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Community Bank Expands Presence with Second Springfield Branch

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Community Bank hosted a ribbon cutting at its new Boston Road branch in January.
Banking and Financial Services

Doubling Down

 

Community Bank hosted a ribbon cutting at its new Boston Road branch in January.

Community Bank hosted a ribbon cutting at its new Boston Road branch in January.

 

For Community Bank, N.A., Springfield was originally a remote outpost. But now, the institution is increasing its footprint in the City of Homes.

“We really are excited about Springfield as a market,” said Matt Plasse, regional president for New England. “I think it looks pretty similar to a lot of the markets where we operate — like, in upstate New York, I think of Syracuse or Rochester or Binghamton, markets where we really do well. There’s no single industry that dominates any one of those markets. It’s pretty diverse, small to mid-sized, family-owned businesses.

“And that’s what we do,” he added. “We’re a relationship bank. We don’t get too specialized in any one area. And at the end of the day, in order to be a community bank — which is part of our name, but it’s at the heart of what we do — you’ve got to have people in the market. So that’s why we are expanding in Springfield, and investing in that community.”

When Community Bank, whose strongest roots are in New York and Pennsylvania, acquired Merchants Bank in 2017, it gained a large network of branches in Vermont … and one in Massachusetts, in downtown Springfield’s Tower Square, which had been NUVO Bank before hanging the Merchants banner for a short time.

Located far from any other Community location, it would have been a prime candidate to be shed altogether, but instead, not only did it become a strong-performing branch, but its success has led, almost a decade later, to a second Springfield branch, which opened on Boston Road in late January.

Matt Plasse

Matt Plasse

“At the end of the day, in order to be a community bank — which is part of our name, but it’s at the heart of what we do — you’ve got to have people in the market. So that’s why we are expanding in Springfield, and investing in that community.”

“It’s not a small investment. We’re excited about this area,” Plasse said. “Boston Road is on the upswing. There’s a lot of investment going on in that side of the city, and we’ve already got great people in Springfield. And now, we’re putting more people on the ground.”

Like the first Springfield branch, Plasse said, the Boston Road office offers the usual range of banking services, from checking and savings accounts to lending, both personal — mortgages, home equity loans, auto loans, and the like — and business loans, from real estate to traditional commercial and industrial borrowers.

“We do have to be somewhat generalists and meet every customer where they’re at, so we have to offer everything,” Plasse said.

The Tower Square location has proven to be a strong performing branch over the past eight years, he added, which paved the way for the expanded footprint.

“That team has proven itself, and we like the market in general; it looks very similar to other places where we thrive. So it just reached a point where we said, ‘OK, we want to invest in Springfield.’ It’s a great opportunity for us.”

 

What’s in a Branch?

Most community banks have found over the past two decades that online banking did not make physical branches obsolete.

“That’s really how we deliver our model: having people in the markets, in our communities, establishing relationships. Customers can’t do everything online, so they’re coming to us to help their families or their businesses,” Plasse explained.

Even for routine transactions, “there’s still certainly a bunch of folks that just love to come in; maybe it’s part of their day. They’re very loyal customers, and we establish relationships with them,” he added.

“But certainly over my career, I’ve seen a shift. It used to be a very transactional role — high volume, you have people lined up out the door, you’re just trying to help everybody get their transactions completed. Now that role — and this is why we train our folks differently now — is more consultative. You’re asking them questions about why they’re there, what they’re looking for, how we can help them, and we have a lot more services to offer that can be super helpful.”

“That’s really how we deliver our model: having people in the markets, in our communities, establishing relationships. Customers can’t do everything online, so they’re coming to us to help their families or their businesses.”

Community Bank, in fact, offers what Plasse characterized as a four-legged stool when it comes to financial products, including its banking services, a wealth management group, an insurance entity, and retirement and benefits administration products.

“We position ourselves as a diversified financial services company. We see that as our differentiator from other banks in terms of our business model. And those entities really run on their own as fully scaled businesses, and they contribute an outsized portion of our revenue,” he went on.

“So, compared to our peers, we’re number one by far in terms of our revenue mix, the revenue that comes from non-bank fee income. But the only way to cross-sell those is to interact with your customers and consult with them and deliver those other options to them every day. So that’s the synergy we’re trying to get, and to have branches on the ground is the way to do that.”

At the same time, the bank intends to get involved in — and give back to — the local nonprofit landscape.

“It’s in our name, and it’s what we do every day, but as an institution, we give about $4 million a year to the community by way of donations and sponsorships, that sort of thing. Last year, we supported about 2,200 different organizations.”

The bank does so with a regional model, Plasse added, noting that the existing Springfield branch contributed about $61,000 to 22 different organizations last year, while team members volunteered more than 200 hours in the community.

“I’m the regional president for New England, which, for us, includes Vermont, New Hampshire, and Massachusetts. And we have separate committees within each region to identify what the community needs are. We don’t want to have a blanket approach. I’m part of that committee, and we decide where to put our dollars into the community along with members from each one of those states. So we have people representing Massachusetts on that committee and advocating for local nonprofits in the Springfield area, and then we have other folks from New Hampshire and Vermont as well.”

As part of the recent ribbon cutting event on Boston Road, Community Bank donated $5,000 to the Springfield Symphony Orchestra and also committed $25 per loan or deposit opened at that location to Rick’s Place, which supports grieving young people and their families.

“And it’s not only dollars — it’s volunteering, too,” Plasse added. “In New England alone, it was 2,700 hours last year, and bank-wide, it was 17,800 hours of community service from our teams. Everyone is really encouraged to live and breathe the bank. We put our orange on — we kind of stand out. We look like a bunch of hunters out there, but it’s pretty fun when everyone gets together.”

 

Focus on the Future

Plasse said Community Bank has its eye on further growth, both organically and, when opportunities arise, with new locations.

“The big headline the other day was about the Webster and Santander merger. So we we expect we’ll see some opportunities out of that; when there’s a merger, sometimes divestitures of locations can come up,” he explained.

In any case, “we’re not done in Springfield. I don’t know what the next expansion might look like, whether it’s a de novo branch like we did on Boston Road or something else. But ideally, you have a hub and the spokes of the branch network, with the hub being downtown and several spokes around it.”

While regional expansion in Western Mass. is certainly possible, he added, the focus now is building in and around Springfield.

“We are certainly opportunistic if we feel like it’s the right time to strike. Our CEO is not afraid to do that, and we’re actively looking at similar things in New Hampshire and other places,” Plasse explained. “But in in terms of market share in Western Mass., the branch up and running downtown obviously has done very well, and we will attempt to replicate that on Boston Road.

“We’re very excited about our customers in Springfield. They may not root for the same football team as our friends in upstate New York, but they they look and feel the same, and they appreciate our core values of integrity, excellence, teamwork, and humility,” he said, while putting emphasis on the last one.

“I’ve worked at other institutions where I didn’t necessarily feel like that was evident, but humility is huge; there are no egos at this bank. We had an entire executive team came to show up in Springfield, which hopefully tells the community how important it is. The CEO was there, the CFO was there, head of HR was there, and all the CEOs of the business lines were there — the four legs of the stool. They’re all zero-ego, totally approachable people, which has been really encouraging. And I think once people come in and interact with us in the branch, they feel that.”

Under New Leadership, Greenfield Savings Bank Forges Ambitious Plans

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Peter Albero, left, takes the reins from Tom Meshako on April 1.
Banking and Financial Services Special Coverage

Time of Transition

Peter Albero, left, takes the reins from Tom Meshako on April 1.

Peter Albero, left, takes the reins from Tom Meshako on April 1.

 

As Tom Meshako remembers it, by the time he was done interviewing Peter Albero, he was convinced the latter was not only his best candidate to become CFO and treasurer at Greenfield Savings Bank, but also a possible successor when he moved into retirement in a few years.

“I thought we had a lot of similarities — we felt the same way coming from a public institution; we came here for the same reason, the right reason,” said Meshako, noting that, like Albero, he came to GSB to be in a mutual bank setting and in a position to give back to the community it was serving.

Albero, who came to GSB from Salisbury Bank in Connecticut after it was acquired by NBT Bank, added that, “as a community bank, we didn’t do a lot for the community, because we had to pay dividends to shareholders. “I wanted to work at an institution where we could give back to the community instead of giving to shareholders.”

Meshako’s initial thoughts back in the summer of 2023 turned out to be prescient, as Albero prevailed in nationwide search last year for a successor to Meshako, who will retire to Florida in the spring.

Albero, who will take the helm on April 1, does so at an intriguing time in the bank’s history — although he says the banking industry is “always interesting.”

Indeed, the institution is expected to reach $1.5 billion in assets in the first quarter of 2026, an important milestone and another threshold as GSB continues its quest for an all-important commodity in the banking industry — size.

“I wanted to work at an institution where we could give back to the community instead of giving to shareholders.”

“Scale matters, and our goal is to continue to grow our loan book without increasing our head count and become more efficient,” said Albero, noting that much of the bank’s growth has come on the commercial lending side.

Meanwhile, the bank will cut two significant ribbons in the coming weeks. One will be at the renovated Leavitt-Hovey House next door to the bank’s headquarters on Main Street in Greenfield, and the other will be at its latest branch, a key piece in a massive redevelopment project at the site of the former Tasty Top in Easthampton.

