance to improve their lives. There are myriads of programs, scholarships, and resources available to help low and moderate income people elevate their economic status. But it’s complicated and it requires mentorship, guidance, and experience. Instead of the haphazard way that community financial institution employees volunteer, and receive paid time off to volunteer, channel their efforts for a finite set of objectives to help people and their communities rise up.

Fall 2016

NJ Poverty Rate 16 15 14 13 12 11 10 9 8 7 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

6

Source: Census.gov

3) Sponsor a local “Shark Tank.” “Shark Tank” is one of my TV indulgences. It puts entrepreneurs in front of a panel of private investors to pitch their business and get funding.

Genius! Why don’t we do this? Lack of capital is a primary reason for business failure, or its inability to achieve scale.

Why can’t a bank, through its holding company, have an equity fund that they contribute to, along with local private investors? A panel of investors could evaluate local businesses and award capital to the most promising ones. As CRA stands now, lawmakers and examiners would have us lend to these businesses. But a loan to an early stage business is like an equity investment with no upside, and servicing debt puts pressure on the business’s cash flow. It doesn’t make sense.

These are just a few ideas that community financial institutions could employ to improve the economic status of their communities, and in so doing improve the prospects for the bank to thrive.

Or, we could continue to log our community hours on a spreadsheet as part of the documentation needed for a good CRA rating.

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Banks are intricately tied to the plight of the communities in which they operate.

Jeffrey Marsico is an executive vice president of The Kafafian Group Inc., which specializes in profitability measurement and improvement, strategic planning, management consulting and financial advisory for community financial institutions. He can be reached at (973) 299-0300, ext. 120, jmarsico@kafafiangroup.com, or follow him on Twitter @ JeffMarsico.

Fall 2016 New Jersey Banker

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Feature

NJBankers Connects

T

hey always say time changes things; but you actually have to change them yourself. During NJBankers management strategy discussions, NJBankers began looking at how we serve our members and the New Jersey banking industry. A common theme emerged. The association is all about “making connections.”

From connecting members through networking to one another and solution providers; to connecting members with professional development opportunities to connecting to law makers and regulators in Trenton, Washington, towns and municipalities; to connecting to the media to healthcare benefits, it was clear that “making connections” is what the association is all about. We decided to visualize our connections and from the model came a “brand” that shows that NJBankers is a representative, resource and champion connecting our members to opportunities today… and for tomorrow… so their banks can prosper and thrive!

We felt it was a good time to refresh our logo to reflect our purpose and because so much is going on at the association that is fresh and new. Our previous logo reflected the combination of the New Jersey League of Community Bankers (Cranford) with the New Jersey Bankers Association (Princeton) in 2009.

The original logo was designed as a combination of the Associations’ logos to show that we now spoke for the industry with one, united voice.

26 New Jersey Banker

Making Connec ons Media

Research

D.C.

Towns & Municipalities

Solution Providers Associate Members

Philanthropy & Volunteerism

Trenton

Networking

Members

Education

FHLBNY BCG Employee Benefits

ABA ICBA SBA’s

We made the new logo simple, fitting and relevant. The fonts connect today with yesterday; they are modern and clean yet classic and conservative. The three spheres represent our connections including advocacy, education and outreach. The descender on the “J” connects with the tagline. The arch at the top connects everything under one umbrella.

Blue is the most popular logo color and establishes a connection to our previous logo. Green represents growth and is particularly relevant to the Garden State.

Using black in the tagline simplifies the logo to three-colors reduced from four-colors.

Regulators

Talent

The tagline states our primary function in two words – Making Connections. The final connection renders the second “o” in the tagline in green and represents healthcare through our subsidiary, BCG. Are you seeing the connections?

So next time you connect with NJBankers, you’ll see our new logo but we are the same, responsive Association making connections with you.

Many thanks to Associate Member Christensen-Tamburri Communications (CTC) for the great work on the logo. Logos are not easy to design but we feel our new logo says it all.

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Fall 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.

Sussex Bank, an FHLBNY member, used an advance to help provide financing assistance to Canterbury Village, a senior assisted living residence in West Orange, New Jersey.

Currently home to 40 senior citizens, the advance helped stabilize the not-for-profit housing facility’s economic future, while a portion of the funding was used to renovate its Victorian structure. This project enabled Canterbury Village to continue to offer quality care and housing services to seniors in Essex County and beyond, as it has since 1921.

