Transactions Magazine - November 2012

November 2012

ThaT’s My BankBUILDING EMPLOYEE MORALE

Page 30

LegisLaTionUPCOMING CHANGES IN HARRISBURG

Page 14

Bank BoardsLESSONS FROM THE FREEH REPORT

Page 10

Mike FitzpatrickFinancial Services Committee Member

United States Congressman

2 | Transactions | www.pacb.org

UPCOMING EDUCATION EVENTS

Plan your training for this year with our variety of educational seminars and conferences. Registration is easy and just a click away at pacb.org.

APRIL • 2013 (CONT)CCBSP Q2 WebinarApril 15, 2013

JUNE • 2013Directors ConferenceJune 4-5, 2013Hershey Lodge - Hershey, PA

JULY • 2013CCBSP Q3 WebinarJuly 15, 2013

SEPTEMBER • 2013ALM SeminarSeptember 10, 2013PACB Headquarters - Harrisburg, PA

136th Annual ConventionSeptember 20-24, 2013Boston Marriott Copley Place - Boston, MA

JANUARY • 2013CCBSP Q1 SessionJanuary 15, 2013DoubleTree Monroeville - Monroeville, PA

CCBSP Q1 SessionJanuary 16, 2013PACB Headquarters - Harrisburg, PA

FEBRUARY • 2013Commercial Lending SchoolFebruary 19-20, 2013Crowne Plaza Harrisburg - Harrisburg, PA

Credit Administration SeminarFebruary 26, 2013PACB Headquarters - Harrisburg, PA

APRIL • 2013Security SeminarApril 9, 2013PACB Headquarters - Harrisburg, PA

OCTOBER • 2013CCBSP Q4 SessionOctober 22, 2013DoubleTree Monroeville - Monroeville, PA

CCBSP Q4 SessionOctober 23, 2013PACB Headquarters - Harrisburg, PA

NOVEMBER • 2013Security SeminarNovember 4, 2013Monroeville, PA

ALM SeminarNovember 5, 2013Pittsburgh, PA

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is your bank

prepared?

IN 2013, YOUR STAFF CAN BECOME CERTIFIED COMMUNITY

BANK SECURITY PROFESSIONALS.

In partnership with:

www.protectmybank.com

Please contact Saundra Cunningham, VP-Education Services, at 717-231-7447

or [email protected] about this important, new certification.

INTERESTED?

Q1 Sessions January 15, 2013 • DoubleTree Monroeville • 101 Mall Blvd., Monroeville, PA 15146January 16, 2013 • PACB Headquarters • 2405 N. Front St., Harrisburg, PA 17110

www.pacb.org | Transactions | 3

010101101010001111001010111010011010101001001010010010100100101001010010101001010101010111111110100010001001010010101001000000011110101001111101010111110100000101101010011101010001011111100111000101111110001010110010100010001010100101001001011110011100010111111000101010100001000 FRAUD 0010100010001010010001001100100100101010100000010010 PHISHING 001111111100000101010101001110100111000011110010101001010010010101000001 IDENTITY THEFT 11101010011111010101111101000001011010100110000000111011111000111111110000010101 1000100010100100010011001001001010101 0010101001000000011110101001111101010101010001011111100111000101111110111010110010100010100010001010010001001100100100101010100000001110111110001100 010000001010101010011101001110000111100101010010100100101001010100100000001111010100111110101011111010000010110101001110101000101111110011100010111111000101011001010001010001000101001000100110010010010101010000000111011111

is your bank

prepared?

IN 2013, YOUR STAFF CAN BECOME CERTIFIED COMMUNITY

BANK SECURITY PROFESSIONALS.

In partnership with:

www.protectmybank.com

Please contact Saundra Cunningham, VP-Education Services, at 717-231-7447

or [email protected] about this important, new certification.

INTERESTED?

Q1 Sessions January 15, 2013 • DoubleTree Monroeville • 101 Mall Blvd., Monroeville, PA 15146January 16, 2013 • PACB Headquarters • 2405 N. Front St., Harrisburg, PA 17110


ContentsNovember 2012

FEATURE STORIES

Community Bank Boards: The Freeh Report’s Lessons for All Boards of Directors

Maximizing Energy Savings for Your Bank

2012 Legislative Casualty Report

An Immodest Proposal: How AOCI Affects Your Capital

May All the Chips Fall

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ADVERTISERS

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ARTICLES

Pennsylvania Proud. Fiscally Focused.An interview with Representative Mike Fitzpatrick, Pennsylvania’s sole member on the House Financial Services Committee, and his perspective on avoiding the fiscal cliff.

Giving Thanks for EmployeesC&G Savings Bank utilizes surveys, an intranet website, volunteer opportunities, and various activities throughout the year to motivate their employees. Read about how all of this, and more, is creating a positive environment for both employees and customers in this month’s member profile.

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ON THE COVERCongressman Mike Fitzpatrick sits down with PACB President/CEO Nick DiFrancesco to discuss his time in Congress, the issues facing his district, the Financial Services Committee, family life, and more in this exclusive interview.

6 | Transactions | www.pacb.org THAT’

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Y B

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Transactions Magazineis published monthly by

Pennsylvania Association of Community Bankers2405 North Front Street, P.O. Box 5319

Harrisburg, PA 17110-5319

BUSINESS HOURS:8:30 a.m. - 5:00 p.m. M-FTelephone: 717.231.7447

Fax: 717.231.7445 www.pacb.org

PACB STAFF:Dominic D. DiFrancesco, [email protected] - President/CEO

Tim G. Arthun, [email protected] - Director of Government Relations Natalie S. Bombatch, [email protected] - Publications Manager

Saundra J. Cunningham, [email protected] - VP–Education ServicesEric A. Kovac, [email protected] - Publications Manager

Patricia Kuharic, [email protected] - Administrative AssistantShirley A. Regan, [email protected] - Comptroller/Office Manager

2012-2013 PACB LEADERSHIP EXECUTIVE COMMITTEEChairperson - Ronald B. Geib

President/CEO, Harleysville Savings Bank

Chairperson Elect - Dennis D. CirucciPresident/CEO, Alliance Bank

Vice Chairperson - Andrew W. HasleyPresident/CEO, Allegheny Valley Bank

Secretary/Treasurer - Terry L. FosterEVP/CEO, MCS Bank

President/CEO - Dominic D. DiFrancescoPennsylvania Association of Community Bankers

Immediate Past Chairperson - Chuck LeyhPresident/CEO, Enterprise Bank

General Counsel - Keith A. Clark, Esq.President, Shumaker Williams, P.C.

STANDING COMMITTEES: CHAIRS & VICE CHAIRSEDUCATION

Gary Bradley, Cresson Community BankWendy Nagle, C&G Savings Bank

FINANCE & BUDGETTroy M. Campbell, Altoona First Savings Bank

Roger A. Zacharia, Ambler Savings Bank

FIRSTPACGeorge M. Evans, Indiana First Bank

LEGISLATIVERory Ritrievi, Mid Penn Bank

Todd R. Hurley, First Savings Bank of Perkasie

MARKETINGPat Evans, Northwest Savings Bank

Linda DeAngelis, C&G Savings Bank

MEMBERSHIPKevin J. Gallagher, Huntingdon Valley Bank

Barron P. McCune, Community Bank

STRATEGIC PLANNINGTim Zimmerman, Standard Bank, PaSB

Terry Sager, William Penn Bank

THE PUBLICATION OF THE PENNSYLVANIA ASSOCIATION OF COMMUNITY BANKERS

Pennsylvania’s Community Banks. For people and their neighborhoods.