The former is a nearly $7 million initiative that will transform the landmark, built in 1797 and home of the city’s public library between 1909 and 2023, into a home for the bank’s trust and wealth management, residential lending, and cash management teams.

GSB’s ‘southern headquarters’ in Easthampton is slated to open within the next several weeks.

GSB’s ‘southern headquarters’ in Easthampton is slated to open within the next several weeks.

The latter is a $7 million investment that marks the bank’s latest and boldest effort to “move south and east,” as Albero put it, meaning into Hampden and Worcester counties, and beyond the bank’s historic base in Franklin and Hampshire counties.

And as the bank continues this expansion east and south, the ‘community’ it serves has become much larger, noted both Albero and Meshako, adding that GSB has responded accordingly, increasing its charitable giving from $300,000 when Meshako started at the bank a decade ago to $1.2 million last year, with that number expected to move higher as the bank continues to grow.

“Tom and I both agree that, if the bank does better, the communities can do better,” Albero said. “When you move into a community, you have to support that community and its nonprofits.”

For this issue and its focus on banking and financial services, BusinessWest talked with Albero and Meshako about the transition in leadership at GSB and what’s in the broad business plan for this 157-year-old institution.

 

Purposeful Journey

Albero spent the bulk of his career in a setting far removed from rural Greenfield — New York City.

He spent 26 years in senior roles in the financial controller group at Morgan Stanley and also worked as a risk advisory consultant at PricewaterhouseCoopers. Desiring a change from the Big Apple, he joined Salisbury Bank & Trust in Connecticut as CFO.

He did that for six years before Salisbury was acquired by NBT Bank in 2023, prompting him to seek another significant career change, this time in the mutual bank setting.

“Tom and I both agree that, if the bank does better, the communities can do better.”

“Salisbury Bank was a community bank, but it was public,” he noted. “We found that it was very hard to grow as a public bank, trying to compete with much larger institutions, when you’re focused on growth and earnings quarter over quarter.”

While Albero was chosen as GSB’s new CFO in early in 2023, he stayed with Salisbury until the merger with NBT had been finalized before coming to Greenfield, a wait Meshako was willing to endure.

“I waited nine months for Peter to finish that transaction because I knew he was the person I wanted,” he recalled. “We seemed to be on the same page, and I kind of knew he was the person that would be taking my position when I retired; I knew he’d make a great candidate.”

As he takes the helm, Albero will be focused on keeping the bank on a strong growth trajectory, a pattern that has emerged “organically and safely,” and continued in 2025, with roughly 6% growth.

“Sometimes, when you try to grow your portfolio, you’ll do a little higher risk rating, but we didn’t — we stayed with high-quality customers while also moving more south,” Meshako said, adding that the move to open a branch in Easthampton is the latest and boldest manifestation of this strategy.

The renovated Leavitt-Hovey House will become home to the bank’s trust and wealth management business, residential lending, and cash management teams.

The renovated Leavitt-Hovey House will become home to the bank’s trust and wealth management business, residential lending, and cash management teams.

Actually, this will not be just a branch, Albero said, referring to it instead as the bank’s “southern headquarters.”

Indeed, the facility, due to open its doors later this month or early in April, will include a commercial lender, a wealth management and trust services representative, and a residential lender, as well as the branch, he noted, adding that it will serve as a staging point, if you will, for continued growth in Hampden County, in all facets of banking, but especially commercial lending.

Indeed, where once the bank’s commercial portfolio had 50% to 60% or more of its originations in Franklin County, that number is now less than 25%, a nod to both slow growth in the Greenfield area and the bank’s pursuit of business east and south of its traditional base.

“We have a lot of borrowers in the Springfield market, and they refer other borrowers to the bank because of our ability to get the deals closed,” Albero said. “And we have some other borrowers more toward Worcester, and they refer more borrowers to our commercial team for the same reason.”

Meanwhile, with assets now approaching $1.5 billion, GSB has expanded its sweet spot when it comes to commercial loans, its niche now being the $3 million to $7 million range, where it was once $1 million to $3 million.

“That’s another way that you can grow, not just doing more loans, but larger loans as well,” Meshako said, adding that this higher ceiling creates many more opportunities to do business across the region.

 

Points of Interest

When asked about plans for further expansion beyond Easthampton and when and where that might take place, Albero said there was nothing on the drawing board yet.

Indeed, the bank is focused on its two large investments — the Easthampton facility and the renovated Leavitt-Hovey House — and assimilating those into the corporate portfolio.

“We have a lot of borrowers in the Springfield market, and they refer other borrowers to the bank because of our ability to get the deals closed.”

“Our plan is to make sure that Easthampton becomes profitable very quickly,” he noted. “We’ll continue to evaluate the markets, but we’re not going to jump in immediately. We have a lot to digest from a cost perspective.”

Renovation of the Leavitt-Hovey House represents a different kind of investment in the community — not a check to a nonprofit, but the restoration and reuse of a city treasure, Meshako said.

“If we didn’t buy it, I think it would have sat in the state that it was in and continue to deteriorate,” he said. “This is something we did to help the city of Greenfield and create some tax revenue. We needed additional space, and we were looking for some place to build or possibly buy, and we thought that renovating the Leavitt-Hovey House would help this whole corner of downtown.

“We’re bringing it back to its original luster,” he went on, referring to the color scheme from the 1950s, when the home was placed on the National Register of Historic Places, adding that the facility is slated to open late this month or early in April.

Peter Albero says GSB’s overall growth strategy involves moving “south and east.”

Peter Albero says GSB’s overall growth strategy involves moving “south and east.”

As for Easthampton, the leaders at GSB saw that community as the logical spot for its southern expansion. That city is similar to Greenfield in many ways — a former manufacturing hub that is reinventing itself as a center for the arts and hospitality, especially in renovated mills — but it also neighbors thriving Northampton, a city where the bank already has a presence.

“There’s been quite a resurgence in Easthampton,” Meshako said. “That whole mill district just took off, and it has helped the whole downtown. The city continues to prosper, and we decided that this is where we wanted, and needed, to be.”

As for the former Tasty Top site itself, plans call for a Starbucks, a steak restaurant, housing, and other developments that should bring foot traffic — and additional business — to the bank.

Continued growth is important to GSB, as it is to all banks, said Albero, as the cost of doing business continues to rise on many fronts, and institutions seek economies of scale.

“Technology costs continue to rise, and it’s difficult, also, to attract employees, particularly where we are in Western Massachusetts, so you ending up paying higher salaries to attract individuals,” he explained. “We find that’s it’s challenging. Every time you continue to grow, you can’t just continue to add head count; you must become more efficient, but the technology costs to do that are very expensive.”

And while the bank plans to continue to grow organically and safely, as Meshako mentioned, it will explore options for acquisitions as well.

“We will consider M&A transactions, but we will be the acquirer,” he told BusinessWest. “But our focus over the next three years is on efficiency, increasing our earnings, and boosting our capital so we have a long runway for organic growth. And while we’re doing that, we’ll keep an eye on the M&A market; if the opportunity is there, we’ll take advantage of it.

“We’ll keep our options open,” he went on, adding that this might be considered the overall game plan moving forward for an institution that it is in a time of transition — in many different ways.

Consumers Rank Banks Above Other Industries for Fraud Protection

By Contributor
Banking and Financial Services

Survey Says

 

U.S. adults overwhelmingly trust banks more than any other entity to protect them from fraud, according to a new survey conducted by Morning Consult on behalf of the American Bankers Assoc. (ABA).

By more than a 6-to-1 margin over the next closest industry, consumers chose banks (50%) over healthcare providers (8%), non-bank fintech payment providers (8%), the government (5%), cryptocurrency companies (2%), major retailers (1%) and telecom companies (1%).

The research, unveiled at ABA’s 2025 annual convention in Charlotte, N.C., also gauged consumers’ views on access to their personal financial data, bank satisfaction, the competitive landscape of the banking industry, and the role banks play in the U.S. economy.

“Financial predators are more sophisticated than ever, and America’s banks are leading the charge to protect their customers from these threats,” said Rob Nichols, ABA president and CEO. “Consumers recognize and appreciate banks’ round-the-clock efforts to detect and combat fraud, and our industry continues to leverage award-winning consumer education campaigns and other tools to empower Americans to spot scams before they can do harm.”

Nearly nine in 10 bank customers (87%) said their bank takes proactive steps to protect them from fraud and scams, and three-quarters (74%) believe their bank does more than businesses in other industries to protect them. In addition, 59% of consumers have received a fraud alert from their banks alerting them to potentially suspicious account activity, and 96% found these alerts valuable.

Rob Nichols

Rob Nichols

“Financial predators are more sophisticated than ever, and America’s banks are leading the charge to protect their customers from these threats.”

Notably, 62% of alert recipients are concerned with government regulations stopping all bank messages, including fraud alerts. Under the Federal Communications Commission’s (FCC) existing Telephone Consumer Protection Act (TCPA) rules, if a consumer responds ‘STOP’ to a text message from their bank on any topic — such as marketing messages — the regulation would effectively require their bank to stop sending them all messages, including fraud alerts notifying them of potentially suspicious activity on their account. The FCC is considering issuing a notice of proposed rulemaking that would update the TCPA rules to address this and other issues, an action that ABA strongly supports.

