March 2016
PEOPLESBANK | LEADERSHIP DEVELOPMENT | RETIREMENT PLANNING
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MARCH 1, 2016 | Telephone Consumer Protection Act: What You Need to Know About the New Requirements Steven Van Beek, Howard & Howard Attorneys PLLC MARCH 2, 2016 | How to Complete & File UCC-1 Financing Statements Elizabeth Fast, Spencer Fane LLP MARCH 3, 2016 | Required Compliance for Commercial Loans Secured by Real Estate Susan Costonis, Compliance Consulting and Training for Financial Institutions
MARCH 15, 2016 | QUARTERLY EMERGING LEADER SERIES: Developing Executive Presence Skills: Presentations, Poise & Professionalism Nancy Flynn, The ePolicy Institute™ MARCH 16, 2016 | Determining Cash Flow from Personal Tax Returns Part 2: Schedules E & F Tim Harrington, TEAM Resources MARCH 17, 2016 | Flood Insurance Compliance Update & FAQs Ann Brode-Harner, Brode Consulting Services, Inc.
MARCH 8, 2016 | DIRECTOR SERIES: What Directors Should Know About CECL, ALLL & New Credit Impairment Standards Tommy Troyer, Young & Associates, Inc.
MARCH 22, 2016 | CYBER SERIES: Outsourcing Tech Services: Regulations, Examiner Expectations & Actions for Vendor Management Brian Vitale, Compliance Advisory Services
MARCH 9, 2016 | Post EMV Card Liability Shift: Managing & Mitigating Card-Not-Present Fraud Lee Wetherington, Jack Henry & Associates, Inc.®
MARCH 24, 2016 | Developing Your Same-Day ACH Game Plan Jen Kirk, EPCOR
MARCH 10, 2016 | SBA Lending Update: Regulations, Trends & Overview of SBA One Kimberly Rayer, Starfield & Smith, PC
MARCH 29, 2016 | DEBT COLLECTION SERIES: Your Customer Has Filed Bankruptcy, Now What? Elizabeth Fast, Spencer Fane LLP
MARCH 14, 2016 | AUDIT COMPLIANCE SERIES: Monday Auditing for TRID Compliance: Safe Harbor Expires February 1, 2016 Ann Brode-Harner, Brode Consulting Services, Inc.
MARCH 30, 2016 | Hot Topics in Social Media Strategies: Techniques & Trends for Community Banks Eric C. Cook, WSI Internet Consulting
March 2016 | CONTENTS
COVER STORY
Features 14 Ten Things Bank Executives Need to Know About Pension and 401(k) Plans 16 What to Look For In Your Next CEO: Part I 18 Equal Employment Opportunity Commission Will Propose Additional Pay Reporting Requirements 20 How Reliance on a “SoL” May Leave You Without a SoL, If the CFPB is Right! 22 2016-2017 Budget By The Numbers 38 Leadership is a Journey 40 Leadership Development: It Doesn’t Have to Break the Bank
26 WARMED-OVER BUDGET LEAVES BUSINESS COMMUNITY COLD
42 5 Ways To Gain Employees’ Respect 44 New Life For Performance Appraisals 48 News From You
THAT’S MY BANK
52 PACB Welcomes New Associate Members: • Main Street, Inc. • PFM Asset Management LLC • Quest Analytics • TeraverdeTM
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08 PEOPLESBANK: OF THE PEOPLE, BY THE PEOPLE, FOR THE PEOPLE
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American Bankers Association Baker Tilly Virchow Krause, LLP CSI - Computer Services, Inc. First American Payment Systems Herbein & Co. ICBA Reinsurance ICBA Washington Policy Summit Shazam Inc. Shumaker Williams, P.C. Smith Elliot Kearns & Company, LLC Tusk Development Company
WWW.PACB.ORG | TRANSACTIONS | 1
PACB HEADQUARTERS
BUSINESS HOURS
2405 North Front Street P.O. Box 5319 Harrisburg, PA 17110-5319 www.pacb.org
8:30 a.m. - 5:00 p.m. Monday through Friday Telephone: 717.231.7447 Fax: 717.231.7445
2015-2016 EXECUTIVE COMMITTEE
STANDING COMMITTEES CHAIRS & VICE CHAIRS
Chairman Terry L. Foster MCS Bank
Education Edward Martel JBT Wendy Nagle PennCrest BANK
Chairman Elect Frederick P. Henrich CSBank Vice Chairman Timothy J. Kronenwetter Indiana First Bank Secretary/Treasurer Troy A. Peters JBT President/CEO Dominic D. DiFrancesco PACB Immediate Past Chairman Andrew W. Hasley Allegheny Valley Bank General Counsel Keith A. Clark, Esq. Shumaker Williams, P.C.
PACB STAFF
FIRSTPAC George M. Evans Indiana First Bank Chuck Leyh Enterprise Bank Legislative Bob Fignar First Community Bank of Mercersburg Craig Zurn Jim Thorpe Neighborhood Bank PACB Foundation Richard L. Meares Fleetwood Bank Chuck Leyh Enterprise Bank
President/CEO Dominic D. DiFrancesco nick@pacb.org Twitter: @PACB_Nick
PACB Services Patrick O’Brien Community Bank Thomas Ondek Sewickley Savings Bank
SVP Strategy and Operations Barbara Holbert barbara@pacb.org Twitter: @PACB_Barbara
PACB SOCIAL MEDIA
Communications Director Eric A. Kovac eric@pacb.org Twitter: @PACB_Eric Comptroller Patricia L. Kuharic patty@pacb.org Twitter: @PACB_Patty
Simply visit http://www.pacb.org/transactions/ from your mobile browser or scan the QR code to the left to access Transactions on the go!
Finance & Budget Terry Sager William Penn Bank Lori Cestra Enterprise Bank
Director of Government Relations Allison L. Coccia allison@pacb.org Twitter: @PACB_Allison
Facebook: PACommunityBanks Twitter: PaCommBankers Flickr: PaCommunityBankers YouTube: PaCommunityBankers
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Executive Administrative Assistant Evelyn Sponsler evelyn@pacb.org Twitter: @PACB_Evelyn Transactions is published monthly by Pennsylvania Association of Community Bankers, 2405 North Front Street, P.O. Box 5319, Harrisburg, Pennsylvania 17110-5319. Member & Associate Member subscriptions, $60 per year. All other subscriptions, $84 per year. Please send address changes to PACB, Attention: Transactions, P.O. Box 5319, Harrisburg, Pennsylvania 17110-5319.
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THE
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SAVE DATE WASHINGTON POLICY SUMMIT April 24-27, 2016 Hyatt Regency Washington on Capitol Hill, Washington, DC
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MARK YOUR CALENDARS: 2016 PACB EDUCATION EVENTS
MARCH:
Security Seminar March 16, 2016 The Conference Center at Central Penn College Summerdale, PA
APRIL:
Training the Credit Analyst April 4, 2016 PACB Headquarters | Harrisburg, PA Risk Management Seminar April 8, 2016 The Conference Center at Central Penn College Summerdale, PA Quarterly BSA/Compliance April 12, 2016 PACB Headquarters | Harrisburg, PA Marketing Conference April 21-22, 2016 Hershey Lodge & Convention Center | Hershey, PA Human Resources Conference April 27-28, 2016 Hilton Garden Inn | Hershey, PA
SEPTEMBER:
PACB 139th Annual Convention September 22-24, 2016 Disney’s Grand Floridian Resort & Spa | Lake Buena Vista, FL Quarterly BSA/Compliance September 29, 2016 PACB Headquarters | Harrisburg, PA
OCTOBER:
Asset Liability Management Seminar October 5, 2016 PACB Headquarters | Harrisburg, PA Quarterly BSA/Compliance October 19, 2016 PACB Headquarters | Harrisburg, PA FDIC Directors College October 26, 2016 DoubleTree Monroeville | Monroeville, PA Asset Liability Management Seminar October 27, 2016 DoubleTree Monroeville | Monroeville, PA
NOVEMBER:
MAY:
Security Seminar November 9, 2016 PACB Headquarters | Harrisburg, PA
JUNE:
Quarterly BSA/Compliance December 7, 2016 PACB Headquarters | Harrisburg, PA
Future of Community Banking Conference May 19-20, 2016 Seven Springs Mountain Resort | Seven Springs, PA Quarterly BSA/Compliance June 22, 2016 PACB Headquarters | Harrisburg, PA
DECEMBER:
*Schedule as of 03.01.2016
ALL ONE DAY PROGRAMS WILL BE JUST $295 PER PERSON FOR PACB MEMBERS!
A WORD FROM PACB’S CHAIRMAN
he presidential debates have been fertile ground for one-liners and late-night TV comics. The series of verbal spar-fests have produced such memorable quotes as: “Jeb is low-energy.” “Look at that face.” “Why do you lie?” “Adults learn not to interrupt.” “Quiet!” “Henry Kissinger is not my friend.” “You’re not in the White House yet.” “You can’t insult your way to the presidency.” “It’s not going to be solved with magic pixie dust.” “This is just nuts.” “That is a low blow.” I doubt these quotes will find their way into the nation’s history books.
At the state level, the Commonwealth continues without a budget, or more precisely, without a full budget. As one attorney answered when asked if we a) have a budget, b) do not have a budget, or c) have half a budget, he replied simply, “Yes.” We are in unchartered waters. Meanwhile, schools, nonprofits, and counties are drowning. This year’s budget negotiations also promise to be treacherous. After delivering a short but strongly-worded budget address on February 9, Governor Wolf offered a proposal that calls for an 11 percent hike in the bank shares tax to raise revenue. This short-sighted approach fails to account for the
I salute all of you for what you do to
ENCOURAGE SAVINGS, PAY IT FORWARD AND INVEST IN THE COMMUNITY.
Regrettably, the debates have failed to provide the deeper, more serious policy discussions they have the potential to trigger before our highstakes April 26th primary election. The debates have showcased perhaps who is the best showman – or woman – and the most talented memorization expert, but not the finest statesman, critical thinker, policymaker and problem-solver. Informed choices are so vital in a world plagued by terrorism, civil war, poverty, economic instability, drugs and alcohol, and so many other dark clouds. A litany of critical issues for bankers, businesses and families are on the legislative and judicial plate, or at least pre-heating in the oven. The sudden death of Supreme Court Justice Antonin Scalia on February 13 only heightened the stakes, as so many lifealtering cases await the Supreme Court’s review. Exacerbating judicial changes and executive-level changes, the regulatory environment continues to swirl.
Just a few weeks ago, in her semi-annual report to Congress, Federal Reserve Chair Janet Yellen cautioned that global weakness and falling financial markets could depress the U.S. economy’s growth and slow the pace of the Fed’s interest-rate hikes. The perils to overseas growth are everywhere. Yellen cautioned that the sharp declines in stock prices, rising rates for riskier borrowers and further strength in the dollar pose risks for growth.
simple aphorism – if you tax something, you get less of it. On a happier note, last month included “America Saves Week,” and “Pay It Forward Week,” two endeavors we celebrate every day of our lives. PeoplesBank, in York County, for one, has illustrated the power of paying it forward in this month’s issue, as they mark 150-plus years strong. They are a bright light among the clouds. I salute all of you for what you to do to encourage savings, pay it forward and invest in the community. It makes me even prouder to be a part of this industry. I wish you well in your work as we prepare for warmer days and the Easter season. And as always, don’t hesitate to contact me with any ideas, feedback, questions, or advice! My response will be anything but “low-energy!”