A WORD FROM PACB’S CHAIRMANSeveral events from the past few weeks have led me back to the word “community.”

First, it’s the time of year when I think a lot about giv-ing thanks and giving back to the communities we serve. Although community banks give back year-round, it becomes especially mindful around the Thanksgiving holiday, a time when most everyone gives thanks for what they have in their lives. I give thanks for the communities we serve, because we could not exist without them.

Second, Nick and I have visited with bankers in their offices and at social events. From our conversations, a common theme formed - the importance of the rela-tionships that community bank employees have with individuals who live and work in their communities. The way that different banks across the state create value for their customers, whether rural, suburban, or urban all comes back to the way they interact with their communities.

Last, a few weeks ago, I attended a birthday party for one of our directors, Sandy. And at that party, someone said that Sandy reflects community. There it was again, the word community, though this time the word was used to describe a person. I couldn’t ignore the signs leading me to reflect on community and what brings value to community banks and individuals. It became obvious to me that the answer is relationships.

We, as community bankers, have built strong relation-ships with those who live and do business in our com-munities. We like to give what we can to help them. Community bankers possess the giver’s mentality - not just seeing what they can get out of a situation, but rather how they can help, how they can give, and how they can make customers’ lives better. These relationships form the value that allows community banks to exist.

When I tell the community banking story, I say that the community is going to dictate whether we remain as a viable organization or not. This is why it’s criti-cal that we take the time to build relationships with community members. Yes, while our pricing must be competitive, it is up to us to make sure that customers want to keep coming back to our banks.

Each year here at Harleysville Savings Bank, for re-view and strategic planning purposes, we ask our-selves the questions, “Do we deserve to exist? How is this community better off because we are in busi-ness?” So far, we keep saying yes, based on feedback we get from customers. They tell us that they appre-

ciate what we do for local organizations and the re-lationships that employees have built with them, and they continue to bring their business to us. We rely on strong relationships to keep our customers happy. It’s what keeps them coming back and allows us to be there for them day in and day out.

And in the spirit of giving, it’s beneficial for us to share our best practices with other PACB members. I don’t mind sharing because I have the mentality that if I help others to achieve their goals, I’ll achieve mine, too. In addition to collaborating with like-minded community bankers, it’s also important to remember that PACB is a resource in helping to accomplish your mission. PACB exists solely to help community bank-ers with education, legislation, and networking. Our strength lies in relying on each other. Individually we may not have economy of scale, but together we pro-vide the best training, the greatest voice, and it’s the shared commitment that makes us special. We have a bright future if we all stick together.

The executive team and some other community bankers will be making a trip to Washington, DC in mid-Novem-ber to represent our interests and be sure that nothing slips through the cracks. PACB is on watch for commu-nity banks in Pennsylvania to give them the chance to survive and be the financial institutions with good val-ues and strong relationships in their communities.

Happy Thanksgiving!

PACB CHAIRMAN RON GEIB


The winds of change are upon us! Fall is slowly giv-ing way to winter; the Presidential Election of 2012 has FINALLY come to a conclusion; and each day more and more community bankers across the Unit-ed States are coming together to unite forces and pro-tect our industry. While the only thing certain is that change will continue, the reality is our efforts appear to be paying dividends.

I must applaud the thousands of bankers who sub-mitted meaningful comment letters in response to the Basel III proposal. The regulatory agencies were flooded with unique opinions as to what the suggest-ed capital standards would do to an already stressed industry. Your actions and the actions of your peers sent a strong message that we are mad as...well, we’re mad...and we’re not going to take it anymore.

Thought I can’t predict how each of the regulators will respond to the cry for relief, I do know that it is in the country’s best interest to scrap Basel III. The last thing America needs is a policy that tightens credit and restricts community investment. Like-wise, America cannot afford policies that further consolidate assets into the hands of TBTF financial conglomerates. With more than 7,000 community banks unified by the ICBA and some 36 state trade associations, like PACB, we can determine the future health of the community banking system in America.

November is a time for thanksgiving. I am grateful for the opportunity to serve an industry of individuals who are committed to doing what is right and good for the communities they serve. I’m grateful because I never have to worry about being on the “wrong” side of an issue in Harrisburg or Washington, DC. The fact is that our entire legislative agenda is focused on strengthening communities and bringing the op-portunity for economic prosperity to every citizen. PACB is here to ensure that the citizens of Pennsyl-vania will always have a strong community banking system responding to their individual needs.

Advocacy is just one benefit of membership; this month’s Transactions magazine is filled with more examples. This month I urge you to read our in-depth interview with US Congressman Mike Fitzpatrick, Pennsylvania’s voice on the House Financial Services Committee. He is our primary contact for committee activities, and the conduit that keeps the other mem-bers of the Pennsylvania Delegation informed on im-portant issues to community banks. Hopefully, you will join us throughout the year as we host several “Town Hall” conference calls with the Congressman.

Fighting the fight in Washington is one way we support community banking, but another way is by introducing our members to contacts like Tom Gibson, President of Energy Management Advisors. This month Tom high-lights the importance of managing your energy costs as a means of strengthening your bottom-line. A different article, written by Attorney Steven Koehler of the law firm Shumaker Williams, offers a reminder that bank board members, regardless if they serve a stock or mu-tual company, have very real fiduciary responsibilities that need to be acknowledged.

Bank directors also share the same responsibility of bank employees to stay up to date on the latest policy changes. As always, you can find a wealth of information and edu-cation programs in the pages of this month’s edition.

Life can be overwhelming. As you navigate the seem-ingly constant changes, know that you have a support team in Harrisburg and Washington specifically fo-cused on watching your back. Whether you look to Tim Arthun’s update on the November election, or Natalie Bombatch’s bank profile, Cam Fine’s outlook on TBTF institutions, or Jim Reber’s take on AOCI, Transactions is one example of the many ways we stand ready to as-sist community bankers in Pennsylvania.

Last month I stressed that PACB should be considered a subsidiary of, not a vendor to, our member banks. This month, on behalf of our entire staff, I will say thank you for the privilege to serve this great orga-nization. We share your spirit of commitment to community, and each of us takes great pride in your success. As you gather with family and friends to cel-ebrate Thanksgiving, I hope you’ll give thanks for the privilege you have in serving your community.

Happy Thanksgiving!

FROM THE PRESIDENT/CEO’S DESK

PRESIDENT/CEO NICK DIFRANCESCO


Volunteering, Rebuilding,Connecting, Coaching,Mentoring, Developing,Inspiring…

How does your community bank give back?