 

Personal Financial Data Rights

The survey also explored Americans’ views on access to their personal financial data, or ‘open banking,’ which is when consumers give permission for their financial information — like their account balance or spending history — to be shared from their bank (or wherever it’s stored) to another company, such as a budgeting app or loan service.

Most adults believe that data shouldn’t be shared if it could put consumers at risk (80%), that all organizations holding consumer data should follow the same sharing rules (76%), and that data aggregators that are monetizing the data obtained from banks should share in the operating costs (70%). Eighty percent of consumers said companies shouldn’t use data they obtain from banks to train AI models or develop new products and services without explicit consumer consent.

“The survey shows that consumers agree that everyone in the open banking ecosystem should be subject to the same rules and that sensitive personal financial information should not be used by data aggregators to power AI models or for market research absent a consumer’s clear permission,” Nichols said. “Banks should be empowered to lower the risk of data breaches and unauthorized activity to protect consumers while ensuring they can safely share their data with companies they trust.”

 

Satisfaction with Banks

The new survey also found that consumers are happy with their bank and view banks as vital to the U.S. economy. Among Americans with a bank account, 89% say they are “very satisfied” or “satisfied” with their primary bank, and 95% rate their bank’s customer service as “excellent,” “very good,” or “good.”

The survey found that Americans believe the nation’s banks are competing aggressively for their business and that they have ample access to banking services. More than 8 in 10 (84%) of respondents agree they have multiple options when selecting products and services such as bank accounts, loans, and credit cards, and 85% said they have a wide array of choices when deciding where to bank. Meanwhile, 84% agree they have easy access to a bank branch when they need it.

Three-quarters of consumers (75%) said the nation’s banks are a source of strength for the U.S. economy and that they appreciate the key role banks play in supporting the financial needs of individuals, businesses, and local communities. Meanwhile, 69% said they are confident in America’s banks as a whole and their ability to support individuals, businesses, and the local communities they serve.

“This national survey shows that the vast majority of American consumers think highly of their bank and recognize the critical role banks across the country play in the growth and stability of our nation’s economy,” Nichols said. “Consumers trust and value the customer service they receive from their bank, and they appreciate that banks of all sizes are competing for their business with innovative products and service they want and need.”

Banks, Credit Unions Leverage Evolving Technology

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Marco Bernasconi says Country Bank’s adoption of new technology must be done smartly, with the needs of customers in mind.
Banking and Financial Services Special Coverage

Tools of the Trade

Marco Bernasconi says Country Bank’s adoption of new technology must be done smartly, with the needs of customers in mind.

Marco Bernasconi says Country Bank’s adoption of new technology must be done smartly, with the needs of customers in mind.

It’s no secret, Marco Bernasconi said, that all banks use similar technology. The difference lies in how they deploy it, and which services they emphasize.

“It’s not just about getting bigger, or being involved in more technology; it’s about operating with intelligence and leveraging efficiency and automation to drive sustainable growth,” said Bernasconi, chief Operating and Innovation officer at Country Bank. “For us, it’s about being smart and determining how to serve the needs of customers.”

Glenn Welch, president of Freedom Credit Union, agreed.

“A lot of us use services provided through a third-party provider. So if you go to our websites, they’re fairly similar — different colors, but the same tools,” he said. “So a lot of it comes down to service. You have to have the tools on the websites, but customers have to like you, too. You have to provide good service to the members.”

Both were speaking to a reality shared by all banks and credit unions these days — at a time when fewer customers actually visit a branch to do business, instead conducting most of it online, institutions need to ensure that those digital tools are robust, easy to use, and, especially, secure.

At the same time, though, there will always be a need for a physical branch presence for the business that people like to conduct there — opening accounts, loan applications, and, for some, normal deposits and withdrawals — so banks can’t afford to neglect that side of their business while they focus on developing and evolving their digital platform.

“We’re modernizing digital channels and continuing to leverage digital investing and marketing tools, and constantly reassessing different technologies to keep customers secure. But we also need to be equipped to train the team when people come in for traditional transactions,” said Bernasconi, noting that Country’s branch strategy includes its first branch in Springfield, opening this year.

“We’re modernizing digital channels and continuing to leverage digital investing and marketing tools, and constantly reassessing different technologies to keep customers secure. But we also need to be equipped to train the team when people come in for traditional transactions.”

The volume of branch visitors has changed from the time he was a teller, he added, “but they’re coming in with more difficult problems, and we’re spending more time with them on education, explaining different products, helping move their financial lives forward. So we certainly need traditional transactions at branches.”

A balance between high-tech and high-touch resources is important to commercial customers as well, said Aleda De Maria, executive vice president and chief operating officer at PeoplesBank.

“A lot of our small business owners are all things to their users — CEO, CFO, HR person, day-to-day manager. So we want to make sure we’re offering services through technology to make their lives easier,” she explained.

Aleda De Maria says PeoplesBank has bolstered its internal fraud detection tools to protect customers.

Aleda De Maria says PeoplesBank has bolstered its internal fraud detection tools to protect customers.

For example, “last year, we implemented some smaller balance lending that our customers can apply for 100% digitally and get answers from us within days, in some cases. We’d like to push that in 2026, optimize that to bring it to a wider audience. That’s something I’m super excited about.”

Last year, PeoplesBank underwent a core conversion of its technology and systems, building on the early growth of its digital brand, ZYNLO Bank, which it launched in 2020 in partnership with Nymbus.

“We didn’t just do the conversion to say we did it. We did it to continually evolve what we offer customers,” De Maria said, adding that the focus was on both back-end technology and front-end interface.

“We are constantly focused on the front end. That’s the window into PeoplesBank. If the customer opens an account and we’re not seeing them after that, what are they doing? They’re online and mobile,” she went on. “Because of the conversion, we have more control over the customer experience and can be more aggressive in updating user experiences — and to ask ourselves what services are available, how can we improve, and what we can add to that.”

Bernasconi said banks must decide whether to crawl, walk, or run toward new technology, but all are asking similar questions — how to deal with the rise of AI, from both a technical and governance perspective; how to help customers access new business products; and, through all of it, how to ensure a crisp customer experience.

“We’re competing with the Apples and Amazons, the fintechs now; it’s not competing only with banks and credit unions anymore,” he added. “The world has changed.”

 

Battling Back

All the area financial leaders who spoke with BusinessWest said fraud prevention — and the increasingly powerful tools that enable it — are critical to any institution’s technology strategy.

“One of the biggest things we’re talking about is fraud detection,” De Maria said. “I recently read an article saying financial scams are an industry now, and one of the things the scammers have going for them is the use of AI. So we’re having internal conversations about how to leverage new technology to detect and prevent these scammers from getting a foot in the door or gaining access to customer accounts — the concept of how to fight AI with AI, using different fraud detection tools.”

Last year, PeoplesBank launched a new fraud detection module developed through ZYNLO.

“We saw some success immediately in detecting fraud specific to account-to-account activity,” she noted. “We’re looking to expand that and get into other areas like mobile deposits, and also things like devices; the technology that we’re dealing with can look at a device somebody’s on and better detect whether that’s your device or not because of how they interact with the screen, where normally they’d spend three seconds on a screen, and they’re now spending 10 because it’s not as familiar to them.

“From a customer perspective, those things may not sound exciting — unless you’ve been the victim of fraud — but it’s certainly something we are extremely excited about as a bank, to be able to step up our game in this industry that has been created around fraud and scams.”

“From a customer perspective, those things may not sound exciting — unless you’ve been the victim of fraud — but it’s certainly something we are extremely excited about as a bank, to be able to step up our game in this industry that has been created around fraud and scams. So we’ll be looking this quarter at deploying more of those fraud technologies at PeoplesBank.”

Such efforts are critical, De Maria added, at a time when many people do the majority of their banking online.

“We still see a significant amount of accounts open in person — those are still greater than the accounts we open online — but after that, we may not see those customers often; they’re relying on the bank’s investment in technology. There is an expectation that, if they use that technology, they’re going to be safe; they’re going to be protected. I think customers should have the expectation that banks are investing in technology to make things safer and more secure.”

Welch said Freedom has also developed a robust set of fraud prevention tools on the back end, which can detect transactions that are unusual to an account at any given time. The same goes for wire fraud or other types of social engineering attacks designed to separate customers from their money.

“At times, I think we have annoyed members by asking them too many questions, but we want to keep them safe. And we’ve stopped a lot of fraud up front by just knowing our members, knowing what their normal transactions are, reaching out to them, and making sure that is something they want to do.”

Along with its wide array of digital banking tools, Country Bank also hosts numerous online financial literacy and fraud prevention resources, in addition to community outreaches like its Credit for Life fairs at area high schools.

Glenn Welch says people became more comfortable during the pandemic conducting basic transactions online, but many were relieved to return to face-to-face interactions.

Glenn Welch says people became more comfortable during the pandemic conducting basic transactions online, but many were relieved to return to face-to-face interactions.