TERRY FOSTER IS CHAIRMAN OF PACB AND EVP/CEO OF MCS BANK, LEWISTOWN. WWW.PACB.ORG | TRANSACTIONS | 5
FROM THE PRESIDENT/CEO’S DESK believe it is time for a wakeup call. Most of us profess to be intelligent, and we carry ourselves and our families on the wisdom gained through a life of rich experience. Unfortunately, what we see played out in society are examples of decisions made through emotion, not intellect. My comments that follow are motivated by the current political environment. At this moment in time, Donald Trump appears poised to win enough delegates to obtain the Republican nomination for President. It is easy to have a strong opinion of “The Donald,” but you have to look past the candidate and evaluate the numbers to identify the real problem. I will get to the numbers in a moment. For now, I want to share my opinion based on the personal experience of watching Trump’s career over the past 30 years. I remember being back at Penn State in 1987 and reading the book, The Art of the Deal. I was taken aback by the business practice of a man borrowing money in a large enough quantity that he could then turn around and threaten a default unless the terms were renegotiated by the bank. In reality, he took the money hostage and then negotiated a ransom from the bank. We all have a definition of ethics which can be applied to our lives, and this practice definitely crosses into an unethical place by my definition.
for the increased turnout, it is factual that Trump is leading the field with wins, and his win margins continue to be impressive. This takes me back to my original statement. If most of us believe we are rational, why is it that a man who would not pass the hiring vetting at any community bank in the country is so close to winning a presidential nomination? My contention is that emotion has long eclipsed reason in modern America. Pennsylvania’s Presidential Primary Election is a few short weeks away. No matter where the delegate count stands on April 26th, the Pennsylvania Primary will be an important election. How we vote will send a message to the entire country, a message which may be critically important to the drama that is sure to play out in Cleveland at the National GOP Convention in July. I urge everyone reading this article to consider the candidates carefully, logically and rationally before making a decision and casting a vote. We need to step out of the wave of emotions guiding the current process and let reason begin to win the day.
“MY CONTENTION IS THAT EMOTION HAS LONG ECLIPSED REASON IN MODERN AMERICA.”
Over the next 30 years, Trump amassed multiple bankruptcies, multiple wives and multiple business failures. Given all that we know about “The Donald”, I certainly believe that there is not one community bank in the nation that would hire Trump to lead their business, yet he stands on the precipice of a GOP endorsement. As we consider this candidate, we cannot forget that his arrogance is his appeal. His rude approach to others is what gained him notoriety, made him a popular reality TV star and what is fueling his successful campaign for President. The truth is that the American public is angry about the corruption in our governmental system, and an arrogant candidate who boldly convicts that system is delivering a message they cannot. The number of American voters lining up behind Trump speaks volumes, and it is in considering the number of supporters that we encounter the real dilemma of the 2016 election cycle. A recent CBS report provided the voter turnout numbers for a recent state primary. In South Carolina, the Democratic Primary of 2016 included 316,000 voters. The primary in 2008 included 532,000 voters. That is about a 30% decrease in voter turnout. Compare these numbers to the Republican primaries. In 2016, South Carolina saw 738,000 republicans go to the polls, compared to 603,000 in 2008 (approx. 20% increase in turnout). This same shift is happening across the nation. While it would be irresponsible to assume Donald Trump is solely responsible 6 | TRANSACTIONS | WWW.PACB.ORG
Our system of government is clearly broken. In Harrisburg and Washington, DC, we continue to see the indictment of elected leaders; neither city can produce a budget; and both cities continue to call for higher taxes in order to fund programs that have long outlived their usefulness. The answer is not found by throwing an emotional vote at an irrational candidate. The answer is found in playing an active role in the legislative process.
In order to play an active role in the process, I urge each reader to build a professional relationship with your State Senator and Representative. Get to know how they vote on issues of importance to you. Likewise, establish a personal relationship with your Congressional representative and learn who they are, understand how they vote and what interests they serve. It is only through knowledge and reason that we can estabNICK DIFRANCESCO lish an appropriate IS PRESIDENT/CEO OF response to fix that PENNSYLVANIA ASSOCIATION which is broken. OF COMMUNITY BANKERS. Until next month…
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OF THE PEOPLE, BY THE PEOPLE, FOR THE PEOPLE
By: Diane McNaughton 8 | TRANSACTIONS | WWW.PACB.ORG
ne bank may not be able to single -h a nded ly zero out hunger, homelessness, poverty, illness and isolation, but PeoplesBank, based in York County, did not let the magnitude of those problems deter them from trying.
The recipients of the surprise cash were varied, but they were universally the same in their awe and appreciation.
As part of the bank’s 150th anniversary celebration, the bank named for its customers reached out to their communities to conquer their most intransigent problems–one person, one good deed at a time.
Bank officials roved the streets of York, and venues such as the Markets of
“We saw this as a way to engage the community in a unique way, beyond traditional marketing efforts,” said Nathan Eifert, Vice President/Director of Marketing for PeoplesBank. “We wanted to involve the community, because without the community, we wouldn’t be here.”
paid for tanks of gas for unsuspecting drivers. Kurt and Tracey Miller honored the Memorial Day holiday by giving the money to a veteran. Joanne Colyer gave money away at a yard sale. Thandi Dlodo visited the YWCA of York County on her lunch break to hand over her cash.
“WE WANTED TO INVOLVE THE COMMUNITY, BECAUSE WITHOUT THE COMMUNITY, WE WOULDN’T BE HERE.”
The joyful reactions they received proved the words of the immortal Aesop: “No act of kindness, however small, is ever wasted.”
To celebrate a century and a half of service as a financial institution born in the turbulent Civil War days, the leaders decided to give to the community who gave to them. They launched a “Pay $150 Forward” campaign and allowed randomly selected citizens to give $150 to anyone they saw in need. They created a big buzz and a benevolent wave in the community.
Shrewsbury and York’s Central Market with a bouquet of gold balloons, a video camera, and cash as they staged their “ambushes.” The all-season Santa Clauses gifted 10 awards in the summer and three over the holidays in 2014. The givers either hopped in a van with bank representatives or met them at their chosen destination. Then the giving began: Gina Sullivan and her husband Sean
Joseph Renbowski and his fellow fire department volunteers surprised their neighbors at the Heritage Senior Center. Dustin Boeckel stopped at the local pharmacy and left money to pay for customers’ prescriptions.
Rebecca Swanson went to the supermarket and bought food for the Stewartstown Elementary School food pantry. Mark Devenney bought lunch for a group of diners, including a cluster of servicemen. David Wendel went to the Make-aWish office and donated the money toward granting a sick child’s wish. Patti Joe Dietz donated to Project Linus, which makes blankets for children in the hospital. WWW.PACB.ORG | TRANSACTIONS | 9
Vlonda Kearse and Adrienne Brandon from Cornerstone Baptist Church donated to the York Rescue Mission. Jennifer Gerz gave her $150 to Christ Lutheran Church to support their food bank and child care services. Stan Escher stopped by a local store to drop his money into the local Salvation Army donation bucket. Each encounter was videotaped, condensed into a three-minute video, and posted to Youtube and the bank’s Facebook page for an instant inspirational high. (PeoplesBank1864.) “They were extremely grateful. A lot of people got really emotional,” said Heather Delp, PeoplesBank’s Communications and Digital Media Administrator. “We touched many lives
And the commitment is not just financial. “Our time and expertise is devoted to many boards and organizations in the community. Our employees serve as coaches, board members, United Way volunteers, church council leaders and more. We consider it our responsibility as a community bank.” Through the state’s popular Educational Improvement Tax Credit program (EITC), the bank contributed $700,000 to foundations and nonprofits in 2015. Eifert notes that the bank spends more on such community support – such as sponsorships and contributions – than it does in advertising. The employees also helped to build a home for a family in Spring Grove, Pa., through York’s Habitat for Humanity, banging nails and screwing in drywall
Our secret to sucess is
KNOWING THE NEEDS OF THE COMMUNITY. in a positive way.” Many recipients of the money looked confused or wore faces of disbelief, but when they realized they were being given “free money,” it was like they had won the grand prize on The Price is Right. The Pay $150 Forward campaign won PeoplesBank a 2014 Keystone Award, as well as a PACB 2015 Grow Your Community Award, according to Nick DiFrancesco, President of PACB. The bank also sponsors a “Care to Share “ program, in which they give Visa gift cards three or four times a year to employees to share with others. And for these employees, bankers’ hours extend far beyond 9 a.m. to 5 p.m. “We are heavily involved in so many different organizations,” Eifert said. 10 | TRANSACTIONS | WWW.PACB.ORG
to build a house that rapidly became a home for a deserving family. The bank serves central Pennsylvania and part of northern Maryland, via 24 financial centers spanning York and Cumberland Counties in Pennsylvania and Baltimore, Harford, and Carroll Counties in Maryland. It is the latest chapter in a storied narrative that dates back to Civil War days in a farm-dotted region that has played a leading role on the world stage, dating back to the American Revolution. The Articles of Confederation were adopted in York by the Second Continental Congress in 1777. Local government and business leaders began referring to York in the 1960s as the first capital of the United States of America. The designation has been debated by historians ever since. Con-
gress considered York, along the sparkling Susquehanna River, as a permanent capital of the United States before Washington, D.C., was selected. From those long-ago days, the bank has grown exponentially and adapted to the times. The bank just opened a “limited service facility” amidst the stately buildings and pristine gardens and ponds of Masonic Village in Elizabethtown. They serve many individuals in retirement communities, from retirement cottages to full nursing facilities. The bank opened its doors right before the Battle of Gettysburg, on June 1, 1864. They are located right by the Mason-Dixon line, the line of demarcation between a host of surrounding states, and 30 miles from the fateful, expansive battlefields of Gettysburg, where Lincoln uttered his famed address. The bank began with only $50,000 in capital. Fast forward to today, with its $1.4 billion in assets. In between, it survived the Civil War, the Great Depression, the world wars, the Great Recession, and hurricanes and floods, to become the largest independent financial institution headquartered in York County. Through times of war and peace, prosperity and poverty, sun and storm, we “stayed true to community bank values,” Eifert said. “We live, work and play in the community. Our secret to success is knowing the needs of the community and responding to those needs,” he added. They have witnessed a slow march of mergers and acquisitions and have gained new business as a result. Clients tend to seek out their local community bank after the big banks devour their competitors, Eifert said. The bank’s goals for the future are to continue to expand their franchise and their product and service offer-
Pay $150 Forward
Meet PeoplesBank’s Pay $150 Forward Difference Makers As part of PeoplesBank’s 150th Anniversary celebrations, they gave 10 random individuals the opportunity to Pay $150 Forward to a person or organization of their choice. Over the course of two months, PeoplesBank surprised people while they were working, on their lunch break, or enjoying a weekend out on the town. Their conversations started with a simple question, “If you had $150 in cash to pay it forward, how would you make a difference?” None of the participants replied with the same answer, yet they all had an impact on the life of a stranger in their own unique way. Meet 10 of their “Difference Makers” and learn how they chose to brighten someone’s day.
1. Gina Sullivan, along with her husband, Sean, picked up the tab for tanks of gas for unsuspecting drivers.
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2. Kurt and Tracey Miller were inspired by the Memorial Day holiday to pay it forward to a veteran as a way of thanking him for his service. 3. Joanne Colyer spread the wealth around at a community yard sale. 4. Thandi Dlodo spent her lunch break visiting the YWCA of York County to pay $150 forward with a donation.
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5. Joseph Renbowski and the rest of the crew at the Dover Township Volunteer Fire Department surprised their neighbors at the Heritage Senior Center. 6. Dustin Boeckel paid $150 forward at York's first Friday, including a stop at the neighborhood pharmacy to leave money for unsuspecting customers' prescriptions.
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7. Rebecca Swanson took a trip to the supermarket to stock up the food pantry at Stewartstown Elementary School for the summer. 8. Mark Devenney treated hungry diners, including a group of servicemen, to lunch.
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9. David Wendel went straight to the local Make-A-Wish office and put the money toward granting a child's wish. 10. Patti-Jo Dietz paid it forward to Project Linus, an organization that makes blankets for children who are in the hospital.