Community Banks, Community Service

Each year, we honor community banks that have gone above and beyond to improve their communities through their commitment of time and resources. If you are a community bank with an ongoing community service, volunteer, or fi nancial literacy program, we want to hear from you. Describe your bank’s program and how it positively impacts your community and the people involved.

Go to www.icba.org/awards and tell us your story.

Entries must be received by December 3, 2012. Winners will be recognized in April as part of Community Banking Month.

GO L CAL BANKSHOPDINE

sm

Communities FirstNATIONAL COMMUNITY BANK SERVICE AWARDS

Communities First12th Annual

Sponsored by:


T

COMMUNITY BANK BOARDS

By: Steven J. KoehlerShumaker Williams, P.C.

his past July the so-called “Freeh Report” was issued by former FBI Director Louis Freeh in the wake of the Jerry Sandusky sex abuse scandal at Penn State. The report was com-missioned by the University’s Board of Trust-ees to investigate the alleged failures of Penn

State personnel in connection with the scandal and to “pro-vide recommendations regarding University governance, oversight and administrative policies and procedures…”

Beyond its sometimes painful and controversial indict-ments of the conduct of specific individuals, the Report’s

THE FREEH REPORT’S LESSONS FOR ALL BOARDS OF DIRECTORS


critique of the actions—or inaction—of the Board of Trust-ees is a serious admonishment and a lesson to all of those serving in a fiduciary capacity. The Report concluded that the University’s Board of Trustees (i) failed to use its over-sight and reasonable inquiry responsibilities; (ii) lacked regular reporting procedures or committee structures to alert them to risk and liability; (iii) failed to set a tone of accountability for everyone; and (iv) received filtered and manipulated information from senior staff, failing to com-petently question or follow-up with its own investigation independent of staff, taking a passive role preferring to be fed information.

Those acting in a fiduciary capacity, whether as a trustee of a university; a director of a non-profit board; or a member of the board of directors of a community bank must seriously consider this message of the Freeh Report and heed its les-son of vigilance in adopting and utilizing best practices in fulfilling the mission of a board in its oversight capacity.

The Comptroller of the Currency in its role as Adminis-trator of the National Banks in Section 501 of the Comp-troller ’s Handbook entitled “Duties and Responsibilities

of Directors” provides that, “Directors are placed in posi-tions of trust by the bank’s shareholders, and both stat-ute and common law place responsibility for the man-agement of a bank firmly and squarely on the board of directors.” This position of trust is also shared by those serving in the capacity as a director of a Community Bank Board and the expectations regarding the conduct of same are also influenced by legislation and regulator and marketplace constraints.

Some basic best practice concepts applicable to community bank boards include board member qualifications; board independence; and policies regarding conflicts of interest and committee structures. These concepts are more fully explored below.

• Qualification of Directors – Board members should have the capacity to contribute to the mission of the Board and be eligible to serve in accordance with ap-plicable regulatory restrictions.

• Board Independence – Banks should consider the composition of the board to insure some degree of in-dependence in order to strengthen the management staff oversight role.

• Committee and Policy Structures – Banks should consider Board committee structures to insure that audit and credit committee functions reflect the ob-ligations of the board regarding board oversight and independence. Particular attention should be paid to

the board’s conflict of interest policies to insure com-pliance with applicable laws and regulations.

The governance structure of a bank and its board is deter-mined by the charter, articles and/or by-laws. In considering the lessons of the Freeh Report and the best practices noted above, careful consideration should be given to the gover-nance framework of the bank and the board. In order to implement institutional change, modifications and amendments to such docu-mentation may be required.

Mr. Koehler routinely coun-sels clients ranging from start-up entities to multina-tional corporations on mat-ters involving immigration law, entity selection, share-holder and operating agreements, intellec-tual property licensing and protection of confidential information, manufacturing sales and joint develop-ment agreements, and general business and real es-tate matters. In the immigration area, Mr. Koehler’s years of experience in representing business and in-stitutional clients provides a complement to the legal needs of clients recruiting professionals and other workers to compete in the global marketplace.

CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE GOVERNANCE FRAME-WORK OF THE BANK AND THE BOARD.


MAXIMIZING ENERGYSAVINGS FOR YOUR BANK

By: Thomas M. Gibson, C.E.P., President Energy Management Advisors


oes your bank have an effective energy management program to reduce ener-gy costs both now and into the future? Monthly energy costs continue to add up and increase each year.

Energy deregulation has allowed busi-nesses today the opportunity to reduce their energy costs. However, the savings obtained through deregulation usually ends when the energy supply contract expires.

Unfortunately, energy contracting, or supply-side energy management, is only a short term solution for reducing energy costs. A long term solution to reducing energy costs is demand-side energy management. Demand-side energy management focuses on reducing energy costs by reducing energy consumption in a building and can be considered to be permanent energy savings! This is real “hard dollar” savings that continues for many years.

The biggest difference between supply-side and demand-side energy management is that supply-side energy man-agement does not involve an upfront capital expenditure. As long as you can identify an energy supply contract that is lower in price than your local utility company’s tariff rate, or Price-To-Compare (PTC), you can save mon-ey. However, how long you actually save money is the real question. As mentioned above, savings only continue through the end of the energy supply contract or when your local utility company tariff rate, or PTC, falls be-low the contract rate and you actually start losing money, which unfortunately seems to be happening more and more today. Although educated energy contracting or supply-side energy management can save your company money in the short term, it should only be a part of your total energy cost management program.

Businesses today often avoid demand-side energy man-agement strategies in their buildings because of the per-ception that savings can only be achieved through a large capital expenditure. For many buildings this is a miscon-ception. There are many no cost, and low cost energy ef-ficiency changes that can be implemented in a building that do not require a large upfront capital expenditure to achieve savings. Some of these changes may include simple things like replacing aging seals around windows and doors, eliminating ventilation ductwork leaks with duct tape, installing inexpensive paddle fans in high ceil-ing areas, and eliminating small space heaters that are present in all offices. It is usually very easy to spot these types of energy leaks in most buildings today.

With rebate programs now available through local util-ity companies, capital expenditures for larger demand-side energy management projects, such as replacing aging lighting/fixtures and HVAC controls, can be mini-mized—which result in shorter project payback periods. In evaluating the value of demand-side energy manage-ment projects, business executives usually begin with determining a simple payback period followed by the

D expected return on investment, or ROI. For demand-side energy management projects, this type of information is usually easily obtained, allowing these projects to move forward quickly.

A great way for businesses to determine how energy ef-ficient their buildings really are today—so that specific buildings can be targeted for possible demand-side en-ergy management projects—is through EPA’s Energy Star Program. By using the Portfolio Manager Program available through the Energy Star Program, the actual Energy Star Performance Rating of a building can eas-ily be determined. The Energy Star Performance Rating can be from 1 to 100 for a building, with a 75 or above rating pre-qualifying a building as Energy Star certified. Buildings with low Energy Star Performance Ratings are usually excellent targets for demand-side energy man-agement programs, with no cost and low cost energy effi-ciency changes a good starting point. Businesses that re-ceive the Energy Star certification for one or more of their buildings receive acknowledgement of this achievement from the EPA, with this award prominently displayed on the front of their building. Significant positive public re-lations opportunities with the local community can be realized through this award.