“It’s extremely important that we spend a lot of time in our community and with the high schools, educating them in financial literacy and credit reports and how to manage budgets,” Bernasconi said, noting that it’s in the bank’s interest to engage young adults. “We spend a lot of time understanding the needs of younger generations. We’ve got to cater to the customers that we have, but also onboard the next generation and be astute to their needs as well.”

 

Face to Face

One way banks and credit unions have melded high tech with high touch is with interactive teller machines, or ITMs, which offer the functions of a traditional ATM with some enhanced services, such as making loan payments, cashing large checks, opening accounts, and, most notably, speaking live with a teller over a video feed.

“We launched our first ITMs in 2019. I like to say we had a crystal ball before COVID hit,” De Maria said. “Our ITM fleet is pretty significant — we have ITMs at every banking center, and also standalone remote locations throughout Western Mass. And we’re seeing, on average, about 25% of our in-person transactions occurring through the ITMs. At some banking centers, it’s as much as 35% to 40%.”

And it’s not just personal lines — about one-quarter of PeoplesBank’s commercial clients have used an ITM at least once. “We’re really seeing a good adoption of the ITM technology,” she said, noting that they operate seven days a week. “They’re what I would consider the next generation of drive-up teller, essentially.”

Country Bank has a fleet of ITMs as well, and while Freedom Credit Union offers one at its Springfield main office — and has the technology ready to deploy at other branches — Welch said questions remain about whether customers are clamoring for more.

“People are using it a lot like an ATM. We might need it more at remote sites because, if the branch is open, customers like to see people,” he explained. “These were perfect during COVID; we couldn’t let people in, or they had to wait in a long line. But now, I think if people travel to the branch, if they want the convenience of a drive-up ATM, they do that, but if they want to talk over transactions, we find they’re coming inside.

“We’ve stopped a lot of fraud up front by just knowing our members, knowing what their normal transactions are, reaching out to them, and making sure that is something they want to do.”

“So we’re going to turn on the remote one that we have in Ludlow to see if that makes a difference,” he went on. “If it’s not attached to a building or a branch in a remote area, and they have transactions they want to discuss with someone, they might get more out of it. So that’s part of our strategy this year — we’re going to test it in Ludlow and see how that goes.”

Part of any institution’s strategy, Welch added, has to be how to engage multiple generations, which is why all this technology is important.

“The younger generation doesn’t necessarily want to come in to do transactions. If they want to do an auto loan, they may not want to do it online, and definitely for mortgages, they want to be walked through the process and talk to people,” he said, adding that Freedom also has a secure video call platform where people can engage in these conversations from home and even download documents.

But since the pandemic, he added, “I think a lot of people got more comfortable doing basic transactions online.”

Across the industry, that’s especially true of younger customers, so Freedom — whose average customer age is around 50, a number Welch would like to see creep into the 30s — will, like all financial institutions, continue to evolve its digital platforms and other high-tech offerings in order to strike that generational balance and meet customer needs.

“When people age out of here, we need to have new members filling in the pipeline,” he said. “And we need to keep them here.”

Check Fraud Is Surging

By Contributor
Banking and Financial Services

Here’s How Businesses Can Protect Themselves

By Heather Arbour

 

In an era dominated by digital payments, it’s easy to assume that check fraud is a relic of the past. But the reality is far more alarming: check fraud is not only alive, but it’s thriving, and it’s evolving to span both physical and digital realms.

As someone who has spent more than two decades in banking compliance and fraud prevention, I have seen the damage firsthand. Check fraud isn’t just inconvenient — it can be devastating.

At Monson Savings Bank, we’ve helped business customers who faced losing tens of thousands of dollars in a single incident. And what’s most frustrating is that many of these losses are preventable with the right tools and awareness.

Heather Arbour

Heather Arbour

“Fraudsters aren’t just individuals — they’re organized networks. They use social media and encrypted messaging apps to share techniques and sell stolen check images. It’s a whole underground economy.”

 

The Mechanics of Check Fraud

Check fraud is no longer confined to forged signatures and stolen paper checks; it has evolved into a complex, tech-enabled threat. Criminals are using both traditional tactics and digital tools to exploit vulnerabilities in business payment systems.

Classic forms of check fraud include forged signatures, altered payee names, counterfeit checks, and check washing, where stolen checks are chemically altered and rewritten. These methods remain prevalent, especially when checks are sent through unsecured mail channels.

Fraudsters aren’t just individuals — they’re organized networks. They use social media and encrypted messaging apps to share techniques and sell stolen check images. It’s a whole underground economy.

Digital check fraud is also on the rise, and it’s often harder to detect. Fraudsters are increasingly using mobile banking apps to commit remote deposit capture fraud, depositing the same check multiple times across different platforms. Synthetic identity fraud is another growing concern, where criminals create fake personas using a mix of real and fabricated data to open accounts and deposit counterfeit checks. Business email compromise schemes are also becoming more common, with scammers impersonating vendors or executives to reroute legitimate payments.

In fact, we’re seeing just as many cases involving digital manipulation as we are with physical theft. Fraud is a risk whether it involves traditional paper checks or digital deposits. This evolving landscape demands that businesses stay informed and proactive. Understanding the full spectrum of fraud tactics is the first step toward building effective defenses.

 

Integrating Critical Lines of Fraud Defense and Loss Mitigation

Fraud detection solutions are crucial. There are few as effective and proactive as positive pay when it comes to protecting against check fraud. Whether fraudsters are targeting traditional paper checks or digital deposit channels, positive pay offers businesses a critical line of defense.

This service allows businesses to submit a list of issued checks to their bank. When a check is presented for payment, the bank compares it against the list. If there’s a mismatch in amount, check number, or payee, the transaction is flagged for review.

Positive pay is like having a second set of eyes on every check. It’s proactive, not reactive. You’re catching fraud before the money leaves your account and potentially saving yourself from major losses. We strongly encourage our business customers to implement positive pay at Monson Savings Bank.

“As fraudsters continue to innovate, businesses must stay vigilant. The rise of AI-generated synthetic identities and deepfakes means that fraud will only become harder to detect.”

Why Businesses Should Act Now

The urgency to adopt fraud mitigation tools has never been greater. According to industry data, check fraud attempts have increased by more than 40% in the past year, with small and mid-sized businesses being disproportionately affected.

Many business owners think, ‘it won’t happen to me’ — until it does. And by then, it’s often too late to recover the funds.

 

Beyond Technology: Building a Culture of Vigilance

While tools like positive pay are essential in the fight against check fraud, that technology alone isn’t enough. Businesses must adopt a multi-layered approach that includes strong internal controls, employee education, and daily operational vigilance.

Daily reconciliation of accounts is critical to catching anomalies early, before they escalate into major losses. Employees should be trained to recognize red flags, such as suspicious payment requests or unexpected changes in vendor information, and empowered to question anything that seems off.

Verifying vendor payment instructions through a secondary channel can prevent business email compromise scams, and secure mailing practices, like using locked mailboxes or dropping checks directly at the post office, can help reduce the risk of physical check theft.

Fraud prevention isn’t just about tools; it’s about culture. Everyone in the organization needs to be part of the defense. Train your staff to recognize red flags. Reconcile accounts daily. Limit who can issue checks and who can approve payments. Fraud prevention is a mindset.

Monson Savings Bank offers a comprehensive Business Security Center on its website. This resource hub provides curated information on fraud prevention strategies, scam recognition, cybersecurity best practices, and secure operations. Whether you’re a small business or a growing enterprise, the Business Security Center is designed to help you stay ahead of threats and build a resilient, fraud-resistant organization.

 

Looking Ahead

As fraudsters continue to innovate, businesses must stay vigilant. The rise of AI-generated synthetic identities and deepfakes means that fraud will only become harder to detect.

If fraudsters are evolving, then so must we. The bottom line is that the cost of prevention is always less than the cost of recovery. As a local community bank, we are happy to help our customers be successful, and that includes offering solutions to help them stay one step ahead and reduce risk of harmful financial loss.

 

Heather Arbour is vice president, BSA/Fraud officer and Compliance manager at Monson Savings Bank.

Greylock, Arbella Support Berkshire Grown’s Mobile Farmers Market

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Greylock, Arbella Support Berkshire Grown’s Mobile Farmers Market
Banking and Financial Services

Boosting Access to Local Food

 

Greylock, Arbella Support Berkshire Grown’s Mobile Farmers Market

From left: Stephanie Bergman, director of Development, and Margaret Moulton, executive director, at Berkshire Grown; Lori Goodell Sr., vice president of Greylock Insurance Agency; and Jennifer Connor Shumsky, assistant vice president of Community Support and Engagement at Greylock Federal Credit Union.

The Berkshires is synonymous with farm-to-table culture, yet more than a third of Berkshire County experiences some level of food insecurity, and many farmers struggle to sustain their livelihood.

In service of caring for the Berkshire community, Greylock Insurance Agency, along with partners Arbella Insurance Foundation and Greylock Federal Credit Union, has awarded a combined grant of $4,500 to Berkshire Grown to help fund the Berkshire Mobile Farmers Market.

“Before you can think about insurance and other forms of financial health, you have to first meet your most vital needs, like feeding yourself and your family,” said Lori Goodell, senior vice president of Greylock Insurance Agency. “All of us at Greylock do our best to lead with heart. Supporting Berkshire Grown and this incredible program is part of our commitment to caring for our community. We are thrilled to continue partnering with Arbella to help fight food insecurity in the Berkshires.”