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ings, he continued. Although they will always keep abreast of technology and expand such New Age innovations as e-services, they know the importance of old-fashioned face-to-face contact. “We will remain true to the communities we serve,” Eifert said. “We will still provide funds to small businesses and mortgages to families.” President and CEO Larry J. Miller agreed. “For over 150 years, PeoplesBank has been committed to helping local businesses grow, our neighbors succeed, and our communities become a better place to live and work.” “At PeoplesBank, we feel very fortunate to be part of a community that cares about its friends and neighbors, and that’s why we are dedicated to generously sharing our resources to help those in need. Our ‘Pay $150 Forward’ campaign represents our belief
in the spirit of giving and demonstrates how a few kind acts can touch the lives of many.” As one grateful cash recipient said at a local flea market, “PeoplesBank rocks!” The bank does not want to just be a home for money; they want to be a “difference maker.” They are living out the principles of the U.S. President who led the warring nation when the bank was born
and intoned these words at Gettysburg: “It is rather for us to be here dedicated to the great task remaining before us – that from these honored dead we take increased devotion to that cause for which they here gave the last full measure of devotion – that we here highly resolve that these dead shall not have died in vain – that this nation, under God, shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth.”
DIANE MCNAUGHTON IS A FREELANCE WRITER WHO HAS PENNED NUMEROUS NEWS STORIES, COLUMNS, AND FEATURE ARTICLES FOR AREA MAGAZINES AND NEWSPAPERS. SHE IS ALSO A LEGISLATIVE AIDE, A COMMUNITY VOLUNTEER, AND HOUSE OF STYLE AUTHOR FOR PENNLIVE/HARRISBURG PATRIOT NEWS, AND MOTHER OF FOUR.
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TEN THINGS BANK EXECUTIVES NEED TO KNOW ABOUT PENSION AND 401(k) PLANS
By: Fabrizio D’Uva & Andrew Strock 14 | TRANSACTIONS | WWW.PACB.ORG
ational retirement policy is becoming a topic of conversation not just in Washington but in boardrooms all over the U.S. and is shaping how banks structure and govern their retirement programs. What are some of the most important issues facing bank executives with respect to company retirement policy? Attracting, rewarding and retaining talent. The pluses of employee retention are self-apparent, and the desire for retirement security and quality of retirement programs are often cited as key reasons that employees join a particular bank and tend to stay there. Move toward progressive 401(k) plan design. Ensure your retirement plan is designed to help participants meet their retirement income goals by using automatic plan features that help participants set a reasonable level of salary savings, increase their contributions over time, achieve proper investment diversification and make better use of a plan’s investment alternatives. Help Your Employees Put 401(k) Savings on auto pilot. Automatic enrollment in – and subsequent automatic escalation of employees’ contributions to – a company’s 401(k) plan benefits employee and employer alike. Automatic features can include automatic enrollment, automatic escalation of salary deferrals, auto rebalancing and utilization of qualified default investment vehicles. Add a Roth 401(k) feature. Traditional 401(k) contributions reduce a participant’s income for federal and (usually) state tax purposes at the time contributions are made, and grow on a tax-deferred basis until the participant takes a distribution, which is treated as ordinary income. No one knows what the tax rates will be in the future, so it may be beneficial to hedge the taxable salary deferrals and earnings in a traditional 401(k) with earnings in a Roth 401(k) that can be withdrawn tax-free. Limit plan leakage. Most plans allow participants to access their accounts using withdrawal and loan provisions – both of which create leakage. It is best to limit the number of total loans outstanding at any given time – ideally to one or two – which limits 401(k) asset outflows due to the perpetual use of plan assets to meet day-to-day spending needs. Outsource fiduciary responsibilities. While the typical bank keeps all three of the principal fiduciary roles for its retirement plans – named fiduciary, trustee, and plan administrator – executives or employees assigned responsibility for these roles rarely know what they entail or what is expected of them. There is a better way: outsource. The bottom line: through outsourcing, a bank can save time, money, headaches, and risk. Consider starting a multiple employer plan for your commercial customers. The growing popularity of multiple employer plans (MEPs) is due to their low fees, reduced fi-
duciary responsibility and relative ease of administration – offer a way to either outsource your own retirement plan burdens, or to generate fee income by starting your own MEP for your commercial customers. Maximize your non-qualified executive benefit plan – where there are no coverage, eligibility or participation requirements. An executive benefit plan affords greater design flexibility as an employer can decide to provide non-qualified deferred compensation benefits only to a select group of executives or highly compensated employees. This allows the employer to provide rewards and incentives based on an employeeby-employee approach. Use BOLI. Using Bank Owned Life Insurance (“BOLI”) as a tax-free asset will earn more net income than a taxable asset like a bond, making it attractive for a sound benefits financing strategy. BOLI is also a more efficient purchase as it can be bought in single premium amounts… unlike municipals, which are generally only available in smaller dollar amounts. Don’t give up on your defined benefit plan. While the last 10-15 years have been difficult for employers maintaining a defined benefit plan as part of their overall retirement programs due to their high costs that may be about to change. Among other factors, historically low interest rates, which cause plan liabilities to increase every time they drop, appear to have nearly hit bottom and are poised to begin rising as soon as the Federal Reserve suspends the accommodative support of growth through an expansionary monetary policy.
FABRIZIO D’UVA IS REGIONAL DIRECTOR, BOLI & NON QUALIFIED BENEFITS PLANS AT PENTEGRA RETIREMENT SERVICES. HE CAN BE REACHED AT 914.607.6855 OR FDUVA@PENTEGRA.COM.
ANDREW STROCK IS REGIONAL DIRECTOR, BOLI & NON QUALIFIED BENEFITS PLANS AT PENTEGRA RETIREMENT SERVICES. HE CAN BE REACHED AT 267.975.2696 OR ASTROCK@PENTEGRA.COM.
PENTEGRA IS A PREFERRED PROVIDER OF PACB.
By: Alan Kaplan 16 | TRANSACTIONS | WWW.PACB.ORG
electing a new CEO for your institution is the single most important responsibility of a bank Board of Directors. Everything flows from this decision: strategy, reputation, leadership that sets the “tone at the top”, the ability to attract critical talent, investor and employee confidence, and the credibility of the board itself. The list is endless. Moreover, selecting an underprepared or inadequate leader – no matter how well liked or how long employed – can quickly send a bank in the wrong direction. The list of optimal banking industry skills required in a CEO today could easily include dozens of items. Here we will highlight ten which, based on our firm’s experience successfully conducting over fifty CEO search and succession assignments, are commonly viewed as “must haves”. Next month’s companion article will highlight ten leadership competencies and attributes which will complement the technical qualifications below – even for healthy banks.
Experience Working with Regulators. A decade ago regulatory relations were barely on the radar screen for bank leaders, unless the bank was in trouble. However, in today’s paradigm-shifted regulatory climate, the ability to forge a positive working relationship with a bank’s varied regulators has become a vital ingredient for success.
A New Perspective on Risk Management. In the good old days risk meant credit, fraud or plain old liability for things like slip-and-fall. Nowadays, this category has broadened to include cyber security, counterparty risk, compliance issues, legal challenges and more. Being able to identify and triage the bank’s risk factors is more important than ever. Marketing and Social Media Knowledge. As mentioned, technology has become a front-line channel for growth. The integration of social media with technology has changed how many banks must go to market, build brand awareness, drive engagement and respond to customer needs. CEOs need to be plugged into these shifts, even if they are not yet active themselves on social media (though they should be). Exposure to Fee-Based Lines of Business. With the decline of the margin business, boosting fee revenue appears to be on almost every bank’s strategic planning agenda. Even for banks with a low percentage of fee-driven revenue, CEOs going forward will need to explore alternative ways to grow the top line.
“SELECTING AN UNDERPREPARED OR INADEQUATE LEADER CAN QUICKLY SEND A BANK IN THE WRONG DIRECTION.”
Balance Sheet Management Experience. The low interest rate environment which seems to have become a semi-permanent condition (rates are going up soon, right?) has put pressure on bank spreads like never before. With interest rate risk and margin pressures on the front burner, CEOs need to understand the construction of their balance sheet, including capital strategy, more deeply than before. Commercial Credit Skills. You can never have too much credit skill in a bank in our opinion. There’s no quicker way to turn a good bank into an underperformer than via credit quality issues. The path to the CEO chair still goes through the commercial lending area more often than any other area. Experience with Corporate Governance. Boards of Directors are under more scrutiny from investors, customers, regulators, communities and even employees than ever before. CEOs need to appreciate the pressures facing Directors (even for privately held and mutual institutions), respect the ongoing challenges facing the Board, and help navigate the path. Technology Savvy, Including Evolving Channels. Everyone knows that technology in banking has moved from the back office to the front lines. Understanding how the rapidly shifting technology landscape is impacting the industry – and how to respond in real time – has become a vital ingredient for ongoing success.
Transaction and Integration Experience. Many banks which had never previously considered a transaction are now exploring all options, including acquisitions, mergers of equals, branch sales and purchases, fee business acquisitions, etc. Exposure to the transactional arena has become more critical, as has the ability to successfully integrate post-transaction. Otherwise, the value derived from “doing a deal” may not be achieved.
Strategic Planning Skills. Everyone seems to have a plan, but how real and achievable is that plan? The CEOs ability to craft a meaningful path forward and drive the plan’s execution has become a differentiator for successful banks. There is no perfect template of skills which will guarantee success, particularly in the pressure-filled and constantly evolving banking industry. However, finding a CEO with a foundation grounded in these ten industry skills will increase your bank’s odds of surviving and thriving.
ALAN J. KAPLAN IS FOUNDER & CEO OF KAPLAN PARTNERS. HE CAN BE REACHED AT 610.642.5644 OR ALAN@KAPLANPARTNERS.COM. ALAN WILL BE A PART OF PACB’S HUMAN RESOURCES CONFERENCE APRIL 27-28.
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION WILL PROPOSE ADDITIONAL PAY REPORTING REQUIREMENTS By: Joseph Hofmann n February 1, 2016, the Equal Employment Opportunity Commission (EEOC) announced that it is proposing to amend the current annual reporting requirement concerning employee demographic information (race, gender) to include information concerning compensation paid to employees. This revised reporting requirement would begin in 2017.
White House ceremony, President Obama, Secretary of Labor Thomas Perez and EEOC Chair Jenny Yang announced the new initiative stating that the availability of pay data will allow the EEOC and the Department of Labor’s Office of Federal Contract Compliance Programs to better target compensation issues and address pay disparities.
“THIS COULD RESULT IN MANY UNWARRANTED CONCLUSIONS AND ASSUMPTIONS BY THE EEOC.”
The EEOC announced its intention to submit to the Office of Management and Budget (OMB) a major revision to the Employer Information Report (EEO-1) which will require that all employers with more than 100 employees submit compensation data to the EEOC beginning in 2017. At a 18 | TRANSACTIONS | WWW.PACB.ORG
Beginning in September 2017, employers with more than 100 employees would also be required to report on the W-2 earnings and hours worked for all employees by race/ethnicity and gender. Federal contractors and subcontractors with between 50 and 99 employees would only be required to submit the current EEO-1 form without compensation data. For each of the 10 EEO-1 job categories (Senior Officers and
Managers, Middle Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Laborers/Helpers, and Service Workers), the proposed new EEO-1 report will require compensation data to be categorized in 12 pay bands. The pay bands track those used by the Bureau of Labor Statistics (BLS) in its Occupation Employment Statistics Survey. For example, an employer would be required to report the number of African-American men it employs as Sales Workers making $49,920-$62,919, the number it employs making $62,92080,079, and similar information for men and women in six other race categories and eight other pay bands. This reporting requirement has already been applied to federal contractors for some time. However the move to apply it to all employers (with 100 employees or more, for now) is a significant shift. This will have a significant impact on employers both from a record-keeping and reporting standpoint and will open employers up to a significantly greater level of review by EEOC of their pay practices. The EEOC explicitly says it will use the pay information to “discern potential pay discrimination.” It will do so by comparing variations within and across job categories. However, the BLS pay bands do not take into effect legally accepted variables, such as seniority, level of responsibility, and education. This could result in many unwarranted conclusions and assumptions by the EEOC and force employers to spend considerable time
defending and explaining their compensation systems. Presumably this expanded reporting requirement will require increased budgets and staffing for the EEOC, which will need data analysts to sift through the mountains of employer-provided data –and, even more so, when the mandate extends to smaller employers (as could very well happen at some later point in time). JOSEPH HOFMANN IS A SHAREHOLDER AT STEVENS & LEE. HE CAN BE REACHED AT 717.399.6643 OR JPH@STEVENSLEE.COM. JOSEPH WILL BE A PART OF PACB’S COMPLIANCE SEMINAR APRIL 12, AND PACB’S HUMAN RESOURCES CONFERENCE APRIL 27-28.