A comprehensive Energy Management Program should include both supply-side and de-mand-side energy management solutions to maximize energy cost savings for your bank today and for the future.

Thomas M. Gibson is Presi-dent of Energy Management Advisors, (www.emadivi-sion.com) Division of Gib-son Consulting Group, LLC, an independent consulting firm that specializes in energy consulting and management services for financial institutions. Mr. Gibson has successfully provided energy and tele-communications consulting services to the banking, healthcare and other industries for over 19 years.

Energy Management Advisors’ premier service for fi-nancial institutions is a comprehensive energy man-agement program that provides total energy cost con-trol for Clients in both supply-side and demand-side energy management. EMA/Gibson Consulting Group, LLC is an Energy Star Partner and a Pennsylvania PUC approved Conservation Service Provider (CSP).

Mr. Gibson is certified as an Energy Procurement Pro-fessional (C.E.P.), he is a member of the Association of Energy Engineers (AEE) and the Institute of Manage-ment Consultants (IMC). Mr. Gibson can be reached at (724) 836-5554, or at [email protected].


By: Tim Arthun

2012 LEGISLATIVECASUALTY REPORT

sayonara at the end of the year, either voluntarily or invol-untarily, regardless of the election results on November 6th. Those running for different offices are listed as well.

OFFICE MOVERS

Two candidates have opted to seek higher office and not run simultaneously for their current seat. Rep. Scott Hutchin-son (R-Venango) is running for the State Senate District 21 seat and does not face opposition. This is the result of Sen. Mary Jo White (R-Venango) retiring at the end of this year.

Rep. Scott Perry (R-York) is looking to jump from state house to the national house in his bid for the open US House District 4 seat. Incumbent Todd Platts announced his retirement earlier this year citing his initial pledge

all is the season of leaves changing, foot-ball, baseball playoffs, and trying to get out on the course for one more game before the frost. In Harrisburg, it’s also the time that legislators wrap up their work for the year and head back to the campaign trails so that they can come back next year to take care of

unfinished legislative business. Some members decide to retire on their terms and use the fall for goodbyes and to reflect on accomplishments. There are a few members that are defeated in the primary election and do the same, al-though not voluntarily. Still more will learn their fate come November 7 when the morning paper comes heralding the winners and losers of races.

Here is a look at some of the members who will be saying

F


to serve a limited number of years. Although he faces a challenger in engineer Harry Perkinson, the district fa-vors the Republican candidate based on the disposition of the demographics.

Three candidates are seeking higher office but will run si-multaneously for their current seat.

HD 40 - Rep. John Maher (R-Allegheny), running for Auditor GeneralHD 95 - Rep. Eugene DePasquale (D-York), running for Auditor GeneralHD 42 - Rep. Matt Smith (D-Allegheny), running for State Senate (see below)

SENATE

The State Senate will have a different look to it as three more members of the upper chamber have opted for retirement, either earlier this year or as of December 31. In a move that surprised many, Sen. John Pippy (R-Allegheny) stepped down from his Senate District 37 seat earlier this year. A heated contest out west puts Rep. Matt Smith (D) against businessman D. Raja (R). The race is expected to be very close and is seen as one of the top pick-up opportunities for Senate Democrats.

Sen. Jane Earll (R-Erie) announced late last year that she would be leaving the Senate at the end of her term. Earll, a member of the Senate since 1996, was the Chair of the Sen-ate Community, Economic, and Recreational Development Committee. In the 49th Senate District race (Earll), Sean Wi-ley (D) and Janet Anderson (R) are competing. Wiley holds a slight edge based on polling numbers prior to the election but it’s anybody’s guess.

Likewise, Sen. Jeff Piccola (R-Dauphin) announced his re-tirement last November citing various reasons in his deci-sion to not run again. Piccola, a member of the Senate since 1995, was the Chair of the Senate Education Committee. In the 15th Senate District (Piccola), John McNally (R) and Rob Teplitz (D) have had a race filled with negative attack pieces from both camps accusing the other of being party insiders. The district has more democratic registered voters but has historically been an easy Republican seat.

Sen. Jane Orie resigned from her seat earlier this year due to a plethora of legal issues. A special election was held earlier this August that saw Rep. Randy Vulakovich (R) win over Sharon Brown (D). Vulakovich was sworn in as a State Sena-tor following his special election win.

HOUSE

Due to numerous retirements by State House Members, the following lists the retiring members who have retired ear-lier this year or have announced formally their retirement.

HD 3 - Rep. John Hornaman (D-Erie) retiring; Jason Owen (R) and Ryan Bizzarro (D) Too Close

If you want to know more about the comings and goings in the PA Legislature or Con-gress, please feel free to call or e-mail me at 717-231-7447 or [email protected].

HD 5 - Rep. John Evans (R-Erie) retiring; Greg Lucas (R) and Charles Dumas (D)HD 24 - Rep. Joe Preston (D-Allegheny) lost primary; Ed Gainey (D) unopposedHD 37 - Rep. Tom Creighton (R-Lancaster) retiring; Mindy Fee (R) and Russell Stahley (D)HD 43 - Rep. Scott Boyd (R-Lancaster) retiring; Keith Greiner (R) and John Weigel (D)HD 64 - Rep. Scott Hutchinson (R-Venango) running for state Senate; R. Lee James (R) unopposedHD 74 - Rep. Bud George (D-Clearfield) retiring; Thomas Sankey III (R) and Mark McCracken (D) Too CloseHD 79 - Rep. Richard Geist (R-Blair) lost primary; John Mc-Ginnis (R) and Richard Flarend (D)HD 92 - Rep. Scott Perry (R-York) running for US House; Mike Reagan (R) and Charles Comrey (D)HD 97 - Rep. John Bear (R-Lancaster) retired; Steven Mentzer (R) unopposedHD 103 - Rep. Ron Buxton (D-Dauphin) retiring; Patty Kim (D) unopposedHD 112 - Rep. Ken Smith (D-Lackawanna) lost primary; Ray Nearhood (R) and Kevin Haggerty (D)HD 113 - Rep. Kevin Murphy (D-Lackawanna) lost primary; Marty Flynn (D) unopposedHD 115 - Rep. Ed Staback (D-Lackawanna) retiring; Theresa Kane (R) and Frank Farina (D)HD 126 - Rep. Dante Santoni (D-Berks) retiring; James Billman (R) and Mark Rozzi (D)HD 132 - Rep. Jennifer Mann (D-Lehigh) retiring; Mike Schlossberg (D) unopposedHD 133 - Rep. Joe Brennan (D-Lehigh) retiring; David Molony (R) and Daniel McNeill (D)HD 148 - Rep. Mike Gerber (D-Montgomery) retiring; Mary Jo Daley (D) and Mike Ludwig (R)HD 154 - Rep. Lawrence Curry (D-Montgomery) retiring; Mark Sirindes (R) and Steve McCarter (D)HD 155 – Rep. Curt Schroder (R-Chester) retired; Becky Corbin (R) and Joshua Maxwell (D)HD 179 - Rep. Tony Payton (D-Philadelphia) retiring; James Clay, Jr. (D) unopposedHD 182 - Rep. Babette Josephs (D-Philadelphia) lost prima-ry; Brian Sims (D) unopposedHD 201 - Rep. John Myers (D-Philadelphia) retiring; Ste-phen Kinsey (D) unopposed

Rep. Joe Smith – Denotes current memberJoe Smith – General election candidate not favored to winJoe Smith – General election candidate favored to winToo Close – Race too close to call

16 | Transactions | www.pacb.org© 2011 RMAGENCY.COM

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AN IMMODEST PROPOSALHOW AOCI AFFECTS YOUR CAPITAL

here’s been lots of hand-wringing going on by community bankers over the set of proposals known collectively as Basel III. At current, the language contains several items of concern to the vast majority of banks in the country. This includes bewil-T dering matrices of risk weights and capital requirements.