According to the Greater Boston Food Bank, food insecurity rates in the Berkshires is at 39%, with children experiencing even higher rates at 43% statewide. Rural regions, such as the Berkshires, have limited transportation, higher housing costs, and lower wages, which create obstacles to affording fresh food.

The Berkshire Mobile Farmers Market is one way Berkshire Grown helps feed people while supporting farmers. The Mobile Market uses funds from donations and grants to purchase fresh local food from more than 50 area farms. In collaboration with partner organizations, including Berkshire Bounty, the Mobile Market distributes seasonal produce, dairy, meats, and other goods, such as honey and bread, to low-income, underserved, and often rural communities of the Berkshires.

“Not only does the Mobile Market make accessible fresh, nutritious food, it also strives to create an inclusive, stigma-free shopping experience with a tiered payment system. Shoppers can choose a price that fits their budget.”

“Many areas, like the hill towns and Pittsfield’s inner city, lack nearby, walkable grocery stores or pantries,” said Katie Rubright, Berkshire Mobile Farmers Market manager. “Not only does the Mobile Market make accessible fresh, nutritious food, it also strives to create an inclusive, stigma-free shopping experience with a tiered payment system. Shoppers can choose a price that fits their budget.”

In addition to the tiered payment system, which allows customers to pay retail price, a 50% discount, or receive up to $50 worth of food for free, the Mobile Market accepts both Supplemental Nutrition Assistance Program and Massachusetts Healthy Incentives Program. Over the course of 17 weeks from June through October, the Mobile Market stopped weekly at sites in Adams, Becket, Cheshire, Monterey, and Pittsfield.

A key component of Berkshire Grown’s mission is to assist farmers in growing the food the community needs; the Mobile Market pays full prices for all products, regardless of how much the consumer is able to pay.

“The program specifically benefits seniors, children, and historically underserved communities, particularly those in environmental justice neighborhoods,” Rubright said. “We have the highest percentage of people more than 80 years old in the state, and many of them face mobility challenges. Our goal is to make locally grown food more accessible to the people who need it most and, at the same time, support small and mid-sized farms by helping bring their products to a wider market.”

Margaret Moulton, executive director of Berkshire Grown, sees the relationship between the farms, Berkshire Grown, and the Mobile Market as an important way to bolster the health of the Berkshire economy.

“Local agriculture is vital to the Commonwealth’s food supply and economy, but too often, farmers earn less than it costs to grow our food — on average, just 95 cents for every dollar,” she explained. “Choosing to buy local strengthens farm businesses, expands access to fresh, healthy food, and helps preserve the farmland that defines our communities.”

Banks Eye Impact of Fed Rate Cuts, and Potential for More

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Matt Garrity says declining interest rates are typically good for the consumer and good for business.
Banking and Financial Services Special Coverage

Lending Perspective

Matt Garrity says declining interest rates are typically good for the consumer and good for business.

Matt Garrity says declining interest rates are typically good for the consumer and good for business.

The Federal Reserve’s decisions to lower its federal funds rate by a quarter-point in September, then another quarter-point in late October — landing at 3.75% — were good news to consumers and borrowers.

“A declining interest rate is good for the consumer and good for business; a business that’s borrowing on a regular basis for working capital can enjoy lower costs from that,” said Matt Garrity, president of Florence Bank. “A higher rate is more difficult for consumers.”

But the story is more complicated than that for banks themselves. The interest rate environment tends to be a mixed bag for financial institutions, impacting their core profitability, demand for loans, and the value of their balance sheets.

The primary mechanism for this calculation is net interest margin, the difference between the interest income banks earn on assets (loans and securities) and the interest expense they pay on liabilities (deposits and borrowed funds).

In a rising interest rate environment, banks’ profitability often increases, particularly in the short term. They can increase the interest rates they charge on new variable-rate loans more quickly than they raise the interest rates they pay on customer deposits, which widens the net interest margin. Meanwhile, yields on new loans and short-term securities increase, boosting overall interest income.

“When there’s a lot of volatile movement, like a couple of years ago, when the rates went up 400 basis points in a very short time, that causes a lot of problems because the market is moving too fast, and it’s hard for banks to rightsize, and it usually causes volatility on the lending side of things.”

At the same time, however, as borrowing becomes more expensive, consumers and businesses may be less willing to take out new loans for major purchases, which can slow loan growth.

Conversely, in a falling interest rate environment, bank profitability tends to be challenged, especially over the medium to long term. The rates banks earn on new and existing variable-rate assets fall faster than the rates they can cut on deposits, squeezing net interest margins.

“Banks are impacted in different ways when the Fed reduces interest rates. Most banks use the Federal Home Loan Bank, which borrows based on fed fund rates, so as the Fed reduces rates, those costs go down for banks,” Garrity said, while revenue falls for variable-rate loans.

Meanwhile, borrowers are more likely to refinance existing high-interest loans into new, lower-interest loans, which reduces the bank’s expected interest income on its existing portfolio.

However, lower interest rates make borrowing cheaper, which encourages consumer spending and business investment, increasing the volume of loans and potentially offsetting some of the margin pressure. “Certain investments make more sense with the lower rate,” Garrity said.

PeoplesBank President Brian Canina noted that, “when the Fed adjusts rates, it has a more immediate impact on deposit rates. On the loan side, it’s typically based off of a long-term rate. For example, a 30-year fixed rate more typically correlates with a 10-year treasury rate. There are some exceptions to that with credit cards and some home equity lines of credit; those are going to be more tied to the fed funds rate. But for the most part, when there’s a spread between the fed funds rate and the 10-year point of the treasury curve, that’s what drives profitability for the bank.”

Whether interest rates are high or low, Brian Canina says, what bankers are looking for is stability.

Whether interest rates are high or low, Brian Canina says, what bankers are looking for is stability.

What banks don’t like, he said, is a situation in which short-term rates rise faster than long-term rates, causing a flattened or inverted yield curve, which is what happened when rates shot up in 2022. “Banks were challenged by these underwater rates, but over time things normalize, and profitability comes back.”

Essentially, Canina added, what bankers are really looking for is stability in the interest rate environment.

“When there’s a lot of volatile movement, like a couple of years ago, when the rates went up 400 basis points in a very short time, that causes a lot of problems because the market is moving too fast, and it’s hard for banks to rightsize, and it usually causes volatility on the lending side of things. Essentially, more of a stable environment in interest rate changes, whether that be increases or decreases, and maintaining a steepness in the yield curve is ideal for a banker.”

 

Home Sweet Home

Interestingly, mortgage rates rose in the wake of both Fed fund cuts, jumping from 6.13% to 6.33% in the hours around the Oct. 29 Fed meeting. The reason is that the bond market had already priced in a cut, and commentary from Fed Chair Jerome Powell tamped expectations for another rate cut in December.

In fact, typically, when a fed funds rate cut is anticipated, mortgage rates usually fall in the weeks leading up to the meeting, but don’t necessarily continue to decrease afterward. In 2024, mortgage rates fell sharply throughout August and early September as people expected the Fed to lower its rate at its September meeting, but they stopped decreasing significantly after the meeting, a trend repeated after two additional rate cuts later that year and, as noted, twice again in recent weeks.

Mortgage rates remain problematic for a number of reasons.

“Folks who are currently paying a lower interest rate don’t want to give that up for what could be a higher rate, which causes lower inventory — people are not putting their homes on the market, and that impacts affordability.”

“We’ve seen, across the country and in our region in the last few years, how it’s impacted folks and led to lower inventory on the market because folks who are currently paying a lower interest rate don’t want to give that up for what could be a higher rate, which causes lower inventory — people are not putting their homes on the market, and that impacts affordability,” Garrity explained.

Canina agreed. “What’s causing fewer homes to be available for purchase is that so many of them are tied to a sub-3% mortgage,” he said, a situation that took many years to develop.

Essentially, when interest rates cratered after the Great Recession (and fell again in the immediate wake of the pandemic), many homeowners refinanced to take advantage. And many of them who might otherwise looking for a new home don’t want to trade in that rate for something around 7%, so they’ve been sitting on their homes, reducing inventory in the market.

“I don’t know how long it’ll take before that changes, because so much of the banks’ books are now 3% on 30-year mortgages,” he explained, and the refi market has been non-existent.

“Once you get below 6% mortgages, you could start seeing an increase in residential lending refinancing, as people with 7% mortgages might want to refinance to, say, 5.5%,” he added — but that won’t be immediate. “Typically, you have a delay. No one wants to jump in immediately, and we don’t know what the inflection point will be to spur increased demand.”

“It’s been steady. I think, because of general uncertainty, you’ve got people sitting on the sidelines. I wouldn’t say it’s robust market, but it’s not a stalling market. There is activity going on; it’s just modest.”

Still Canina stressed that, “for new mortgages, the demand is not being driven by an interest rate; it’s being driven by the availability of homes in the market” — which causes prices to soar, creating another barrier for people to get into homeownership.

 

Broad View

Overall, banks are generally optimistic about the current environment, after struggling with profitability following those sharp rate increases in 2022 and 2023 and building back from that ever since.