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.

Fall 2016 New Jersey Banker

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Notes Jeff Halverstadt

Joseph Stella III

Joseph Dafcik

ATLANTIC STEWARDSHIP BANK Jeff Halverstadt has been appointed to vice president and commercial lending officer of the bank’s commercial lending division. Halverstadt has over 30 years of commercial banking experience, including investment management, franchise lending, private banking and middle market commercial lending.

He is the chairman emeritus and current board member of the Morris County Economic Development Corp., housing commissioner and chairman emeritus of the Summit Housing Authority, a co-founder and trustee of the Summit Affordable Housing Corp. and a board member

Hugh McCaffrey

John Dunne

Daniela Marino

of Trans Options Inc. Additionally, he holds a Bachelor of Arts degree in economics from Denison University and a Master of Business Administration in finance from New York University, Leonard Stern School of Business.

CENTURY SAVINGS BANK Century Savings Bank appointed two new members to its executive management team.

Bringing with them over 69 years of combined banking experience, Joseph Stella III joins Century as senior vice president and CFO, and Joseph Dafcik as senior vice president and chief operating and compliance officer. The bank was

Robert J. Bardusch

Bruce H. Stanwood

equally pleased to report the addition of Hugh McCaffrey to its board of directors.

As the CFO, Joseph Stella III will be responsible for overseeing the bank’s accounting department as well as the overall financial operations of the bank. He holds a Master of Business Administration in finance from Wilmington University of Delaware, as well as a Bachelor of Science degree in accounting from Villanova University.

Under the general supervision of the board of directors and the president and CEO of Century Savings Bank, Joseph Dafcik will, as the chief operating and compliance officer oversee

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28 New Jersey Banker

Fall 2016

and provide overall direction to core operational departments. He will also be responsible for executing the bank’s regulatory compliance activities as well as serving as the bank’s CRA Officer.

Dafcik is a 37-year veteran of the banking industry with multidepartmental experience.

Hugh McCaffrey’s appointment to Century’s distinguished board of directors is following the retirement of two prominent long-term directors. McCaffrey, president of Southern New Jersey Steel Co., brings over three decades of experience in strategic planning, construction and contract management, and new business development.

KEARNY BANK John Dunne has been named senior vice president and chief risk officer of Kearny Bank.

Dunne is a St. Francis College graduate and he earned his Master of Business Administration degree in finance from Pace University. He is a certified bank auditor and certified risk professional with over 30 years of banking experience.

In his position he’ll oversee enterprise risk management, BSA/compliance and bank information security.

LAKELAND BANK Lakeland Bank announced that Jenifer Thoma will be appointed to the position of first senior vice president and director of human resources, based in Oak Ridge, New Jersey. Thoma has more than 20 years of experience and demonstrated success in leadership and organization development, talent management and acquisition, performance management, succession planning, compensation and benefits, change management, and employee communications and relations.

Thoma holds a Bachelor of Science degree in business administration from New Jersey City University and a Master of Science in organizational management and human resource development from Manhattanville College.

marketing and sales initiatives to enhance Lincoln 1st’s business retail and lending initiatives.

With more than 15 years of experience in financial services, including a special focus on retail and wholesale mortgage sales, she has earned tremendous respect throughout the TriState Area. She is a former board of directors member of the LML Division of MBA, a member of PCBOR’s in Passaic County and is a licensed mortgage banker and BNI member.

PEAPACK-GLADSTONE BANK The bank appointed Bruce H. Stanwood as senior managing director of commercial private banking. Building upon the bank’s successful growth, Stanwood is now a part of the commercial banking team providing clients with an exclusive one-touch private banking experience.

He has over 35 years of financial services experience focused on new business development, portfolio, business line and credit risk management and the creation of both domestic and global financial solutions for clients.

He holds a Bachelor of Science Degree in accounting from St. Peter’s University and a Master of Business Administration in finance from Fairleigh Dickinson University. He holds designation

as a Certified Financial Planner (CFP) and is a former trustee of St. Vincent de Paul Church in Stirling where he presently serves as a member of the finance and school endowment committees.

VALLEY NATIONAL BANK Valley National Bank announced the appointment of Robert J. Bardusch to executive vice president and chief information officer. Bardusch brings over two decades of financial technology leadership expertise to his current role.

As chief information officer, he is responsible for implementing information technology solutions that support Valley’s strategic vision while improving cost effectiveness, service quality and business development using technology driven solutions.