Employers should closely monitor the status of this pending proposal as systems will need to be established to gather and generate the required data to ensure compliance if the proposal becomes effective.
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csiweb.com/Secret WWW.PACB.ORG | TRANSACTIONS | 19
I. INTRODUCTION n an ongoing enforcement proceeding against a defunct payday lender by the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), the Bureau’s Office of Enforcement this past month argued that its claims for alleged unfair, deceptive, or abusive acts or practices (“UDAAP”) are not subject to the three-year SoL1 set forth in the Consumer Financial Protection Act (“CFPA”), which is Title X of the Dodd-Frank Act (“Dodd-Frank”), because the Bureau is proceeding administratively, rather than in federal court. The CFPB is relying on a ruling issued by CFPB Director Richard Cordray last year in his controversial PHH decision, the very first such administrative appeal of an administrative law judge decision in a CFPB administrative enforcement proceeding. Currently, that decision is on appeal before the U.S. Court of Appeals for the D.C. Circuit. II. THE CFPB POSITION
if ever pursues enforcement actions in court, preferring administrative enforcement proceedings that almost invariably lead to settlements by consent order. For example, on August 12, 2015, the CFPB entered into such a consent order with Citizens Financial Group, Citizens Bank, N.A., and Citizens Bank of Pennsylvania, a UDAAP action under the CFPA taken in coordination with the FDIC and the OCC. As a result, the defendants were ordered by the CFPB to pay approximately $11 million in restitution damages to consumer depositors, and a $7.5 million penalty payment to the CFPB’s Civil Penalty Fund. The FDIC separately ordered Citizens Bank of Pennsylvania to pay restitution and a $3 million civil penalty, and the OCC separately ordered Citizens Bank, N.A., to pay restitution and a $10 million civil penalty. The relevant period during which these banks engaged in the alleged activity that resulted in this administrative consent order was from January 1, 2008 through November 30, 2013, nearly double the three-year SoL under the CFPA that otherwise would have applied had the CFPB brought the identical action in court.
“THIS RAISES THE STAKES YET HIGHER FOR BANKS.”
The CFPB’s position is that it is subject to a statute of limitations when it brings an enforcement action in court, but is not when the CFPB brings the same action administratively. This dichotomy poses major ramifications for those segments of the consumer financial services industry, including federally-insured banks with assets greater than $10 billion, subject to CFPB oversight, regulation, and enforcement of UDAAP and other consumer protection statutes and regulations. The CFPB asserts that it has unfettered discretion in deciding whether to pursue asserted violations of law in an administrative forum or as a complaint in federal court. Moreover, the CFPB can pursue the same remedies, including civil money penalties, in either forum. However, if the CFPB is right regarding the SoL issue, pursuing its remedies in an administrative action not only gives the CFPB a longer look-back period, but theoretically allows the CFPB an unlimited time period within which to initiate the administrative proceeding, thereby increasing the defendant’s exposure to penalties for claimed violations. In the PHH matter, this resulted in a massive increase in the initial penalty award, from $6.4 million to $109 million. Not surprisingly, since the PHH decision, the CFPB seldom
III. THE PHH DECISION
On January 29, 2014, the CFPB began an enforcement action alleging that PHH Corp. and other defendants, in connection with certain mortgage reinsurance practices, violated the Real Estate Settlement Procedures Act (“RESPA”). Rather than filing suit in court (as the Bureau had theretofore done in virtually all of its other contested actions), the CFPB instead elected to pursue its claims administratively. A trial was conducted before an administrative law judge (“ALJ”). Among the defenses raised by PHH was that of the three-year SoL on “actions” to enforce RESPA. In PHH, the CFPB argued that the term “action” as used in the CFPA means court litigation only, and pointed to the fact that the three-year SoL appears in the CFPA section authorizing litigation, but not in the CFPA section authorizing administrative proceedings. PHH had argued that since the challenged conduct ended in 2009, it was largely time-barred. The ALJ, however, ruled that the SoL did not apply to the CFPB’s administrative enforcement of RESPA, construing the term “actions” to mean court actions, not administrative proceedings. Both parties appealed different aspects of the ALJ’s decision to the CFPB Director. On June 4, 2015, Director Cor-
HOW RELIANCE ON A “SoL” MAY LEAVE YOU WITHOUT A SoL, IF THE CFPB IS RIGHT! By: Martin Ellis, Esquire 1
“Statute of Limitations” (hereinafter “SoL”), a statute prescribing a period of limitation for the bringing of certain kinds of legal action.
dray issued his ruling which was extremely favorable to the CFPB. Regarding the SoL issue, the Director ruled that the CFPB can pursue RESPA claims that accrued within the same three-year SoL that would have applied to HUD, but that no SoL applies to administrative enforcement of claims accruing after the CFPB assumed its RESPA authority under Dodd-Frank. Therefore, the CFPB could pursue any RESPA claims accruing since July 21, 2008, when the CFPB assumed enforcement responsibility for RESPA, and could seek substantial penalties for any such violations that occurred after July 21, 2011, when the new penalty provisions of the CFPA became effective. PHH has appealed Director Cordray’s decision to the D.C. Circuit Court of Appeals which is scheduled to hear it in April. IV. THE TAKEAWAY Even under a short SoL, the penalties and other remedies available to the CFPB under administrative enforcement give the CFPB significant leverage. Thus, most defendants have chosen to settle, even in instances where there was a
strong basis to challenge the allegations. In its January 15, 2016 brief filed in the latest such administrative action, the CFPB has announced that “the [PHH] decision remains the Bureau’s official interpretation unless and until it is overruled by the court of appeals or the United States Supreme Court.” As a result, this raises the stakes yet higher for banks, and imposes significant challenges on their ability to assess risk, and to address a CFPB investigation or enforcement action.
MARTIN B. ELLIS, ESQUIRE IS A MEMBER OF SHUMAKER WILLIAMS P.C. HE CAN BE REACHED AT 410.825.5223 OR MELLIS@SHUMAKERWILLIAMS.COM.
WWW.PACB.ORG | TRANSACTIONS | 21
he 2016-2017 Budget address, much like the previous year’s budget gridlock, was unlike any other in recent history. The Governor spent the entire address scolding the legislature, giving them a lecture that was high on warnings and low on actual budget details. The Governor’s proposed $33.3 billion budget is a whopper, including what PennLive called “one of the biggest tax increases in state history.”1 Its highlights include: $3 billion in new spending and $3 billion in new tax increases.
work, with additional spending and tax increases built on top of his original spending increases. He removed the problematic property tax, liquor and pension reform legs. However, many Members will be hard–pressed to support major tax increases without some kind of property tax or pension reform as part of the package. And, that $30.8 billion framework is not the budget passed by the legislature, and not the budget that he ultimately signed. He signed a $30.2 billion budget, which became a $23 billion budget, post a few line item vetoes.
“THE GOVERNOR PROPOSES RAISING THE BANK SHARES TAX FROM .89 TO .99, AN 11% INCREASE.”
Governor Wolf is adamant that the legislature should be working from the $30.8 billion budget framework agreed to by both House and Senate Leadership for the 2015-2016 fiscal year, a framework that House and Senate Republican Leadership now insists is dead. The original framework lost its legs with the failures of property tax reform, pension reform and liquor privatization. One property tax proposal was defeated in the Senate by only one vote. Liquor privatization passed in the House, but couldn’t find agreement in the Senate. A pension reform bill passed in the Senate, only to die in the House because not one House Democrat supported it. That pension reform bill failure was the final dagger to the framework. This presents significant problems for the Governor, because his new budget is entirely based upon that frame22 | TRANSACTIONS | WWW.PACB.ORG
Is your head spinning? Here are some highlights of the new budget: $3 BILLION IN NEW SPENDING
On the spending side, the new budget presents a $200 million increase in basic education spending on top of the already proposed $377 million increase in basic education spending in the 2015-2016 budget; a $50 million increase in Special Education funding, on top of the $50 million increase proposed in the 2015-16 budget; and a $60 million increase in early childhood spending in addition to the 2015-2016 proposed budget $60 million increase in early education funding.2 MINIMUM WAGE INCREASE The proposal includes a minimum wage increase from $7.25 to $10.15 per hour.2
By: Allison Coccia 15 NEW TAXES: $3 BILLION IN TAX INCREASES Personal Income Tax Increase This proposal raises the personal income tax from 3.07% to 3.4%, an increase that is retroactive – effective January 1, 2016.3 “The 10.7 percent increase…would raise the tax bill for a person at the per capita income of $45,046 a year from $1,383 to $1,532.”1 The Governor estimates it would raise an additional $1.4 billion in the 2016-2017 fiscal year.3 Many are balking at the retroactivity portion, forcing individuals to backtrack and pay more in taxes than they’ve already paid. Tobacco/Cigarette Taxes Raises the tax on cigarettes from $1.60 per pack to $2.60 per pack effective April 1, 2016. The proposal also includes a firsttime–tax on cigars, chewing tobacco and vaporized e-cigarette smokers, all of which are not taxed now. They would be taxed at 40% of wholesale price. Combined with the increased tax on cigarettes these taxes would raise $604.1 million.4 Severance Tax Proposes a 6.5% severance tax on oil and gas drillers. The tax would include an impact fee credit. Effective January 1, 2016, it would raise $217.8 million at the current gas prices.4 Sales Tax Base Expansion Effective April 1, 2016, the Governor proposes taxing movie tickets, basic TV, digital downloads, and vendor discounts. It is estimated to generate $414.6 million in the 2016-2017 fiscal year.3 Insurance Premiums Adds a .5% surcharge on property casualty and fire insur-
ance premiums for a total tax on premiums of 2.5%. The new tax would raise $100.9 million.3 Gaming Tax The proposal adds an 8% tax on casino slot machine and table game winnings and a 3.4% tax on Pennsylvania Lottery jackpots. The combined taxes would raise $67.2 million.3 Bank Shares Tax The Governor proposes raising the Bank Shares Tax from .89 to .99, an 11% increase, effective January 1, 2016. This is down from the Governor’s 2015-2016 proposed budget bank shares tax increase of 1.25 retroactive to January 1, 2014. It is projected to raise $39.2 million.3
1
Penn Live “Governor Wolf’s Green Machine: A Tax by Tax Look at the
Revenue Raisers in the Proposed State Budget 2.9.16 2 2016-2017 Pennsylvania Executive Budget in Brief, Governor Tom Wolf 2016-2017 Pennsylvania Executive Budget, Governor Tom Wolf 4 Allentown Morning Call In 3
a Second Budget Proposal, Gov. Tom Wolf Again Seeks Tax Hikes 2.9.16
ALLISON COCCIA IS DIRECTOR OF GOVERNMENT RELATIONS AT PACB. SHE CAN BE REACHED AT 717.231.7447 OR ALLISON@PACB.ORG.
WARMED-OVER B BUSINESS COM
a conversation with: NICK DIFRAN MATTHEW BROUILLETTE, President and KEVIN SHIVERS, Executive State Director, Nati and DAVID TAYLOR, President, Pennsy
26 | TRANSACTIONS | WWW.PACB.ORG
Want to listen to the full conversation? Using your smart phone or tablet, simply scan the QR code above to download the audio file!
R BUDGET LEAVES MMUNITY COLD
FRANCESCO, President/CEO, PACB t and CEO, Commonwealth Foundation National Federation of Independent Business nnsylvania Manufacturers Association By: Diane McNaughton WWW.PACB.ORG | TRANSACTIONS | 27
From left to right: Nick DiFrancesco, President/CEO of the Pennsylvania Association of Community Bankers, Kevin Shivers, Executive State Director of the National Federation of Independent Business, David Taylor, President of the Pennsylvania Manufacturers Association, and Matthew Brouillette, President and CEO of the Commonwealth Foundation meet to have a round table conversation about the current state of Pennsylvania’s budget issues.