“As we move through this environment, it’s been a very good year for us,” Garrity said. “We continue to grow customers, and we’re growing and expanding our footprint, opening a new branch in Holyoke early next year. It’s been a successful 2025 for us, and it’s looking to be a successful 2026 as well.”

On the lending side, Canina noted, “it’s been steady. I think, because of general uncertainty, you’ve got people sitting on the sidelines. I wouldn’t say it’s robust market, but it’s not a stalling market. There is activity going on; it’s just modest.”

He believes lending activity will respond to clearing skies, however, and lowering rates won’t hurt.

“The uncertainty is due to what’s happened and what’s going to continue to happen in the economy. People don’t want to make a commitment because they’re unsure where the Fed’s going to go, where the economic indicators are going, where the administration is going with tariffs. When that finally gets played out and there’s more stability, we’ll see what will happen. We could end up with lower rates in lending, but not an increase in economic growth because a lot of that could be potentially from refinancing.

“Anytime you have a very low interest rate environment — for example, coming out of the Great Recession or coming out of the pandemic, when interest rates were at all-time lows — you then have a period of significant increases in refinancing loans, and mortgage financing goes way off,” Canina elaborated. “Even on the commercial side, we will always have a lot of borrowers coming back to the table looking to see if they can refinance. If rates go up, it’s going to have an opposite effect.”

For now, interest rates seem to be on the decline — not to those post-pandemic levels, but lower than the past few years — which comes as good news for borrowers, and an optimistic yet still complicated picture for banks.

Study Underscores Importance of Financial Education

By Contributor
Banking and Financial Services

Youthful Interventions

On Aug. 18. EVERFI and the MassMutual Foundation announced findings from the third and final year of a three-year, longitudinal study of financial capability among adolescents. The release of this new data occurs as the MassMutual Foundation’s FutureSmart financial literacy curriculum also celebrates the milestone of reaching 6 million learners.

EVERFI is an international technology company driving social impact through education to address key societal challenges like financial wellness, character education, STEM and careers, mental health, prescription drug safety, workplace conduct, and more.

The study by EVERFI and the MassMutual Foundation, the first of its kind, has tracked financial behaviors and literacy levels of participants throughout the course of the study as they completed up to six different EVERFI financial education courses, including FutureSmart. Since the program’s inception in 2015, FutureSmart has provided free educational resources to students across the 50 U.S. states and Puerto Rico, helping them build a foundation for financial literacy and economic empowerment.

Third-year data was collected during the 2023-24 school year, providing further evidence that multiple financial education interventions among young people are key to making sustainable, long-term improvements to financial knowledge, self-efficacy, and desirable behaviors.

Dennis Duquette

Dennis Duquette

“These recent findings further affirm that middle school students are not only able to retain critical financial knowledge, but can show lasting success in the months following their education.”

Key takeaways from this year’s results include:

• Financial self-efficacy. Students who took multiple courses became 21% more confident in their financial skills compared to those who took one or fewer courses. Sustainable and evident growth in these students also existed six months following the program’s completion.

• Desirable financial behaviors. Taking multiple courses prepared students to actively engage in healthy financial behaviors when the opportunity arose. The frequency of these desirable behaviors increased by 10% compared to students who took one or fewer courses during the six-month period following the conclusion of the program.

• Interest in financial learning. Forty-four percent of the students who completed coursework expressed interest in receiving more financial education.

• Student-parent conversations. After participating in multiple courses from the program, students increased the frequency of financial-focused conversations with their parents by 9%. The topics that spurred these conversations included preventing financial fraud and the use of online banking applications.

• Impact on low-income families. Students in this category had a 12% larger improvement in their likelihood to engage in desirable financial behaviors compared to their peers in wealthier families.

“Throughout our strategic partnership with EVERFI, we have seen just how important sustained education is for creating a strong financial knowledge foundation and healthy financial habits for adolescents,” said Dennis Duquette, president of the MassMutual Foundation. “These recent findings further affirm that middle school students are not only able to retain critical financial knowledge, but can show lasting success in the months following their education.”

 

Continued Progress

This year’s findings build on conclusions from years one and two of the longitudinal study. Findings from year one noted that middle school students who participated in the FutureSmart curriculum significantly improved the frequency of desirable financial behaviors, including saving money, tracking monthly expenses, spending within a budget, and investing for long-term financial goals. Year two research findings confirmed that students demonstrated these behaviors after completing two or more courses in year one.

The FutureSmart curriculum significantly improved the frequency of desirable financial behaviors, including saving money, tracking monthly expenses, spending within a budget, and investing for long-term financial goals. Year two research findings confirmed that students demonstrated these behaviors after completing two or more courses in year one.

“As these recent study results confirm, the influence of multiple financial education interventions cannot be understated,” said Ray Martinez, CEO of EVERFI. “Over the past three years, we have seen how these interventions improve not only financial literacy, but willingness amongst adolescents to plan for and talk about their financial futures. Our continued work with the MassMutual Foundation is a powerful demonstration of how to empower students and help them build a foundation for financial success for themselves, their families, and their loved ones.”

The MassMutual Foundation’s stated goal is to invest in programs that help people access resources needed to earn, protect, and help build their financial capability and thrive, and its participation in this study reflects that priority.

“In 2015, our teams set a goal to reach over 6 million students with our middle school curriculum by 2025. Reaching that goal only further affirms the impact of the MassMutual Foundation’s long-term strategic partnership with EVERFI,” Duquette said. “We look forward to continuing to help build financial competency for students, their families, and communities.”

Financial Literacy Is Key for Young Professionals

By Contributor
Banking and Financial Services

Stick to the Plan

By Amanda Goewey

 

As many recent college, trade school, and high school graduates settle into new jobs, their pockets may be feeling a bit heavier with money from the first few paychecks. It can be tempting (and exciting) to spend this newfound money on summer fun, but young professionals should have a plan for these paychecks. Understanding the options for what you can and should do when the money starts flowing is a great place to start.

 

Make a Budget and Stick to It

Setting a budget is critical for young professionals who are often balancing myriad expenses, like school and car loans, rent and utility payments, entertainment, and more for the first time. A budget is a plan that helps track and manage expenses to keep spending within your limits and help build your savings.

Budgets are built on a simple equation: your income minus your expenses equals your monthly net. To be financially stable, your expenses must be less than your income — that’s how you know you’re living within your means. If your expenses are equal to your income, you will be living within your means, but you will have nothing left over for savings.

 

Amanda Goewey“Setting a budget is critical for young professionals who are often balancing myriad expenses, like school and car loans, rent and utility payments, entertainment, and more for the first time.”

 

Create an Emergency Fund

One account everyone should have, regardless of age or career stage, is an emergency fund for unexpected costs like vehicle and home repairs, medical bills, or vet bills, if you have a pet. It’s critical to consider this fund as a part of your overall monthly budget.

Setting a specific goal for an emergency fund will help determine a reasonable timeline for reaching it. For example, if your goal is to build a $2,000 emergency fund in one year, you’ll need to allocate about $167 per month to that fund. Being consistent in saving that amount every month is critical to achieving the goal. Consider setting up a direct deposit for the amount needed from your paycheck.

 

Pay Off High-interest Debt

High-interest debt is ever-changing alongside loan interest rates; it’s generally accepted that high-interest debt is anything above the student loan or mortgage rates. Those interest rates are assigned when you borrow or receive money in advance, also known as credit.

So, what should you do if you’re carrying this type of debt? While simply paying it off is the best answer, actually doing it isn’t quite that straightforward, but should be a top priority before setting savings goals. Having debt, especially high-interest debt, will lead to poor credit, which can create obstacles to achieving your financial goals.

One of the most straightforward ways to pay down high-interest debt is to carefully budget and track your expenses and limit non-essential spending. There are several budgeting apps that can help track all expenses from monthly bills to groceries, eating out, and even monthly streaming subscriptions. Review where you can cut spending and make a plan for paying down the debt.

 

Start Saving for Retirement

Believe it or not, it is never too early to start planning for retirement, and taking advantage of employer-sponsored retirement benefits is a great way to start. Many employers offer programs such as 401(k) plans and 403(b) plans. These accounts help reduce your current taxable income, are easy to contribute to through direct deposit, provide interest rates that support significant growth over time, and can be transferred from employer to employer, if and when you move on.

When it’s time to determine your contribution, a good rule of thumb is to contribute enough to ensure you receive your employer’s full matching contribution, if offered. If your employer does not offer a retirement benefit, consider starting an individual retirement account (IRA).

 

Bottom Line

Your banking institution can be a helpful resource in determining what option is best for you and your financial goals. For example, the NBT Bank Wealth Management team can help you determine contribution limits, how employer contributions work, what terms like ‘vesting’ mean, and who is actually directing investments within your plan.

Getting a new job and having a new source of income is exciting, but figuring out how to manage your money can be stressful. Spending money is easy, but doing it responsibly and within a budget takes a bit more effort. The good news is, there are many helpful resources, like your banking partner, that can help you assess your current financial situation and future goals and provide you with money skills and tools for long-term success.