He received a bachelor’s degree in engineering from Pennsylvania State University and a master’s degree in information systems and business administration from the University of Pittsburgh. He is actively involved in Pennsylvania State University, College of Information Sciences and Technology as an advisory board member and Odyssey of the Mind as a regional board member and tournament director.

■

There’s a Reason Leading Banks Call on Mercadien Responsive, forward-thinking, relationship-driven, we provide the answers they need and service they trust.

Regulatory Compliance Bank Secrecy Act Reviews Outsourced Internal Audits Enterprise Risk Management Information Technology Audits

LINCOLN 1ST BANK Lincoln 1st Bank has hired Daniela Marino as a business development specialist. Marino is responsible for growing Lincoln 1st’s consumer and commercial loans business, while continuing to originate residential loans for the lending department. She also will work on strengthening the bank’s residential, consumer and commercial sales processes and on developing and maintaining relationships with attorneys, realtors, CPAs and networking groups to further strengthen the bank’s client base. In addition, she will develop

Leading by example.

Salvatore Zerilli, CPA, CAMS szerilli@mercadien.com

Certified Public Accountants • Consultants • Technology • Wealth Management Mercadien.com | 609.689.9700

Fall 2016 New Jersey Banker

29

Shots Peapack-Gladstone Bank certified 190 North Plainfield High School students in financial literacy during the 2015-2016 school year through their New Jersey Financial Scholars Program. This program is an initiative to bring critical financial literacy education to high school students across their community.

Peapack-Gladstone Bank partnered with NJBankers Endorsed Service Provider EverFi Inc. to bring an interactive, web-based financial management program to the students, as well as two additional local high schools.

On behalf of Bankers Cooperative Group, Richard Siderko, president and CEO of BCG presented a $50,000 contribution to the NJBankers Charitable Foundation during the NJBankers Annual Golf and Networking outing. From left to right, James Meredith, executive vice president and chief operating officer, NJBankers; John E. McWeeney Jr., president and CEO, NJBankers; Robert E. Stillwell, president and CEO, Boiling Springs Savings Bank, chairman of the foundation; and Richard Siderko.

Lincoln 1st Bank made a $250 donation to the U.S. Coast Guard Auxiliary, a Civil Air Patrol division located at Lincoln Park Airport. After proving itself as a vital contributor to the country’s defense during World War II, the Civil Air Patrol was permanently established as an auxiliary of the U.S. Air Force. Its three primary mission areas are: aerospace education, cadet programs and emergency services.

Clark High School and Roselle Savings Bank selected graduating senior Kerdija Gai of Roselle as the recipient of the 2016 Roselle Savings Bank Outstanding Business and Finance Student Award. Carl Zeitlinger, Roselle Savings Bank senior vice president, presented Kerdija with her award at the 2016 Abraham Clark High School Scholarship Night. Candidates for the award were evaluated on a variety of criteria, including academic achievement, exemplary participation in extracurricular activities and a high level of personal integrity and commitment. Pictured left to right are Jordan Siegel, Abraham Clark High School counselor; Carl Zeitlinger; Kerdija Gai, Business and Finance Scholarship winner; Candida Young, Roselle School board president; Dr. Kevin R. West, Roselle superintendent of schools; Dr. Dana E. Walker, Roselle assistant superintendent of schools; and Rashon L. Mickens, high school principal.

Unity Bank donated $8,000 to Family Promise of Hunterdon County and Family Promise of Warren County, the proceeds from the 10th Annual Cruisin’ Bob’s Classic Car Show, which drew a record 110 automobiles. The funds were raised through sponsorships, food sales and registration fees to compete in the classic car competition.

30 New Jersey Banker

First Bank’s Somerset branch participated in The Somerset County Business Partnership’s “Biz Fest” a trade show and networking opportunity with more than 70 local businesses at The Imperia. Left to right are: Carol Monaghan, manager, Somerset branch; Sue Paglione, senior business development officer, senior vice president, retail administration; Julianne Silletti, teller, Somerset branch; and Frank Puleio, business development officer, Somerset and Cranbury.

Columbia Bank employees took part in Paterson Habitat for Humanity “Corporate Challenge” to help build a new, affordable living home in the Greater Paterson area. The Team Columbia volunteers completed various outdoor work assignments, including foundation and yard leveling, providing the “elbow grease” necessary to move the construction project along.

Fall 2016

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