Another source of anxiety is the proposed treatment of un-realized market gains and losses in the investment portfo-lio. At current, it is not an element of Tier 1 capital. Such has been the situation since 1994, when the banking regulators

By: Jim ReberPresident/CEOICBA Securities


Jim Reber is President/CEO of ICBA Securities and can be reached at 800-422-6442 or [email protected].

determined that paper gains or losses on Available for Sale (AFS) securities would be relevant only for audited finan-cial statement purposes. (Accounting standards require their inclusion in Accumulated Other Comprehensive In-come, or AOCI.)

Since this is a much-discussed issue among the ICBA and its members, I thought it would be timely to review recent hard data to help quantify the potential impact of this piece of the proposal. We will use as our data the bond account-ing customers of Vining Sparks, which serves as ICBA Se-curities’ clearing broker. As of June 30, 2012 Vining Sparks had 591 community banks using its bond accounting ser-vice, containing $47 billion in securities.

HIGH WATER MARK?

As you might expect, today capital ratios of virtually every bank in the country would be enhanced if this piece of Ba-sel III were adopted as proposed. This is the residue of the record-low interest rate environment in which we reside. The amount of the appreciation in value is probably close to as high as it is going to get.

At present the typical community bank investment portfo-lio has an unrealized gain of about 2.4 percent of princi-

pal. For a security inventory of $100 million, this would be a gain of $2.4 million. To extrapolate this onto a community bank’s capital ratios, I have to make some assumptions.

First, I’ll assume that 92 percent of the bonds are in AFS, which coincides with the Vining Sparks population. Sec-ondly, I’ll assume that securities make up 33 percent of total assets, which closely approximates FDIC data. Finally, I’ll assume that the financial institution has a marginal Federal tax rate of 35 percent.

With these factors accounted for, average capital ratios would increase about 50 basis points. In other words, if your Tier 1 capital ratio today is 8.0 percent, it would become 8.5 percent in an “after” scenario. This improvement, of course, will fluctuate with interest rates, which is the very source of the angst arising from the proposal.

IT’S HAPPENED BEFORE

Which takes us to the examination of recent history. In the past decade the lowest bond valuations from a market perspective occurred in June 2006. Bankers will recall that business was pretty good at that point: the year of 2006 did not have a single bank failure. Loan demand and collateral values were both strong, Fed Funds were peaking at 5.25%,

and net interest margins were, for the most part, tolerable. The only part of the balance sheet that was problematic was the investment portfolio.

Again using the Vining Sparks population as our data bank, the average portfolio then had a market loss of about 2.8 per-cent. We need to change one of our assumptions to account for the era: the average portfolio then accounted for only 25 percent of the balance sheet. Our math calculates that capital would have declined by about 40 basis points. So a bank with 8 percent Tier 1 would have dropped to 7.6 percent.

That may not seem dramatic, but what this means is that the fall from the highs of 8.5 percent to the lows of 7.6 represents a more than ten percent decline. What also must be stated is that market valuations present an asymmetrical risk, in that interest rates can always rise more than they can fall.

POTENTIAL REACTIONS

If the Basel III proposals become regulation, it can be sup-posed that bankers will employ a range of strategies to ad-dress the issue of market valuation fluctuations. It has been suggested by more than one community banker that more investments will be designated as Held to Maturity (HTM). I would proffer that this tact may not be effective, as the

accounting industry may be moving toward eventual elimi-nation of the HTM designation.

More likely will be a range of strategies that include gen-eral shortening of average durations, use of derivative interest-rate contracts (i.e., swaps) to limit market expo-sure, or the election to value deposits at fair value. Other strategies can be employed that are beyond the scope of this column.

As Basel III continues to be debated on Main Street and in the corridors of the banking regulators, it may be wise for you to review your own portfolio to estimate the potential impact on your own bank. ICBA Securities and the fixed-income broker/dealer industry will be prepared to assist in your port-folio management, and to mini-mize the hand-wringing.

It may be wise for you to review your own portfolio to estimate the

POTENTIAL IMPACT ON YOUR OWN BANK




I am confident that our economy is ready to recover, we just need to get the federal

government out of its way and provide it with the tools required to take off.


NICK DIFRANCESCO (ND): Prior to your election win in 2010, you had also served in the US House in the 109th Congress. How has the political landscape differed, if at all, since your previous time in Congress?

CONGRESSMAN MIKE FITZPATRICK (MF): Serving in Congress has been the highest honor of my life, and I did have the opportunity to represent the people of the 8th District during the 109th Congress from 2005 to 2006. After serving my first term, I returned home to Levittown to continue practicing law.

During the four years be-tween my terms, I watched as the government grew larger and the economy struggled to recover. I knew that I could best serve my community by running for Congress in 2010, and I was honored to be sent back as part of the 112th Congress.

I would say that the most notable difference between my two terms is the focus of Congress. My first term in the House was focused on foreign policy issues and various other domestic policies because frankly, the economy was doing well.

These last two years have focused primarily, appropri-ately, on addressing the economic challenges we face and the need to reduce our ever-expanding debt and deficits.

(ND): Your district includes portions of Bucks and Mont-gomery Counties. When you are out in the district, what is the number one issue for people you encounter?

(MF): Without a doubt, the number one issue on the minds of my constituents is jobs and the economy.

We are in the middle of the weakest economic recovery since the Great Depression with 23 million people out of

work and struggling to make ends meet.

Across Bucks and Montgom-ery Counties, the story has been the same - people want to know if slow growth and high unemployment is the

new normal, or if they can expect a true economic recovery.

In addition to stagnant growth, we’ve seen rising gas pric-es and healthcare costs that continue to grow, despite the promise of the Affordable Care Act to lower costs and in-crease access.

When I’m asked about these issues, I remind people of where we found ourselves economically in the late 1970s.

Interest rates and unemployment were high, there was a gas riot in my hometown of Levittown, and it looked as if America was in decline and our economic reality had changed forever.

WITHOUT A DOUBT, THE NUMBER ONEISSUE ON THE MINDS OF MY CONSTITUENTS

IS JOBS AND THE ECONOMY.


Then in 1980, I voted in my first presidential election for Ronald Reagan and we saw one of the largest periods of economic growth and prosperity in our nation’s history.