28 | TRANSACTIONS | WWW.PACB.ORG
ike a falcon without wings, Pennsylvania is limping into the second year of the Wolf Administration’s tenure without a full budget for the first year. As the House and Senate Appropriations Committees hold three weeks of hearings in late February and early March on each departmental request for the 2016-2017 budget, the 2015-2016 budget idles in a state of purgatory, grounding efforts to spend money for schools, service providers and other vital needs. Noting that “we are in uncharted waters,” PACB President Nick DiFrancesco asked the experts where the ship of state goes from here. David Taylor, President of the Pennsylvania Manufacturers Association, was surprised to hear that Governor Tom Wolf delivered his second budget address on February 9 with a “striking”
lack of “policy specifics.” Instead of outlining a broad vision for the future, Gov. Wolf used the opportunity to “scold the General Assembly,” which is a “strange negotiating tactic to berate the people whose support you ultimately need.” Matthew Brouillette, President and CEO of the Commonwealth Foun-
“WE ARE IN UNCHARTED WATERS.” dation, said the governor’s fall from grace is particularly “disappointing” because the business community had “high hopes” for Gov. Wolf, expecting him to “bring private sector business principles to government.” As the CEO of his own company, Gov. Wolf had altered his own corporate pension system and balanced the books, and private-sector leaders were hopeful that business acumen
would translate seamlessly to his role as CEO of the Commonwealth. As a successful business person, Gov. Wolf was expected to possess the ability to work with others, collaborate, and reach agreements. Instead, the governor seems to be stuck in gear in an unceasing quest to increase taxes, spending and the size of government, Brouillette, Taylor, and Shivers said. In his second-year budget proposal, he is “doubling down,” offering “warmed-over policies that have, frankly, failed,” Taylor said. “It is very disappointing.” Kevin Shivers, of the NFIB, agreed that there was such optimism and an expectation of collaboration in the beginning of Wolf’s term. Instead, Shivers said, Wolf “ruled with an iron fist,” was “vindictive” and “dictatorial,” and crushed his opponents with “heavy-handed retribution.” WWW.PACB.ORG | TRANSACTIONS | 29
Shivers recalled that the sour tone began as early as the inaugural ball, when Gov. Wolf would not serve Yuengling beer because company principals had supported his campaign opponent. The very next day, Gov. Wolf picked a fight with the Office of Open Records and the Senate, firing its popular Corbett-appointed director – former Senate employee Erik Arneson – and challenging the independence of the office. The courts have since reinstated Arneson. The business community at first was ready to dismiss these moves as “freshman mistakes” that would soon be learned from, but regrettably, they carried through to policy – to this day. Just recently, for example, the Administration demanded that Penn State University join Gov. Wolf in
what he wanted last year, he is asking for that and more. Brouillette said Gov. Wolf must consider the historic majorities Pennsylvania now has in the General Assembly. The size of the majorities is the greatest it has been in 50 years, and is dominated by members of the opposite party, leading to today’s monthslong impasse. Consider that Pennsylvania has the 15th highest tax burden in the nation, Brouillette amplified. Despite that, Gov. Wolf still called for $4.5 billion in higher taxes in his first year in office – the largest proposed tax hike in the country. This request exceeded the tax increases of all other states combined, Brouillette expounded. Still, the Governor is not compromising at all on his call for income tax,
This is off the deep end.
THIS IS PURELY PARTISAN POLITICS. his campaign for higher taxes or face “significant repercussions.” “This is off the deep end. This is purely partisan politics,” Shivers said. Taylor said most businessmen and women learn from their mistakes or go under, but Gov. Wolf has not pivoted away from those first inaugural errors. He has still not risen above the “strife and turmoil” of his first year. Because Gov. Wolf vetoed all of the June 30 budget and a “big chunk” of the budget passed in December, spectators wondered how the journey to his 2016-2017 budget would commence. Remarkably, Wolf predicated his new budget for fiscal year 2016-2017 on $30.8 billion in spending. Significantly, the budget that passed the Legislature had $30.3 billion in funding – a full half a billion less. So after not getting 30 | TRANSACTIONS | WWW.PACB.ORG
sales tax, and severance tax hikes. “There isn’t the appetite for this kind of spending and tax increases,” he said. Taxpayers are saying thank goodness for the General Assembly for just saying “no” to these tax hikes. The governor continues to perpetuate the myth of education underfunding, the policy experts agreed. By any objective measure, Pennsylvania ranks 10th highest in the nation in annual per pupil spending, 6th highest in spending at the local level, and 24th in the U.S. in state funds. Classrooms are not being starved for dollars. DiFrancesco quoted Rep. Kerry Benninghoff, who recently said, “You don’t have to like me, but you’ve got to work with me.” While Governor Tom Corbett had a no-
toriously rocky relationship with the Legislature, Wolf’s rapport may have sunk to even lower lows. DiFrancesco said Gov. Wolf started with a “wonderful rhetorical base” – “government that works,” “jobs that pay,” “schools that teach.” So what happened? Now look at the rhetoric, Shivers pointed out, as Gov. Wolf has been employing words like “garbage” and an “exercise in stupidity” in rejecting the budget. Taylor said, “We are at the proverbial fork in the road.” The Commonwealth is witnessing a natural gas revolution. Trillions of cubic feet of natural gas reside under Pennsylvania, and we have the technology to remove it and harness it. While Wolf has called for more taxes on natural gas, this is not about one tax versus another, Taylor stated. Instead, it is about the “total cost of doing business.” The state is faced with “pernicious” lawsuit abuse, regulatory expenses, the costs of zoning and permits, the high corporate net income tax rate, and other suffocating costs for business. Having affordable, available energy is an enormous opportunity, so it is imperative to “optimize conditions for growth,” Taylor said. When Gov. Wolf warns of the dire consequences of not getting more money through taxes, he only talks about the effect on government, Brouillette pointed out. We have two choices, Brouillette said: grow government, or grow the economy. “If Pennsylvania is the next state to tax itself to prosperity, it will be the first.” This is not how we create Gov. Wolf’s much touted, oft-repeated “jobs that pay,” the analysts agreed. Shivers pointed to a press release issued by Gov. Wolf just three weeks be-
“WITH SUBSIDIES, GRANTS, ABATEMENTS, AND SPECIALLY DESIGNATED ZONES, THE GOVERNMENT IS IN THE BUSINESS OF PICKING WINNERS AND LOSERS.” WWW.PACB.ORG | TRANSACTIONS | 31
fore his second budget address. Gov. Wolf touted government subsidies to a company that generated $5 billion in sales tax, leading Shivers to query – if it’s a successful company, why does it need government dollars? “With subsidies, grants, abatements, and specially designated zones, the government is in the business of picking winners and losers,” he said – “crony capitalism” at its worst. Let’s reduce the government tax burden overall, Shivers said. Taylor agreed, emphasizing, “The key is competitiveness.” It’s like the famous Winston Churchill quote about the man in the bucket: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” Brouillette said the government is “masking the problem with these types of subsidies.” Worse, “talk of new taxes renders the investment environment uncertain,” Taylor said. Shivers said the budget impasse has “become about winning a political argument.” 32 | TRANSACTIONS | WWW.PACB.ORG
Meanwhile, it hurts employers and entrepreneurs, who are in search of “predictability and stability” as critical factors to investment. Therefore, we cannot afford “another unrealistic budget.” Taylor said the governor inflicted “six months of unnecessary suffering” on taxpayers and the needy, and it was done “out of spite.” Gov. Wolf vetoed the entire budget on
“TALK OF NEW TAXES RENDERS THE INVESTMENT ENVIRONMENT UNCERTAIN.” June 30. Then he line-item-vetoed parts in December, a move he could have done in July that would have at least given some money to pressing needs. Now, he has made noncontroversial line-items like cancer screening, domestic violence prevention, and drug and alcohol treatment a political football. “It’s a shameful thing,” Taylor said. School districts also incurred tens of millions of dollars in added borrowing costs, and the vetoes have
forced the closure of some human service agencies. Shivers said private and community charter schools are also at the point of closure. Charters, unlike local public schools, cannot access local tax dollars. Moreover, Taylor noted, “The public pension crisis is catastrophic.” The debt is at least $55 billion, and climbing. Brouillette said the Commonwealth Foundation sounded the alarms about unfunded pension liabilities a decade ago. Scranton may go bankrupt over retirement benefits in the next year or two, the Auditor General has warned, and other school districts and municipalities may soon follow suit. Shivers said this is not about “political will” anymore. It is not about Wolf’s insistence that “we had a deal,” referring to the Governor’s clinging to an October framework deal that fell apart. It’s “a three-legged stool,” comprised of pensions, taxes and spending. “Not a single Democrat voted for what
I would call milquetoast pension reform,” Shivers said. The Governor failed to produce one vote, he underscored. Brouillette added that the Governor never embraced liquor privatization, which could have produced hundreds of millions of dollars without raising taxes. Pennsylvania is losing dollars to consumers crossing the state’s border for better prices, selection and convenience, Brouillette said, especially in the southeast. Surveys show that an overwhelming majority of Pennsylvanians want government out of the liquor business. We should be regulators, but not purveyors, of alcohol, they conclude.
ing our eyes to an oncoming tsunami.” The analysts said the plans would not alter the benefits of existing retirees. Shivers warned that issuing pension obligation bonds is like taking out a loan and then going to the casino to gamble, in the hope that your return on investment will exceed your loan rate. With
education
remaining
Gov.
at any time in history, at more than $15,500 a student per year. Where is all that money going? Most people are shocked to hear the $15,500 figure, and guess that it is more like $7,000 to $8,000 per student. Noting that $15,500 a child translates to about $450,000 a classroom, he is unsure where the money is going. Taylor noted this debate is more about the employment of adults than the rigorous education of children.
“MONEY DOES MATTER, BUT WE ALSO HAVE TO EXPECT A RETURN ON THAT INVESTMENT.”
With Rep. Glenn Grell leaving the Legislature for PSERS, Reps. Warren Kampf, Mike Tobash, and John McGinnis have carried on the pension reform cause in the House, with Sen. Pat Browne leading in the Senate. “Judgment Day is upon us,” Taylor said. Brouillette blamed public sector unions, such as the FOP, AFSCME, SEIU and PSEA, for thwarting those efforts and warned that, “We are clos-
Wolf’s main platform, the analysts noted a stunning fact: Gov. Wolf vetoed $3 billion in education spending in December, despite continually condemning Gov. Corbett for cutting $1 billion in education. Brouillette explained that federal stimulus dollars were stopped under the final years of the Rendell Administration. Gov. Corbett wisely did not raise taxes to backfill those dollars. Brouillette said Pennsylvania is spending more on public education than
“Money does matter, but we also have to expect a return on that investment,” said Brouillette, a former high school and middle school teacher.
He said data reveals that there is no correlation between more money and better outcomes on the other side. Preparation for the workforce is the key to competitiveness, Taylor said. In the NFIB’s Small Business Economic Trends report, Shivers said, employers used to say that they were having a difficult time finding qualified workers. They were interviewing students without specific skills and a higher level of education. Now WWW.PACB.ORG | TRANSACTIONS | 33
“IT DOES NOT TAKE A MAJORITY TO PREVAIL…BUT RATHER AN IRATE, TIRELESS MINORITY, KEEN ON SETTING BRUSHFIRES OF FREEDOM IN THE MINDS OF MEN.” 34 | TRANSACTIONS | WWW.PACB.ORG
they are saying they can’t find students with soft skills, like punctuality, good appearance, and a willingness to follow directions. Shivers said they have been measuring trends since 1974. Brouillette lamented the fact that, “The public sector unions have a stranglehold on the policy-making process.” They profit from higher spending and bigger government, which in the end is “very short-sighted.” PSEA is a $100 million a year operation, and that is just one of the public sector unions, Brouillette noted. They are against pension reform and liquor privatization, and are lockstep for more dollars for education. “We need more Davids against these political Goliaths,” Brouillette advised, or problems “will metastasize.”