And remember, if you suddenly find yourself with extra money, from a bonus, birthday gift, or tax return, use it as an opportunity to get ahead of your timeline and put a portion of it toward your debt or your savings — but be sure to set aside a little bit to celebrate your new gig!

 

Amanda Goewey is the Massachusetts market manager for NBT Bank. With more than 15 years of experience in banking, she is responsible for overseeing retail banking at NBT’s eight branches in Berkshire County.

M&T Charitable Foundation Announces $4.9 Million In Grants

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Banking and Financial Services

Broad Impact

The M&T Charitable Foundation, the philanthropic arm of M&T Bank, recently announced $4.9 million in grants to 51 nonprofit organizations across the six New England states, as well as Long Island and Westchester County, N.Y.

The announcement of this third round concludes the company’s Amplify Fund supplemental grant program, a three-year, $25 million commitment to address inequities, with a focus on all low- and moderate-income communities and underserved populations.

First announced in May 2022, the Amplify Fund is a $25 million philanthropic investment as part of the merger between People’s United Bank and M&T Bank. Powered by the M&T Charitable Foundation, the Amplify Fund is a one-time supplemental charitable giving program to provide further support in the legacy People’s United communities.

Dominique Goss

Dominique Goss

“The M&T Charitable Foundation is proud to support the work of nonprofits that are dedicated to advancing equity and creating positive and lasting change. We look forward to seeing the progress of their work and the collective outcomes of our partnerships in the months and years ahead.”

During the first and second rounds of giving through the Amplify Fund, more than $20.1 million was awarded to 173 nonprofit organizations. The grants were awarded through a series of RFPs that focused on environmental initiatives, mission-driven and capacity-building work, community and tenant organizing, and financial empowerment, in addition to collaboratives working together to advance equity.

Grantees in this third and final round of funding include nonprofit organizations that are centered on advancing financial inclusion and spurring economic growth and prosperity, with a particular focus on creating equitable change through homeownership, small-business development and entrepreneurship, career growth, and financial resilience.

“The M&T Charitable Foundation is proud to support the work of nonprofits that are dedicated to advancing equity and creating positive and lasting change,” said Dominique Goss, executive director of the M&T Charitable Foundation. “We look forward to seeing the progress of their work and the collective outcomes of our partnerships in the months and years ahead.”

Throughout the three-year Amplify Fund grant program, the M&T Charitable Foundation awarded $25 million to 224 nonprofit organizations and collaboratives, helping to empower nonprofit organizations to work collaboratively to drive meaningful change and advance equity in the communities served by the program.

“This grant means a lot to our ability to help the families and communities we serve achieve economic self-reliance,” said David Hopkins, CEO of the Urban League of Greater Hartford, which is celebrating 60 years of economic empowerment. “We appreciate the leadership and team at M&T Bank, a 2024 equity partner, for their support of our social enterprise, community engagement, and leadership development, and now this Amplify Fund award will help enrich our financial opportunity program.”

Betsy Biemann, CEO of Coastal Enterprises Inc., added that “we are grateful for the M&T Bank Charitable Foundation’s support of CEI and their commitment to promoting entrepreneurship and a thriving small business community in Maine. This funding from the Amplify Fund will enable us to help more Maine entrepreneurs who are CEI lending and advisory clients to take charge of their finances and build assets through no-cost, confidential financial counseling and coaching, starting them on a solid foundation for starting or growing their business.”

The M&T Charitable Foundation, the philanthropic arm of M&T Bank, is a 501(c)(3) not-for-profit charitable organization founded in 1993 and funded by M&T Bank. The foundation awards nearly $40 million in grants per year to thousands of nonprofit organizations focused on improving quality of life in the areas the bank serves.

Financial-literacy Programs Equip Families for Success

By
Country Bank team members help high-school seniors navigate a Credit for Life Fair.
Banking and Financial Services Special Coverage

Generational Impact

Country Bank team members help high-school seniors navigate a Credit for Life Fair.

Country Bank team members help high-school seniors navigate a Credit for Life Fair.

 

Jodie Gerulaitis’s title at Country Bank is first vice president, Community Relations. But before that, she was a Financial Education officer for the institution — a role for which she still has a passion.

“My job was offering financial education to our communities,” she said, noting initiatives like Savings Makes Sense, a partnership forged in the late 1990s with local schools — eventually about 40 of them — in which the bank collected deposits and students could engage in banking activities right at school.

These days, that program has morphed into Money School, a series of financial-literacy resources in public schools that include books, workshops, and five annual Credit for Life fairs that involve about 2,000 seniors from 13 different high schools.

The fair, a Massachusetts-based program that many banks participate in, asks students to role-play a 25-year-old, visiting about a dozen booths and making financial choices based on their career and salary goals.

“Some students get a salary or a credit score they weren’t expecting, and they also learn to understand needs versus wants,” Gerulaitis said, adding that the students also get a dose of reality; at one booth, they might get a bonus at work or an unexpected expense. “Do they want to take vacations? Is that important to them? Do they want to own a pet? These are choices you and I make every day, and we’re bringing it to the students.

“The students who wind up with a low credit score or a low salary and are struggling, they’re going to learn the most,” she added. “They see how difficult it is to get where they want to go. Can they afford a house, or do they need a roommate to split expenses? It’s a really eye-opening experience, and they need to experience this stuff now, so they don’t make bad choices later.”

Two years ago, the United Way of Pioneer Valley started partnering with middle- and high-school students in Springfield and Holyoke to teach basic financial-literacy skills to young adults before they start interacting with finances for real, President and CEO Megan Moynihan said.

Megan Moynihan

Megan Moynihan

“It’s so very important — if you don’t understand how to take care of yourself from a financial perspective, how can you become successful?”

“We want them to create a basis to be financially successful before they go out into the real world,” she noted. “Many of these students may not have access to learning about financial independence through their families. They didn’t learn about the importance of saving and credit and preparing a budget as a child. Some of the students we work with have zero idea going into these classes. The goal is to give them a basis, a skill set to prepare them for the real world.”

The United Way’s financial-literacy programs go well beyond young people; it launched an initiative called Thrive almost a decade ago, which helps individuals across all age groups achieve financial security through education and other resources.

“Personal financial education is huge — it’s a huge gap for so many individuals,” Moynihan said, noting that the partner agencies the United Way funded would refer to Thrive people who needed the service.

“Our partner agencies let us know about individuals who needed support. We would do one-on-one coaching with those individuals, typically follow them for an entire year, helping them with budgeting, helping them set goals for raising their credit score. Many did not even have bank accounts, so we brought in individuals from the banks to set up simple checking accounts, direct deposit, and credit cards to create credit. Others would learn how to fix their credit score, how to consolidate credit, the importance of reducing expenses, and more.”

Around 2020, the United Way switched to a more direct-service model, and now Thrive services are offered to any client of the nonprofit who needs them, typically people who access services from one of the United Way’s service centers in Springfield, Chicopee, and Holyoke.

“Individuals come in needing help with food insecurity or mental-health support, and we can also help them with personal-finance training; every individual who comes through our doors has access to Thrive financial education,” Moynihan explained. “We also partner with other nonprofits on a classroom-style, six-session financial-education series.”

Serving about 450 people at any given time through its youth programs, human-service agencies, and workplaces, Thrive impacts families in ways that can be generational, she noted.

Jodie Gerulaitis says the financial-literacy skills students develop now will benefit them later, no matter what college or career path they choose.

Jodie Gerulaitis says the financial-literacy skills students develop now will benefit them later, no matter what college or career path they choose.

“It’s so very important — if you don’t understand how to take care of yourself from a financial perspective, how can you become successful?”

For this issue’s focus on banking and finance, BusinessWest talks to several area professionals involved in financial-literacy efforts about those impacts, and the various forms these programs take.

 

Lifetime Financial Journey

Springfield Partners for Community Action is another local organization offering financial-literacy education through a series of different free workshops, from basic financial literacy to first-time homebuying and property management.

“They all consist of a little bit of financial literacy. We dive deep into budgeting, credit, debt management, banking, and investing,” said Gabriel Ortiz, a housing councilor at Springfield Partners, noting that the workshops average around 28 people each. Some are one-session workshops that run six to eight hours, often featuring speakers from the banking and financial-services world, while the first-time homebuyer workshop is a two-part series.

“We have a lot of professionals that have been in that industry for a lot of years, and they give their expert analysis of what the process is and how to get people where they need to go, watching out for predatory lending, things like that.”

Meanwhile, the basic financial-literacy session is a good idea for people looking to establish some credit and start saving for the future, Ortiz added.

“In Springfield, probably one out of four residents live in poverty. Springfield has seen inflation, and potential tariffs will make it harder for households to manage their budgets. As a local financial advisor, we’re trying to give some helpful tips and help people regain control of their finances, stick to a budget, and cope with today’s economic challenges.

“We want to help people transition from poverty to a more equitable future,” he went on. “By establishing generational wealth, buying homes, and establishing some credit, that’s definitely going to help families down the road.”

Having offered financial-literacy programs since 1996, Gerulaitis noted, Country Bank has seen those initiatives take on a life of their own.

“These programs make a difference. Sometimes parents are not in the financial situation they expected themselves to be in, and I’ve found the grown-ups at home sometimes don’t talk to kids about money. Maybe they’re embarrassed about their financial situation.