I am confident that our economy is ready to recover, we just need to get the federal government out of its way and pro-vide it with the tools required to take off.

(ND): In the 109th and in the current 112th Congress, you have been assigned to the Financial Services Committee. How has your involvement on the committee affected your perception of community banks in the realm of fi-nancial services?

(MF): The most important thing I have learned about com-munity banks during my time on the Financial Services Com-mittee is the crucial role they play in their communities.

Small businesses in this country account for the vast ma-jority of new job creation, and employ nearly 50% of the private sector workforce.

Community banks help provide these businesses with the access to capital they require to grow and create good, family-sustaining jobs. In addition, the community banks provide local entrepreneurs with the financial advice they need to sustain their businesses and their success.

It is also important to recognize the “community” in “community banks.” These institutions have become pil-lars of their communities. From sponsoring local sports teams, to hosting neighborhood fairs and festivals, com-munity banks play a vital role beyond the technical dol-lars and cents of their daily operations.

I am proud to continue to support the success of commu-nity banks across Bucks and Montgomery Counties and I look forward to working with them to promote a real and lasting economic recovery.

(ND): This past year you successfully visited 100 business-es in 100 days, including a local community bank, which undoubtedly offered insight into the struggles small busi-nesses face in a recovering economy. What was the most intriguing aspect of your experience?

(MF): I met with business men and women from a wide range of industries across Bucks County, representing a cross-section of our diverse local economy.

What intrigued me the most is that while the specific con-cerns may have varied from business to business, a clear and consistent message emerged: our economy is struggling

under the weight of a complicated tax code, ineffective and onerous regulations, and rising healthcare costs. As a result of these valuable meetings, I organized the themes and proposals I heard from local manufacturers into a comprehensive legislative plan entitled: “Made in America: A Plan to Promote American Manufacturing and Revitalize Our Economy.”

This plan is full of proposals that I have helped introduce or supported in the 112th Congress to grow our economy and create good, family-sustaining jobs and I look forward to sharing it with my colleagues in the House as we work to promote a lasting economic recovery.

(ND): What do you consider to be your biggest accom-plishment while holding elected office? Either from your time as a County Commissioner or in Congress.

(MF): During my time as a Member of Congress, I have worked on important legislation which will allow small businesses and community banks to jumpstart our econo-my. I view this as my top priority in Congress.

However, my proudest achievement during my time in public service was during my previous term in Congress when I was able to bring the Washington Crossing National

Cemetery for our veterans to Bucks County.

Working extensively with friends in Congress and allies on the local level, I was able to persuade the Veterans Adminis-tration to move the planned site for the cemetery to the pic-turesque, rolling fields where Washington’s army may very well have made camp in the winter of 1777 before crossing the Delaware into Trenton, NJ.

I am proud to have helped provide generations of veterans with a final resting place on these historic grounds.

(ND): There is an overwhelming feeling that a delay in resolving “fiscal cliff” issues will jeopardize the economy and put the country at risk for recession. Are Members be-ginning to feel the heat from constituents about the need to address these issues before it is too late?

(MF): We are approaching what has been called the “fiscal cliff” - the expiration of the 2001 and 2003 tax rates, and the imposition of drastic spending cuts through a process known as sequestration; both scheduled for the beginning of 2013.

Allowing this double hit to our economy threatens to halt completely our already fragile recovery.

It is also important to recognize the

“COMMUNITY” IN “COMMUNITY BANKS”


I am proud to continue to support the success of community banks across Bucks and Montgomery

Counties and I look forward to working with them to promote a real and lasting economic recovery.


I REMAIN HOPEFUL THAT AFTER THE POLITICAL SEASON, CONGRESS WILL

BE ABLE TO COME TOGETHER TO AVOID FALLING OFF THE FISCAL CLIFF.

One report conducted concludes that as a result of the expi-ration of the 2001 and 2003 tax cuts and the new taxes being imposed through Administration policies, the average fam-ily in Pennsylvania’s 8th Congressional District can expect to pay nearly $4,500 more in taxes in 2013.

These tax hikes, left unchanged, will drain more than $20.5 billion from Pennsylvania’s economy at a time of anemic economic growth and discouraging jobs numbers.

The House has done its job in passing legislation to prevent these tax hikes and to deal with the pending sequestration, but the Senate has yet to act.

I remain hopeful that after the political season, Con-gress will be able to come together to avoid falling off the fiscal cliff.

(ND): Do you consider yourself to be a Phillies or Nation-als fan when it comes to baseball?

(MF): Growing up in Levittown, I have been a proud Phil-lies fan my entire life, through the good and the bad.

I know my friends in Washington might not like to hear it, but it’s always a sight when the Phillies play the Nation-als in our nation’s capital and transforms their stadium into

what I’ve heard called “Citizens Bank Park South” thanks to the crowds full of Philadelphia fans.

(ND): You keep an extraordinarily busy schedule as a Congressman, splitting your time between your district and the Capitol, but can you share a little bit with us about your personal life? What do you like to do in your spare time?

(MF): Between my work in Washington and my meet-ings with constituents across Pennsylvania’s 8th Congres-sional District, a free minute is often difficult to find.

However, my top priority beyond my work is spend-ing quality time with my

wife, Kathy and our six children.

Being with them for the basketball games, the school dances and the boy scout meetings is incredibly important to me, and I make it a point to drive them to school myself every morning that I am here in the District.

Members of Congress, indeed anyone serving the pub-lic, are hard-pressed to effectively balance all aspects of their life, and I am grateful to have the opportunity to do just that.


mental organizations, including the Greenspace Alliance.

During his time as Commissioner, Mike led the fight to establish the county’s first Enterprise Zone, a project that eventually led to the creation of more than 4,000 private sector jobs in Bucks County.

As a Member of the 109th Congress Mike demon-strated himself to be an independently-minded advocate for his constituents. He fought for stronger borders, low-er taxes, and smaller budget deficits. Locally he worked successfully to bring the National Veterans’ Cemetery to Bucks County. Mike was also instrumental in flood miti-gation efforts along the Neshaminy Creek watershed, which had been plagued by persistent flooding.

Mike returned to Congress in 2011 after practicing law in Bucks County focusing on representing small businesses and local governments.

Mike and his wife Kathy have been married twenty-two years and have six children - three girls (Katie, Maggie, and Molly) and three boys (Jimmy, Mick, and Tommy). An Eagle Scout, Mike has remained active in Scouting and is a past-President of the Bucks County Council of the Boy Scouts of America.

Congressman Mike Fitzpatrick is a lifelong resident of Bucks County, where he has been an active member of his commu-nity for decades. In the 112th Congress, Mike’s number one priority is job creation. Mike recognizes that government does not create jobs, but fosters an environment in which the private sector can create permanent, family sustaining jobs.

Mike graduated from Bishop Egan High School in Fair-less Hills and earned his bachelor’s degree while working his way through St. Thomas University in Miami, Flori-da. Upon graduation, Mike was awarded the university’s highest service award.