Taylor cautioned that government is “not a spectator sport.” Employees need to know the landscape, which is destined to affect their jobs and families.
The entrepreneurs of today must become engaged to overcome the powerful union muscle.
“Be a voice for a pro-growth, proproduction agenda” in Harrisburg, he urged.
He offered a relevant Samuel Adams quote: “It does not take a majority to prevail…but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.”
Brouillette said one person can make a difference – and they must to counter the unions’ power.
In the minds of the many who rely on state government, Harrisburg is already burning.
DIANE MCNAUGHTON IS A FREELANCE WRITER WHO HAS PENNED NUMEROUS NEWS STORIES, COLUMNS, AND FEATURE ARTICLES FOR AREA MAGAZINES AND NEWSPAPERS. SHE IS ALSO A LEGISLATIVE AIDE, A COMMUNITY VOLUNTEER, AND HOUSE OF STYLE AUTHOR FOR PENNLIVE/HARRISBURG PATRIOT NEWS, AND MOTHER OF FOUR.
All three analysts urged taxpayers to contact legislators.
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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation. He is a prominent voice in statewide public policy debates through frequent appearances in print, television, and talk radio across the Commonwealth. Matt is a board member of the REACH Foundation, a Pennsylvania school choice advocacy organization, the Joshua Group, a Harrisburg nonprofit ministry serving atrisk youth, the Fairness Center, a public interest law firm, and Keystone Community Action, a nonprofit educating and equipping Pennsylvania taxpayers. He is on an advisory board for the Economics Department at Duquesne University. Matt received his bachelor of arts (B.A.) in both U.S. History and Education from Cornell College and earned a master of education (M.Ed.) from Azusa Pacific University and a master of arts (M.A.) in history from the University of San Diego. Matt is married and has four children.
Kevin Shivers is executive director of the National Federation of Independent Business (NFIB), Pennsylvania’s most influential organization representing small- and independent businesses. Since joining NFIB in 2001, Kevin and his team have worked collaboratively with four governors and the General Assembly to enact a host of new laws that have saved small employers thousands of dollars annually and protected their ability to run and grow their businesses. Kevin is regularly quoted in Pennsylvania’s major newspapers and business journals because of his straight-forward, no-nonsense style and his ability to easily explain complex issues. He also is a frequent guest on a variety of statewide television and radio programs, including the show Capitol-Watch which is broadcast semi-monthly on over 90 radio stations across the state. Before joining NFIB, Kevin was Deputy Press Secretary for Pennsylvania governors Tom Ridge and Mark Schweiker. Before joining the Ridge administration, Kevin worked in the Pennsylvania House of Representatives.
David N. Taylor is President of the Pennsylvania Manufacturers’ Association (PMA), a statewide trade organization representing the interests of manufacturers in the state’s public policy process since 1909. Taylor is a 1990 graduate of Dickinson College, where he earned Bachelor of Arts degrees in History and Dramatic Arts. He previously worked for the Research Department of the Republican National Committee in Washington DC, the late state Sen. John J. Shumaker (R-Dauphin), and the Pennsylvania Leadership Council. Immediately prior to joining PMA in 1997, he worked in the Washington DC office of U.S. Sen. Rick Santorum (R-Allegheny), where he served as the staff writer for issues before the U.S. Senate Armed Services, Foreign Relations, Intelligence, and Veterans’ Affairs committees. Taylor serves on the boards of directors of the Pennsylvania Manufacturers’ Association, the Lincoln Institute for Public Opinion Research, the Pennsylvania Leadership Council, the Foundation for Free Enterprise Education, the Pennsylvania eCommerce Association, and the Pennsylvania Business Council Education Foundation. Since 2010, Taylor has represented the northeast United States on the board of directors of the Conference of State Manufacturers Associations. He is also an Advisory Committee member of the Pennsylvania Steel Alliance. A native of Huntingdon PA, he is the son of former Huntingdon County President Judge Newton C. Taylor and Nancy R. Taylor. David lives near Hershey, PA with his wife Erica and daughter Meredith. 36 | TRANSACTIONS | WWW.PACB.ORG
LEADERSHIP IS A JOURNEY
By: Kathy Prime COMMIT TO THE JOURNEY AND GREAT LEADERS WILL EMERGE! n all the years I have been practicing strategic human resource management, organizational development and leadership and talent development in both very small and very large organizations, crossing over 4 industries (nonprofits; financial services; manufacturing and real estate) one thing is a constant, every organization needs great leaders… and every organization is in search of how to best grow them within their organizations.
in today, our leaders need to be more agile than ever before. Whether it is the changing customer demands causing leaders to problem solve at a faster and more thorough pace than ever before; or the multi-generational workforce we have today and leaders needing to connect individually versus in a broadband manner with employees in order to engage their hearts and minds in driving the needed results of the business. What worked for leaders yesterday may not work tomorrow – so the continued thirst to learn and grow from daily experiences is key. Leaders and organizations that create those leadership-defining moments will succeed.
“LEADERS AND ORGANIZATIONS THAT CREATE THOSE LEADERSHIP DEFINING MOMENTS WILL SUCCEED.”
In my experience the successful strategies to develop strong managers and leaders fall into these key areas: VIEW LEADERSHIP DEVELOPMENT AS A CAREER-LONG JOURNEY NOT AN EVENT-DRIVEN SET OF COURSEWORK In the rapidly changing business environments we all live 38 | TRANSACTIONS | WWW.PACB.ORG
SEE YOUR LEADERS AS THE CULTURE CARRIERS OF YOUR ORGANIZATION Submerge your leaders in fully understanding the culture of your organization. Make sure they understand the experience you want each of your stakeholders to have when they touch your organization and engage your leaders in identifying the tools they need in order to role model, teach, and develop their teams in that culture.
CREATE DEVELOPMENT PROGRAMS THAT ORIENT LEADERS TO THE TOOLS AND CONCEPTS THEY NEED TO BE EFFECTIVE – AND EMBED THEIR USE INTO EVERYDAY BUSINESS AND HR PRACTICES Great development programs alone won’t cut it. Great programs can engage and excite the leaders while they are in the event, but if when they return to their roles the leadership development tenants taught in “the classroom or in programs” aren’t embedded into business strategies and HR practices, we have not gotten the return on the investment of that leadership development experience. When they are aligned, organizations not only grew leaders faster; but created a learning environment across and within the company – not just in the organizations corporate university or leadership institute. Sounds so simple – but business leaders and leadership development professionals should be attached at the hip! DON’T EXPECT PERFECTION – EXPECT CONTINUED LEARNING This is where the journey – not the destination is important. When we expect leaders, who are human beings, to be perfect in their execution of their management and leadership responsibilities; we are setting us all up for failure. Celebrate the journey of leadership development. Make learning mo-
ABA
ments surface in each day. When we lose a customer – make it a learning moment reflecting on what we can learn about our part in why the customer left. When we lose an employee do the same; when we end a meeting let’s ask what went well and what didn’t. When we come out of a leadership development class let’s tell our teams we are practicing some new skills learned and engage them in that learning experience. We do this in our real lives, why not in the part of our lives where we are responsible for leading others inside organizations. KATHY PRIME IS CHIEF LEARNING & TALENT So commit to the jourDEVELOPMENT OFFICER ney that is needed to AT THE HIGH COMPANIES. build and grow great SHE CAN BE REACHED leaders and watch what AT 717.209.4079 OR happens to your enKPRIME@HIGH.NET. gagement, customer KATHY WILL BE A PART OF loyalty and financial PACB’S HUMAN RESOURCES performance! CONFERENCE APRIL 27-28.
May 2–6, 2016
Philadelphia, PA
BOOT CAMP
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LEADERSHIP DEVELOPMENT: IT DOESN’T HAVE TO BREAK THE BANK
By: Cami Ressler
an you relate to any of these statements?
“I am a leader who is actively engaged in finding and developing new talent but I find myself alone in this at our bank.” “Our bank knows leadership development is important, but figuring out how to do it and making the time when we are at capacity is a challenge.” “Our financial resources are limited and we just do not have the money to fund a leadership development program.” Granted, for some banks, leadership development may seem like a luxury. However, the risk of not having a leadership development process in place is far greater than making the investment. In our work and conversations with senior leaders 40 | TRANSACTIONS | WWW.PACB.ORG
across multiple disciplines, when leadership and talent fall into place, performance in all functions is improved, from service delivery to customer retention to increased profits. Your bank’s vision for your leadership development program may be very different from the bank’s down the street. Yet, most meaningful programs share a comment thread: Organizations with a clear mission, purpose, and focus for their leadership development program recognize that to succeed the program requires buy-in from senior leaders, needs dedicated financial resources and time, and a planned approach for developing talent and measuring results. With that in mind, let’s explore a foundational premise of leadership development…it is rooted in self-awareness. Self-aware leaders are familiar with their strengths and know how to use them to accomplish the best for their organization and for the employees they lead. Self-aware leaders own their weaknesses and know how to minimize them either through participating in development activities or by delegating tasks to others on their team who are more suited to those tasks. To be an effective leader today, individuals must take responsibility for continuous learning and have a commitment to developing their skills, knowledge and work experiences. The next building block for a solid leadership development program entails teaching emerging leaders how to lead teams and finally lead an organization. The fact remains, if emerging leaders lack the fundamental skills to lead themselves and lack core competencies around effective communication, strategic decisionmaking, conflict management, and influencing skills to name a few, those leaders will be hard-pressed to establish trust and credibility required to lead a team or lead within an organization. One of the most common questions we address is, “Who are our future leaders and how do we identify them?” Emerging leaders go beyond their current job descriptions and have the interest and capacity to seek developmental opportunities to expand their careers either within their current role or for a role elsewhere in the organization. Within small to medium sized banks, the senior leadership team may be responsible for collectively identifying emerging leaders within their organization and within their departments. While there is no specified number of participants required for an emerging leader development program, there are a few considerations: • Ensure an objective process exists for identify emerging leaders benchmarked against objective selection criteria which keeps the process fair and honest and avoids any perception of favoritism. • Ensure that the emerging leader has both the desire and time to participate in a leadership development program which can range from several weeks to year-long assignments. • Ensure that each emerging leader has the commitment from his or her boss. The senior lead-
ership person must be available to handle questions and to provide feedback on a timely basis which supports development. Organizations are elastic and fluid; so are leadership development programs. With evolving workplace demands requiring employees to gain new skill sets and apply different knowledge, leadership development programs must change to keep pace with these needs. What does not change is an organization’s core values and culture which remains the center of a leadership development program. A portion of this text was excerpted from our book, Career Planning and Succession Management: Developing Your Organization’s Talent for Today and Tomorrow, 2nd edition.
CAMI RESSLER IS FOUNDER AND CEO AT RESSLER CAREER AND BUSINESS SOLUTIONS LLC. SHE CAN BE REACHED AT 717.350.4412 OR RESSLERSOLUTIONS@GMAIL.COM. CAMI WILL BE A PART OF PACB’S HUMAN RESOURCES CONFERENCE APRIL 27-28.
Your Bank. Our Experience. Better Together.
Top L-R: Gary D. Snyder, CPA • Scot E. Orndorff, CPA • Scott N. Drake, CPA Bottom L-R: Luke C. Martin, CPA • DoriAnn F. Hoffman, CPA
Smith Elliott Kearns & Company, LLC CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
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5 WAYS TO
GAIN EMPLOYEES’ RESPECT By: Karen Young, SPHR, SHRM-SCP
espect in the workplace is as crucial as productivity when it comes to the bottom line. Without respect, no manager will succeed, which could mean a company that fails as a result. Respect is a two-way street, but it is one that managers must walk over and over again in order to gain the respect needed to run a quality company. Gaining the respect of fellow employees is not something that comes as a result of a title or paycheck – it is something that is earned through hard work and perseverance.
a reality. The rules that are set forth for employees are the same rules that every manager should abide by in order to have the respect they need and deserve. 2. Keep Everyone Involved Micromanaging, berating, or downright ignoring is not the way to create productive employees. Everyone wants to feel needed, heard, and valuable, which is only possible by managers doing their part. Employees thrive on compliments and praise, but this should only be provided when it is warranted. Falsely praising employees will not drive them, but rather deter the company’s goals. Work together as a team and the respect will naturally fall into place, keeping everyone on the same page.
“RESPECT IN THE WORKPLACE IS AS CRUCIAL AS PRODUCTIVITY WHEN IT COMES TO THE BOTTOM LINE.”
1. Follow the Company’s Mission Do as I say, not as I do is not the mantra any manager should live by; instead, managers need to lead by example. Actions speak louder than words in the workplace, which means managers need to be the leader that they want their employees to follow. Employees cannot be expected to fulfill a mission if their leaders are not doing what is necessary to make that mission 42 | TRANSACTIONS | WWW.PACB.ORG
3. Set Goals Goal setting and achieving those goals can make employees value their managers. A manager should be someone that is looked up to and sought after.
A manager that just shows up to work to punch the clock, does their job, and leaves is not a goal setter or achiever. This is a manager that collects a paycheck. The manager that gets the respect desired is one that reaches for the stars and achieves personal and company goals. The team is a part of reaching those goals and a good manager recognizes those achievements with everyone. 4. Carry Yourself with Pride Pride and self-confidence lend themselves to respect. If managers do not carry themselves well, letting others around them know how unsure they are about the job being performed, no one is going to respect them. Instead, that manager will be walked all over and the jobs will be inefficiently performed. Managers need to exude self-confidence and pride in order for others to respect them the way they desire to be respected and in order to get the job done. 5. Have an Open Door Respect is achieved when a manager is approachable. Respect is not the same as fear, which any manager with a closed door and unapproachable attitude will create. Keeping that open door policy, allowing anyone to come in at any time with any problem will help to put employees at ease, making them want
to problem solve and make things right. In the end, this helps with productivity, creativity, teamwork, and the company’s bottom line. A well respected manager is one that works just as hard as the employees, following the rules, and remaining approachable. In the end, when employees and managers work together, a higher level of success is achieved. It is not hard to achieve success, but it is hard having employees that disrespect. Finding the perfect level of achievement is necessary for managers that want their company to be the next best thing. #DramaFreeHR
KAREN A. YOUNG, SPHR, SHRM-SCP IS PRESIDENT/ AUTHOR/SPEAKER AT HR RESOLUTIONS, LLC. SHE CAN BE REACHED AT 717.652.5187 OR KAREN@HRRESOLUTIONS.COM. KAREN WILL BE A PART OF PACB’S HUMAN RESOURCES CONFERENCE APRIL 27-28.
Being visionary starts by seeing what’s right in front of you. The biggest opportunities are sometimes the hardest to see. Baker Tilly’s industry specialists have the experience to help you leverage resources and maximize opportunities. And we won’t just tell you what you want to hear, but exactly what’s needed. Want a more insightful advisor? The choice is right in front of you. Connect with us: bakertilly.com/industries/banking/ Want to receive our banking articles? Go to: bakertilly.com/insights/subscribe Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. © 2015 Baker Tilly Virchow Krause, LLP An independent member of Baker Tilly International
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NEW LIFE FOR PERFORMANCE APPRAISALS By: Sally Williams, SPHR, SHRM-SCP
sk any Bank Human Resource Manager and they’ll tell you: of all the Human Resource Management Systems, Performance Appraisal seems to bring the most dissatisfaction and frustration. Why is that? In my travels around the state I have been asking that very question, and the answers I receive are varied. Managers don’t like them. Managers won’t do them. Managers won’t do them on time. Managers aren’t receiving their performance review so why should they do the reviews for those under their supervision. Managers haven’t been trained. Managers have been trained, but fail to follow instructions. Managers say they are too timeconsuming. Managers are uncomfortable sitting down with their employees to discuss them. Why should they bother when the results are not tied to anything? There is no correlation between the individual’s position and what is being measured. They are too personality driven. They take too much time. They are too much work. The reasons, as well as the excuses, are endless. So what’s a Human Resource Manager to do? I would suggest that good Performance 44 | TRANSACTIONS | WWW.PACB.ORG
Appraisals begin with a well-defined strategy, well-defined systems and processes, and training, training, training! A well-defined strategy means that you are asking and providing answers to questions which define the purpose. Why do you do performance appraisals? What good is to be gained? What will be measured? Who will be charged with conducting the appraisals? How will managers be trained – by whom and how often? What will be the correlation between results and rewards? What other human resource actions might result from the appraisal process? Do we need outside help? If these questions remain unanswered or aren’t even asked, you risk setting yourself up for failure. Recent articles are suggesting that perhaps the Performance Appraisal is dead. I don’t for a minute believe that! Why? Because done correctly, there is much good to be gained! A recent Performance Appraisal project of mine was necessitated by an Examination. The regulators wanted to know how the Board was holding management accountable for important functions, most importantly credit and risk. Because there were no formal, documented reviews, just the CEO having an annual “chat” with the division leaders, there was no proof that they were being done at all, let alone holding the managers accountable. Part of the Memorandum of Understanding from the OCC was a requirement that the Bank develop job descriptions and performance appraisals for their top management staff. That system, which included both Board and Management training, proved satisfactory in subsequent follow-up reviews by the OCC.
6. Qualitative standards clearly define desired outcomes. 7. Factors are weighted to reflect their importance to the overall outcome. 8. Documentation is required for extraordinary performance scores, both positive and negative. 9. Training is provided initially and on an on-going basis. 10. Managers and supervisors are held accountable for good documentation and timely completion. Nobody ever said that Performance Appraisal is easy. It does take work, but then so does every other worthwhile endeavor. And besides, measurement is an important responsibility of every Manager’s job.
SALLY WILLIAMS, SPHR, SHRM-SCP IS PRESIDENT AT WILLIAMS HR SOLUTIONS, LLC. SHE CAN BE REACHED AT 814.693.5165 OR SWILLIAMS@WILLIAMSHRSOLUTIONS.COM. SALLY WILL BE A PART OF PACB’S HUMAN RESOURCES CONFERENCE APRIL 27-28.
I’m not suggesting that fear of the regulators should be the driving force behind developing a Performance Appraisal System. The desire for fairness, staff development, justification for promotions, layoffs or dismissals, and a basis for rewards are all excellent reasons to conduct annual reviews. But one of the most positive outcomes is the opportunity for on-going communication between supervisor and employee. Recent surveys report that employees don’t leave employers, they leave bosses! The on-going process of Performance Appraisal with frequent communication regarding progress contributes toward a positive supervisor-employee relationship. Regarding systems and processes, there is more than one right method, and each Bank must determine what best fits their needs. We have found that the Performance Appraisal process is most successful when: 1. Both the purpose and the process are clearly articulated to the entire staff. 2. The process is strongly supported by the Bank, starting at the top. 3. Factors used to measure are developed for each position in the Bank, rather than “one (or even two sizes) size fits all”. 4. Managers and supervisors are engaged and involved in establishing the factors and standards for the positions they supervise. 5. Quantitative standards are used when possible.
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NEWS FROM YOU BRYN MAWR TRUST CONTRIBUTES TO DREXEL UNIVERSITY THROUGH ITS MEN’S AND WOMEN’S HEALTH INITIATIVE of Frank Leto and his outstanding Bryn Mawr Trust team.” Bryn Mawr Trust made the contribution through an initiative supporting critical health issues facing men and women in the community. It recently focused on the “Movember” campaign.
Bryn Mawr Trust proudly donated $5,000 to Drexel University’s College of Medicine for the benefit of prostate cancer research. John A. Fry (left), President of Drexel University, accepted the donation from Frank Leto, President and CEO of Bryn Mawr Trust.
Bryn Mawr Bank Corporation (NASDAQ: BMTC) (the “Corporation”), parent of The Bryn Mawr Trust Company (the “Bank”), announced the Corporation’s $5,000 contribution to Drexel University’s College of Medicine for the benefit of prostate cancer research. “Drexel scientists and physicians are leaders in the fight against prostate cancer, and it is partners like Bryn Mawr Trust who make their work possible,” said John A. Fry, Drexel’s president. “It is a great honor to have the personal support
The Movember Foundation is a global charity committed to men’s health issues and to having an “impact on the face of men’s health.” In “Movember,” or no-shave November, men grow moustaches to raise awareness of various cancers, including prostate cancer. This past November, nearly 100 Bryn Mawr Trust men grew facial hair in support of Movember. “As good corporate citizens, it is important that we promote discussions around health issues and create a dialogue around prevention,” said Frank Leto, President and Chief Executive Officer of Bryn Mawr Trust. “Through our involvement in Movember, we were able to focus on men’s health and raise awareness more generally within the communities we serve. Our employees embrace the opportunity to participate, and we are pleased our donation to Drexel University will further prostate cancer research.” The Bryn Mawr Trust Health Initiative Committee is planning a series of other initiatives for 2016 that will promote good health and allow it to give back to the community.
NEW TRIPOLI BANK $10,000 DONATION TO THE CETRONIA AMBULANCE CORPS The Cetronia Ambulance Corps supports many community organizations by providing stand-by EMS services to events, offering training and community education classes such as CPR, First Aid, oxygen administration classes, Emergency Medical Responder and Emergency Medical Technician courses, as well as monthly car seat safety inspections.
New Tripoli Bank, has donated $10,000 to the Cetronia Ambulance Corps. The bank recognizes Cetronia Ambulance’s critical role in their communities. In addition to providing rapid pre-hospital emergency medical response and ambulance transportation for hospital care, Cetronia Ambulance also is available for non-emergency medical transport for individuals to doctor’s appointments and repetitive medical treatments. 48 | TRANSACTIONS | WWW.PACB.ORG
New Tripoli Bank is a proud supporter of Cetronia Ambulance Corps. Since the Corps is NOT directly supported by tax millage “It is of critical importance that we continue to invest wisely in our infrastructure because our community expects us to utilize our limited funds to improve upon our operations and save more lives, our most important mission. The generous donation from New Tripoli Bank will certainly help us do just that,” added Larry Wiersch, Chief Executive Officer of Cetronia Ambulance Corps. Cetronia Ambulance Corps, founded in 1955, is a NONPROFIT, 501(c)3 community-based emergency medical services provider prominently located in the Lehigh Valley.
PHOENIXVILLE FEDERAL ANNOUNCES PROMOTIONS The Board of Trustees of Phoenixville Federal Bank & Trust are pleased to announce the promotion of Karla Rush to Senior Vice President/Compliance/Training/BSA Officer. The announcement came at the recent annual meeting of the bank. She is responsible for overseeing all of the bank’s compliance and training. Rush has worked for Phoenixville Federal for 28 years, starting as a Teller in the Phoenixville Office and was promoted to Assistant Head Teller in 1989, and then Assistant Branch Manager of the Royersford Office in 1990. At the same time she took on the responsibilities of Retirement Specialist for the bank. In 1993, Rush was promoted to Compliance Officer, and in 2000 elected by the Board as Assistant Vice President, later adding the duties of Training Officer and BSA Officer. In 2010, Rush was elected as Vice President of Compliance & Training. Throughout her career at Phoenixville Federal, Rush furthered her education to earn the distinction of Certified BSA/AML Professional and Certified Community Bank Compliance Officer. “Karla has done an outstanding job for our bank in her current role,” said Doug Darlington, President and COO, “and I am confident she will continue to do so.” “In this day and age, twenty-eight years is a long time to stay in one place, but it says a lot about my employer,” said Rush. “Phoenixville Federal is like family to me and I’ve enjoyed my entire banking career at this fine community bank. I look forward to many more years.” Rush and her two children reside in Phoenixville. A Magna Cum Laude graduate of Bloomsburg University of Pennsyl-
vania, she has been actively involved in the school district and her church, serving as treasurer of several committees, teaching Sunday school, and leading various women’s groups. In addition, she has volunteered her time delivering meals to shut-ins with the local chapter of Meals on Wheels. In her spare time, she enjoys walking, knitting, crocheting, and cheering for her favorite team, the Philadelphia Flyers. Phoenixville Federal is also pleased to announce the promotion of Kathy Clark to Branch Manager at the Collegeville Office. She will be replacing long-time manager Marsha Beard who is retiring after more than 26 years with the bank. Clark started as a part-time teller with the bank in 1969 in the Phoenixville Office and quickly moved to full-time and then Head Teller. In 1980 she was promoted to Branch Manager of the Collegeville Office, but retired a year later to raise her family. Returning to banking in 1996, Clark held several positions at the Pikeland Office before being promoted to Assistant Branch Manager of the Collegeville Office in 2007. A resident of Schwenksville, she enjoys gardening, knitting, crocheting, and reading in her spare time. A financially strong bank headquartered in Phoenixville, Pennsylvania with multiple branches in Chester and Montgomery Counties, Phoenixville Federal Bank & Trust provides a diverse portfolio of personal and business checking, savings and lending products and services, including wealth management and trust services. Phoenixville Federal Bank & Trust is a mutually-owned, community bank committed to improving the quality of life in the communities it has served for more than 100 years.