Following graduation, Mike returned to Pennsylvania and in 1988, he graduated from Penn State’s Dickinson School of Law. While attending law school Mike was the Busi-ness Manager of the Dickinson Journal of International Law. Mike is admitted to practice law in both Pennsylva-nia and New Jersey.

In 1995, Mike was appointed to the Bucks County Board of Commissioners where he served for ten years. As a Bucks County Commissioner Mike was a champion of responsible county social service programs, job creation, and efficient government administration. He fought to preserve more than 11,000 acres of beautiful farmland, parkland, and critical natural areas. His record on open space earned him recognition from a variety of environ-

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he goal of C&G Savings Bank, based in Al-toona, is to create a positive, friendly, and energetic environment for both their em-ployees and customers. Being dedicated to identifying ways to achieve that goal, the Bank invested in a personnel position to facilitate collaborative efforts to create

and maintain this environment. In November 2009, Linda DeAngelis experienced a title change from Accounting and Employee Benefits Of-ficer to Staff Services Direc-tor, which expanded her role at C&G Savings Bank to in-clude some functions to fo-cus on the environment that the Bank creates for their employees and customers.

The Bank established processes to provide personal and meaningful recognition to their employees for their positive contributions. C&G Savings Bank relies on surveying both their employees and customers to obtain feedback about the Bank’s environment and activities. When employees begin and end their jobs, they are given an interview. Though these surveys are not new, the Bank continually monitors and analyzes the data in order to improve their practices.

More recently, C&G Savings Bank implemented annual em-ployee satisfaction surveys. The Bank values the opinions of their employees and relies on survey responses to improve the workplace practices and environment, including those to increase employee morale. One question asks, “What about our company excites you?” Listed below are responses to this question, in addition to other related employee comments:

“The fun things we do, like the games, holidays, recipes, etc. I really enjoy working for a hometown bank that really cares about its custom-ers and employees!”

“The real sense of family. Overall, I am very happy to be part of the C&G family

and look forward to many years ahead with the Bank.”

“Dress down/fun days! The environment is upbeat, and the center for happy employees and happy customers is fabu-lous! The Bank appreciates employees and their dedication.”

“I have been impressed with the way this company treats their customers! Since I’ve been here, we always seem to be doing something special for the customers. Whether it’s of-

TIT’S A GREAT WAY TO SHARE

RESULTS AND RECOGNIZE OUREMPLOYEES AND OFFICES.

GIVING THANKS FOR EMPLOYEES


fering coffee or flower seeds, the customers really seem to appreciate what we give out.”

“I also think what this company does for its employees is pretty impressive too! It’s the little things…they make me happy and I feel appreciated too! How awesome is that!!??”

To Bill (President and CEO): “Thank you...I have never worked anywhere else that I have felt so appreciated.”

“Next to being a Mom, work-ing at C&G is the most reward-ing job I’ve ever had. Everyone from the Board Members down genuinely care.”

In addition to employee sur-veys, C&G Savings Bank surveys their customers, both on-line and in bank branches, to engage them and encourage them to be a part of the Bank’s environment. Supervisors share the positive comments with their employees, and the comments are also shared companywide via E-Board, the Bank’s intranet system, for all employees to see. “It’s a great way to share results and recognize our employees and of-fices that are providing excellent customer service. The Bank encourages employees to reach out and congratulate those

employees for a job well done. We find that happens a lot and makes everyone feel good about working for C&G Savings Bank,” explained DeAngelis.

The Bank is careful to be sensitive to employees who don’t want to have their photo taken or don’t want to be congratu-lated publicly on E-Board. Some are shy and would rather not be in the spotlight. DeAngelis said, “Though the bank contin-ues to remain sensitive to employee preferences, the more we

use E-Board to congratulate our staff, the more employ-ees are open to sharing their compliments with the entire company. Employees have be-come more comfortable with the process.”

Below, you’ll find a sampling of customer comments that were posted on E-Board under the title “Banking with the Stars.” “I noticed that each customer that came in while we were waiting, the tellers knew each one by name! You don’t see that too much anymore. More of a ‘PERSONAL’ touch, rath-er than a number.”

“The Manager and staff near the courthouse facility are the

THEY’RE READING ABOUT EACH OTHER AND THEY REALLY FEEL LIKE THEY’RE

PART OF C&G SAVINGS BANK AS A WHOLE.

By: Natalie Bombatch

GIVING THANKS FOR EMPLOYEES


best caring people around. They are really people-first em-ployees!! They are the best!”

“Many banks advertise their friendliness. You are not only friendly, but understanding and professional, as well. Thanks to you and the rest of C&G Savings Bank for taking the time to appreciate our unique situation.”

It is this kind of candid feedback, from both employees and customers, that lets the Bank know they are doing something right. And what is it they are doing to keep their employees so happy and appreciated? A lot! The Bank brings employees together by using E-Board, hold-ing fun events throughout the year, offering career devel-opment opportunities, encouraging community volun-teer involvement, and more!

C&G Savings Bank uses E-Board for more than sharing customer comments with employees: “E-Board is utilized as a communication and motivational tool and to keep the Bank’s offices and employees unified.” DeAngelis contin-ued, “Given that we have six different branches and a total of 40 employees, E-Board really does keep everyone con-nected. They’re reading about each other, and they really feel like they’re part of C&G Savings Bank as a team.”

The Bank has created E-Board publications, for example the “C&G Insider,” where employees can share positive per-sonal and professional news, like a wedding or birth an-nouncement or earning an award. Another document is the “Employee Spotlight” used to highlight a Bank employee several times a year. The selected employee is asked a set of questions to answer and expand upon. DeAngelis com-mented, “The last person in the spotlight was a Branch Manager. When we interviewed her, her staff requested to

contribute their positive comments. What a great compli-ment to our Manager and her employees, as well!”

The Bank also uses interactive documents on E-Board. For example, individual branches can post documents for ac-tivities like a potluck lunch where employees can sign up to bring a dish. Additionally, DeAngelis explained that the Bank has a Trade Store on E-Board, where employees can buy and sell C&G brand dress down apparel, as well as a Bargain Corner, where employees can buy and sell their personal items. “Both of these documents are completely generated and maintained by employees, and they’ve been quite popular,” said DeAngelis.

An employee committee frequently meets to identify ways to maintain interest, create fun, and optimize the utilization of the E-Board system. Employee feedback is encouraged and solicited. The committee reported to the Bank that employees wanted something fun published on E-Board each day, like a quote, joke, fun fact, or reci-pe. DeAngelis said, “We rotate the responsibility of these daily updates to offices and departments, so that everyone has a chance to be involved with the content that is shared on E-Board. We want to know what employees want to see and do - it keeps them more engaged.” President and CEO Bill Ritenour added, “I make it a point to wish everyone at the Bank a Happy Birthday. A lot of times I’ll post a birth-day wish on E-Board, and I’ve had employees respond to me at 8:00 or 9:00 at night...that means they are getting on the Bank’s intranet in the evening, on their own time. How cool is that?!”

Not all employee activities happen online. C&G Savings Bank continually tries to identify ways to celebrate and create excitement in their workplace. Employee holiday

When asked, “What did you like best about C&G Savings Bank?” customers responded:

“Excellent service, always willing to go the extra mile and always with smiles.”