MID PENN BANK HIRES KOSAKOSKI AS VICE PRESIDENT, COMMERCIAL LOAN OFFICER Mid Penn Bank is announcing Shirley T. Kosakoski has joined the bank as vice president and commercial loan officer, primarily serving Lancaster and Chester counties. A resident of Lancaster, Kosakoski was previously a commercial loan officer at Ephrata National Bank. She has more than 23 years of financial services experience. Kosakoski holds a bachelor’s degree in business management and marketing from Lebanon Valley College. Kosakoski serves as a volunteer for the ARC of Lancaster County.
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NEWS FROM YOU THE DIME BANK WELCOMES TWO NEW MORTGAGE ORIGINATORS exceptional service. Their knowledge of what is required to originate and close mortgage loans in a timely and convenient manner, as well as their understanding of our market area, makes them both a perfect fit for The Dime Bank.” said Pete Bochnovich, senior vice president and chief lending officer. Scartelli has devoted his career to mortgage lending. He holds a Bachelor of Science from East Stroudsburg University. He resides in Paupack with his wife, Robin, and their two children.
The Dime Bank hired Ralph Scartelli, vice president residential mortgage originator and Mario Leombruni, residential mortgage originator to serve the lending needs of borrowers, real estate agents, and builders in the Wayne, Pike, and Lackawanna County markets. “We welcome Ralph and Mario to The Dime Bank to assist in our continued efforts to inspire our community to pursue homeownership and financial freedom. Both Ralph and Mario come to The Dime Bank with a wealth of mortgage industry experience and a commitment to
Leombruni has been a licensed mortgage originator for 18 years. He holds a business management degree from the University of Scranton. He resides in Mount Cobb with his wife, Tracie, and their children. Together Scartelli and Leombruni bring residents of Northeast PA trusted, experienced mortgage advice. For over 25 years they have each been a member of the Pike/Wayne Association of REALTORS®. They work day, evenings, and on weekends to bring a quick response when needed. Scartelli and Leombruni will assist customers every step of the way with outstanding mortgage service to those looking to purchase or refinance their homes.
C&G SAVINGS BANK AND CRESSON COMMUNITY BANK FINALIZE MERGER; RENAMED PENNCREST BANK SM PennCrest BANKSM will serve Blair and Cambria counties with seven locations William E. Ritenour, President and CEO of C&G, will continue to serve in that capacity for PennCrest BANK. Gary M. Bradley, President and CEO of Cresson Community Bank, retired upon completion of the transaction.
C&G Savings Bank (C&G), headquartered in Altoona, Pennsylvania, announced the completion of its previously announced merger with Cresson Community Bank (Cresson), headquartered in Cresson, Pennsylvania. The combined Banks opened on March 1, 2016 as PennCrest BANK. The merger, first announced on November 4, 2015, was concluded following the receipt of all required regulatory approvals. Based on financial information as of December 31, 2015, on a pro forma basis, the combined Bank has approximately $182 million in assets, $111 million in loans, $147 million in deposits, and $27 million in capital. PennCrest BANK has seven locations serving Blair and Cambria counties. 50 | TRANSACTIONS | WWW.PACB.ORG
“We are so proud of the thoughtfulness and initiative that everyone involved has shown in making PennCrest BANK a reality,” noted Ritenour. “We’ve just completed the merger of two banks, each with a century of history. We’re most happy to report that our employees, who really are PennCrest BANK, are still here and they will continue to offer the outstanding products and service excellence to which our customers and communities have become accustomed.” Ritenour added, “The PennCrest BANK name and logo has received an overwhelmingly positive reaction. Knowing that, we’ll energetically roll out the new identity and brand going forward.” Customers of C&G and Cresson will have immediate access to all PennCrest locations. The combined bank will be headquartered in Altoona and will have additional locations in Altoona and Hollidaysburg in Blair County; and Cresson, Gallitzin, Nanty Glo, and Patton in Cambria County.
JBT APPOINTS TROY A. PETERS AS PRESIDENT AND CEO Jonestown Bank & Trust Co. (JBT) is pleased to announce Chief Executive Officer Troy A. Peters has been appointed President and Chief Executive Officer, and is now a member of the Board of Directors. Former President Richard J. Newmaster, Jr., will continue as Chairman of the Board of Directors. In his announcement, Newmaster explained, “We took this action in recognition of the leadership that Troy Peters has brought to JBT over the past ten years, and specifically during the last four and half years as CEO. He, along with all our executive officers, management, and employees have done a great job continuing to grow this local community bank.”
Troy A. Peters, JBT President & Chief Executive Officer
Peters is a graduate of York College of Pennsylvania, and graduated with Distinction from the Stonier Graduate School of Banking at Georgetown University. He is currently enrolled in the Graduate School of Banking at Colorado (Boulder). He has been a featured speaker throughout the United States, focusing on the topics of bank marketing, leadership, and his experience as a triathlete. Peters serves on several boards, including the Pennsylvania Association of Community Bankers, Lebanon Valley Chamber of Commerce, and the Lebanon Valley Family YMCA. He is a past board member and Treasurer of the Lebanon Valley Chamber Foundation and Big Brothers Big Sisters of the Capital Region. He is a former ‘big brother’ as well. Founded in 1873, JBT currently has assets of more than $480 million. JBT operates twelve offices serving customers in Lebanon County, Lancaster County, and surrounding areas. With JBT, you can always Bank on a Smile.® Member FDIC.
For publication consideration, please email press releases to Eric Kovac, Communications Director, at eric@pacb.org. To ensure publication in Transactions, all press releases must be received by the 5th of the preceeding month.
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PACB WELCOMES NEW ASSOCIATE MEMBERS |
Main Street has provided checks and accessories to community banks nationwide for almost 20 years. We are a family-owned company founded in simplicity and sincerity. Our sense of family transcends beyond our roots as we try to be an extension of the great service our customers already provide. We offer products at competitive prices and provide a level of support unmatched by any other checkprinting vendor. Each of our customers receives a personalized experience, from our customized check programs to our dedicated client service teams. When you partner with Main Street, we’ll work with you to generate revenue for your business and provide value to those you serve. CONTACT INFORMATION: Lisa Beck, Chief Marketing Officer 920 19th Street North, Birmingham, AL 35203 P: 205.380.4000 | F: 866.785.4581 lbeck@mainstreetinc.com | www.mainstreetinc.com
Quest Analytics is a financial services technology and sales training company specializing in helping banks grow quickly and profitably. Founded in 2001, Quest Analytics is headquartered in Pittsburgh, Pennsylvania. Quest uses automated data mining techniques to uncover sales opportunities by turning overwhelming data into actionable information. Being tightly coupled to major core banking systems, community banks use Quest software to prospect for new relationships as well as grow existing share of wallet.
CONTACT INFORMATION: Karl Keller, President 2600 Boyce Plaza Rd Ste 219, Pittsburgh, PA 15241 P: 412.347.0386 x201 | karl.keller@quest-analytics.com www.quest-analytics.com
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PFM Asset Management LLC (“PFMAM’) professionals have more than 35 years of experience in managing high-quality, fixed-income assets. PFMAM serves as a fiduciary, providing banks with investment advisory services that are tailored to their specific investment objectives, risk criteria, regulatory requirements, and overall business goals. Our fixed income strategies are designed to consider the overall market and economic environment, banking peer group research and analysis, as well as the special needs and concerns of each individual client we serve. As a part of the PFM Group of companies, PFMAM has a long history of serving the investment needs of institutional clients of all sizes from local municipalities to large and complex organizations.
CONTACT INFORMATION: Jonathan Sundberg, Senior Managing Consultant 2 Logan Square, 18th and Arch Streets, Suite 1600 Philadelphia, PA 17103-2770 P: 215.557.1234 | sundbergj@pfm.com | www.pfm.com
TeraverdeTM is a national financial institution advisory firm providing services in the areas of: BSA/AML compliance, Compliance Management systems, Regulatory Enforcement Order Remediation, Cybersecurity, Risk Management, Strategic Planning, Capital Management, Asset Sale/Acquisition due diligence, and maximizing productivity/profitability of loan origination systems, including Ellie Mae Encompass360®.
CONTACT INFORMATION: Alex Henderson, J.D., Chief Counsel, CAO 805 Estelle Drive, Suite 111, Lancaster, PA 17601 P: 717.344.5553 | F: 717.344.5507 ahenderson@teraverde.com | www.teraverde.com
Surround yourself in a world of Victorian charm and stately elegance at the flagship hotel of the Walt Disney World® Resort. From its distinctive lobby to the ultimate in five-diamond dining, Disney’s Grand Floridian Resort & Spa offers a level of luxury matched only by the best resorts on earth.
Thursday, September 22, 2016 - Saturday, September 24, 2016
Lake Buena Vista, Florida
Come and join PACB in a place where creativity and innovation run wild. The Walt Disney World® Resort is like no other destination. It is the perfect place to mix the excitement of doing business with the time to relax. Take advantage of the 139th Annual Convention location and use it as an opportunity to explore the world-famous Theme Parks with special Convention ticket pricing. We are also pleased to welcome you to stay an extra day or two before or after the Convention and enjoy Disney’s Grand Floridian Resort & Spa at our special group room rate (subject to availability).
For additional information, please visit www.mydisneymeetings.com/pacb16 A draft of the 139th Annual Convention agenda can be found at www.pacb.org
PRSRT STD U.S. POSTAGE PAID HARRISBURG PA PERMIT NO. 547
2405 N. FRONT STREET P.O. BOX 5319 HARRISBURG, PA 17110
RETURN SERVICE REQUESTED
PACB PREFERRED PROVIDERS ANOTHER VALUE INCLUDED IN THE PRICE OF PACB MEMBERSHIP! PACB PREFERRED PROVIDERS OFTEN OFFER DISCOUNTS OR PROMOTIONS ON PRODUCTS AND SERVICES TO PACB MEMBERS.
CALL PACB AT 717-231-7447 TO FIND OUT HOW YOUR ORGANIZATION CAN BECOME PART OF THIS SELECT GROUP OF PROFESSIONAL FIRMS.
WITH THE EXCEPTION OF OFFICIAL ANNOUNCEMENTS, THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS AND STAFF DISCLAIM RESPONSIBILITY FOR OPINIONS EXPRESSED AND STATEMENTS MADE IN TRANSACTIONS. THIS PUBLICATION IS INTENDED AND DESIGNED TO PROVIDE ACCURATE AND AUTHORITATIVE INFORMATION, NOT TO PROVIDE LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. AT TRANSACTIONS MAGAZINE, WE ARE COMMITTED TO THE ENVIRONMENT. EVERY ISSUE IS PRINTED ON RECYCLED PAPER USING SOY-BASED INKS.