“Connie and Kathie are very professional! And are very nice people to deal with.”

“Always recognize holidays with treats and coffee. This is not found in any other bank.”

“Everything!”

“Treating me like a wanted and good customer.”

“BANKING WITH THE STARS”“The coffee, cookies, lollipops, mints, and smiles!”

“Easy to work with. Seemed very honest and kind.”

“Atmosphere and the friendly, willing-to-please employees.”

“The kindness that everyone shows to help you with your needs.”

“Friendly, small town service.”

“It is a local bank that cooperates with our local organization.”

“Free coffee, longer hours, and closeness to home. Very convenient location.”


blood drive, where available employees throughout the Bank volunteered. Employees did such a great job promot-ing the event that the Red Cross was unprepared for the large donor turnout and was forced to turn away donors. DeAngelis added, “The local Foodland donated drinks and some of our employees volunteered to bring in homemade soups and sandwiches for the donors. It was definitely an event that brought our employees together with individuals and businesses within the community.”

The Bank also holds an annual “Summer Days” cookout event at their branch locations. Hot dogs, hamburgers, and ice cream are available to everyone stopping by. “Our com-munities love Summer Days! Employees are welcome to help grill, serve, and have fun at the events,” said DeAnge-lis. Summer Days initially was held for one day at just one of our branch locations and, due to its popularity, has since expanded to two days each at five of their branch offices.

C&G Savings Bank has a definite focus on employee morale. The Bank is continually trying to identify ac-tivities that are new and unique to keep the environ-ment creative. The goal is for employees to feel ap-preciated, challenged, and engaged. “Positive morale contributes to a positive and enthusiastic environment, which is a benefit enjoyed by the Bank and customers, too,” said DeAngelis. “And all of this is made possible with the support of our President and CEO, Bill Ritenour, and our Board of Directors.”

If you would like Transac-tions to feature your bank as our Community Bank Profile in an upcoming is-sue, please feel free to contact me at [email protected] or 717-231-7447.

lunches, Halloween dress-up days, pumpkin carving contests, Steelers dress-down days, and employee weight loss contests are a few ways they have fun. (Yes, they actually have fun with weight-loss contests!) Employees contributed proceeds from a recent weight-loss contest to a local charity, and the Bank matched the donation. Decorating offices for various holidays and events are al-ways enjoyed by both employees and customers. DeAn-gelis admitted, “We’ve also developed other unique ways to celebrate, but we just don’t want to give away all of our secrets!”

The Bank also offers career development opportunities to employees to provide them with ways they can develop their skills to advance into positions in which they are in-terested. Their goal is to highlight employees’ strengths and let them know there are opportunities available within the Bank.

Additionally, the community benefits from a positive envi-ronment. Each day, customers are greeted with smiles and offered coffee (in C&G logo cups) in all of C&G Savings Bank’s branches. Customers are treated with lunches or small gifts at different times throughout the year. In sup-port of Breast Cancer Awareness Month, the Bank desig-nated several days in October as “Pink-Out” days where employees had pink dress-down days and customers were given pink C&G chip clips and pink ribbon note pads. “We make a conscious effort to identify ways to support our communities and to engage our employees. We want C&G Savings Bank to be a place that they like to work and that it is a positive experience for them, and in turn a positive experience for our customers,” elaborated DeAngelis.

In addition, employees choose a charity to support through Blue Jean Fridays and other fundraisers. Most recently em-ployees raised $2,504 for their charity, Make-A-Wish.

Employees are supported and encouraged to volunteer within their communities. Recently, the Bank’s Nanty Glo office sponsored a very successful American Red Cross

The goal is for employees to feel

APPRECIATED, CHALLENGED, AND ENGAGED


MAY ALL THE CHIPS F

By: Camden FinePresident and CEO

ICBA

ALL


t’s well understood and universally agreed that everyone inside and outside Washington wants to vanquish too-big-to-fail forever. No one wants to see anymore taxpayer bailouts for megabanks, or risk another financial system meltdown. Even a few former megabank chief executives echo ICBA

in urging federal policymakers to break up Wall Street’s mega-financial institutions.

But, of course, we’re not there yet. Despite some of the law’s unfortunate detours, the foremost aim of Wall Street financial reform was ending too-big-to-fail, and hopefully policymak-ers will have the will to use their authority in that regard. Yet everyone recognizes that financial overconcentration has got-ten worse since the financial crisis began. Establishing the next steps in reform by regulators and Congress is where the policy debate now stands, and there are diverse ideas and proposals under consideration.

ICBA has urged the new Financial Stability Oversight Council to use its full statutory authority to downsize the sprawling, dangerously structured Wall Street mega-financial institu-tions. However, the problem of too-big-to-fail is twofold. ICBA

and community bankers have long recognized that size and structure is only one dimension. The other is untangling the current chaotic, convoluted nest of both traditional and nontra-ditional financial operations of the Wall Street conglomerates.

Some of the most constructive too-big-to-fail proposals in Washington would have Congress enact a modernized ver-sion of the Glass-Steagall Act’s once longstanding separation of commercial banking and investment banking activities. FDIC Director Thomas Hoenig offered one leading proposal more than a year ago while he was president of the Kansas City Fed-eral Reserve. Similar to other proposals, it outlines how finan-cial institutions should be made to choose one of two distinct business models. One would be a traditional banking model that would allow for only FDIC-insured deposit-taking and lending and other core banking activities, such as payment and settlement, and trust and wealth management services. This option would support the stable, relationship-based ac-tivities that community banks uphold—the essential func-tions of our financial system and economy.

Under a second, vastly different transaction-based model in-stitutions would only engage in the highly structured Wall Street investment activities, such as securities dealing, mar-ket making, and proprietary trading. With inherently differ-ent risks than traditional banking, these investment activities would be restricted to funding not backed by FDIC insurance, establishing a visible bright line for all to see that would elimi-nate moral hazard ambiguities that persist today.

Camden Fine is President and CEO of ICBA and can be reached at 202-659-8111 or [email protected].

I Hoenig says adopting his proposal would create a more simplified regulatory framework for less-risky financial institutions performing traditional banking functions. This would allow for eliminating much of the regulatory overkill for community banks that is driven by the ex-treme complexity and free-for-all activities of today’s larg-est Wall Street conglomerates. Most important, it would establish a regulatory framework that, combined with other measures against industry overconcentration, would allow all financial institutions to prosper or fail equally based solely on their own decisions and performance—without any too-big-to-fail exceptions. For every player in the financial system, chips could then fall where they may, crisis or no crisis.

Let the investment-minded Wall Street firms make their windfall profits. But let them take their losses too—all of them, without taxpayer bailouts. Ultimately, that would be the measure of what ICBA, commu-nity bankers, and everyone else wants—full and final liberation from too-big-to-fail.

EVERYONE RECOGNIZES THAT FINANCIAL OVERCONCENTRATION HAS GOTTEN WORSE

SINCE THE FINANCIAL CRISIS BEGAN.

36 | Transactions | www.pacb.orgNews From You



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Transactions Magazine - November 2012