“So, whether they come from a wealthier background or not — really, all walks of life — these programs empower students to make the decisions themselves. After all, if the parents aren’t having these conversations, who is?”

“In Springfield, probably one out of four residents live in poverty. Springfield has seen inflation, and potential tariffs will make it harder for households to manage their budgets. As a local financial advisor, we’re trying to give some helpful tips and help people regain control of their finances, stick to a budget, and cope with today’s economic challenges.”

Sherleen Crespo, vice president, branch manager, and mortgage specialist at Westfield Bank, who is being honored as one of BusinessWest’s 40 Under Forty this spring, said this reality — and the opportunity to start the conversation — is one of the reasons she loves being in banking.

“Sometimes financial literacy starts in the home, but not everyone has access to that,” she said. “Parents try their best, but they may not know as much as they should. And that lack of education affects people.

“Now, schools are very much involved in financial literacy. They invite me in, and that’s something that we didn’t have when I was growing up,” Crespo added. “It’s super important. It’s planting a seed toward breaking these generational cycles. The more we can educate people, the more that they’ll be able to grow.”

Gerulaitis agrees, and has anecdotal evidence to boot.

“I run into students after they’ve been through the programs — at the grocery store or a restaurant — and they say, ‘thank you, thank you. I got my first job, and a lot of what you said makes sense now.’ They put it into practice. That’s why we hit them when they’re seniors. Whether they’re going into the workforce or college, these skills are necessary at all levels. You can see the impact later on.”

And it’s not just high-schoolers; Country Bank targets educational programs throughout the community, from college students to senior centers. She’s even read age-appropriate books about money to preschoolers.

 

Bridging the Gaps

Moynihan said the United Way has a Thrive program that goes into workplaces, helping coach employees on the best ways to navigate financial struggles. In fact, three staffers are certified as financial coaches in the workplace, and they come at their roles from a mentorship perspective.

“We’re not giving you this information and saying, ‘now go figure it out yourselves.’ We’re setting you up with a mentor to walk you through these programs that will support you not just in your financial education, but on everything else that impacts your life.”

Another Thrive coach is a social worker, “so he understands the full scope of the needs of our clients — not just help with financial literacy, but so many other underlying issues that need to be addressed in the classes,” she went on. “We work with individuals to understand and identify the other areas where they need support so they can become financially stable.”

Every individual doesn’t need the same level of support, or the same educational components, she noted; some need close hand holding to get through it, and others just need to learn about different modalities to budget, save, and make good financial decisions.

“You don’t know what you don’t know, but it’s one of those things where it can be very difficult to ask for help. They might be ashamed,” Moynihan said. “So we move at the speed of trust. It can take time to build a relationship with an individual to become comfortable talking about this.”

The United Way is also part of the Bridges to Prosperity program through Springfield WORKS, a state-funded pilot program tasked with overcoming the ‘cliff effect,’ a phenomenon whereby the increased income from securing a job isn’t enough to offset public benefits while unemployed.

“It’s a first-in-the-nation approach that pairs cash payments to employed individuals over a two-year period with financial coaching and workforce training to bridge the gap between being on state assistance and being fully, gainfully employed,” Moynihan said. “So far, it’s working wonderfully.”

At the same time, the need for financial education continues, and Gerulaitis wishes it started at a younger age for everyone. She’s part of a committee that has advocated in Boston for state-mandated financial-literacy education in schools, trying to make Massachusetts the 27th state to mandate that as a graduation requirement.

Meanwhile, she added, Country Bank is doing as much as it can by offering free financial education.

“Even if it’s just one class, these schools love to partner with us. They feel they’re able to offer something to students as a benefit. Not all of them have personal-finance classes,” she said. “So, we’ve done a lot of programs. We want to provide as many free resources as we can to the community and guide them through their financial journey.”

The Evolution of Financial Fraud and How You Can Prevent It

By Contributor
Banking and Financial Services

Preparing for 2025

By Daniel Cardi

 

If there’s one thing we all learned in 2024, it’s this: scammers aren’t slowing down. From texts that pose as Amazon to fake job offers asking you to deposit checks, their deception is getting more creative — and more effective. In fact, the Federal Trade Commission (FTC) estimates Americans will lose more than $10 billion to fraud this year alone.

The good news? Protecting financial data doesn’t have to be complicated. With a few smart strategies and a healthy dose of skepticism, you can avoid becoming a statistic in 2025. Let’s break down what’s deceiving people, why it’s working, and what you can do about it.

 

Scammers Got Smarter in 2024

Last year, we saw some old tricks making a comeback. Counterfeit checks were still common — people receiving fake checks, depositing them, and being asked to forward the funds before the check bounces. These scams often target folks selling things online or applying for jobs.

Daniel Cardi

Daniel Cardi

“Scammers thrive on urgency. They’ll tell you your account’s been compromised or there’s a suspicious charge on your card, hoping you’ll panic and act without thinking.”

But one thing really stood out: fraudulent text messages. Criminals sent fake texts pretending to be from retailers like Walmart or Amazon, claiming there were “suspicious charges” on your account. The goal? Get you to click a link, enter your banking info, and give them instant access to your money.

These scams are working for a reason. As a society, we use our phones for everything, and we trust them with a lot of information — from shopping to banking to ordering pizza. Scammers know this and are doubling down on texts and emails because they know we’ll respond quickly, often without a second thought.

 

What Scams to Expect in 2025

These tactics aren’t going anywhere. In fact, they’ll likely get more advanced. Cybercriminals are already using artificial intelligence (AI) to create more convincing fake messages. It’s only going to get harder to tell the difference between a legitimate message and a computer-generated one.

Who’s most at risk? Unfortunately, older people are still a primary target because they’re less familiar with digital tools. But anyone who’s too quick to click or too trusting can fall victim, especially as scams get more sophisticated.

For our part, the financial industry is fighting back. Many institutions, like Community Bank, are embracing AI to catch fraudulent activity faster. These systems analyze millions of transactions in real time to flag suspicious activity. But even with all the technology in the world, the best defense is still a vigilant consumer.

 

How You Can Protect Yourself in 2025

So what can you do to stay ahead of scammers? Luckily, the best strategies are simple and don’t require a computer science degree.

Slow down. Scammers thrive on urgency. They’ll tell you your account’s been compromised or there’s a suspicious charge on your card, hoping you’ll panic and act without thinking. Pause and look closely at the message. Does it seem real? Check the link — is it actually from a legitimate source, or is it some random string of letters and numbers? When in doubt, call your financial institution’s customer-care center directly and have them research the activity.

Change your passwords. I know — it’s inconvenient. But using old, weak passwords is like leaving your front door wide open. Make a habit of updating your passwords regularly and using different ones for different accounts. If that sounds overwhelming, get a password manager to do the hard work for you.

Use multi-factor authentication. MFA is an added layer of protection for devices and accounts — a gateway guard that says “prove it’s really you.” When you log in, you’ll need to verify your identity with a code sent to your phone or email. It’s an extra step, but it’s worth it to keep scammers out of your accounts.

Be skeptical of offers that seem too good to be true. If someone offers you a job out of the blue or says you’ve won money but need to send funds to claim it — run. Scammers love to bait people with promises that sound amazing but aren’t real.

Report fraud ASAP. If you think you’ve been scammed, don’t stay silent. Call your bank immediately. Not only can we help you secure your account, we might also be able to recover your money. In 2024, our team at Community Bank helped recover more than $235,000 on behalf of our customers who would have otherwise lost that money to scams.

 

The Role of AI and What’s Next

Here’s the silver lining: 2025 is shaping up to be a turning point for fraud prevention. Like I mentioned earlier, financial institutions, like Community Bank, are rolling out advanced AI systems that can adapt in real time to catch new scams as they emerge. Because these tools use machine learning to analyze millions of transactions daily, they can spot patterns that humans might miss. Any new trend will be addressed instantly, with new or updated alerts to our team.

But with every advancement in fraud prevention comes new strategies from the scammers. They’re also experimenting with AI to create fake emails, texts, and even phone calls that are more convincing than ever. This is why vigilance and skepticism will always be your best tools.

We also expect more regulations in 2025 aimed at improving cybersecurity. Businesses will need to comply with stricter rules to protect sensitive data — which is great news for consumers. But at the end of the day, personal accountability remains key.

 

Don’t Rush and Stay Skeptical

The main takeaway for this year? Take your time. Whether it’s a text about a suspicious charge or an email requesting urgent action, don’t rush to respond. Scammers rely on speed and panic — take that away, and you take away their power.

Remember, if something feels off, don’t hesitate to call and ask questions. By staying informed, skeptical, and proactive, you can outsmart the scammers and protect what matters most.

In short, 2025 will bring new challenges, but with the right mindset and tools, you’ll be ready.

 

As vice president and Corporate Security officer for Community Bank, Daniel Cardi draws on more than three decades of experience in policework, gaming investigations and security analysis to stay ahead of emerging threats and prevent financial losses for customers. He specializes in risk management, fraud prevention, and physical security, overseeing security upgrades and modifications across the bank’s branch network. He also supervises a dedicated team of corporate security investigators committed to investigating allegations of fraudulent financial activity across the bank’s footprint to foster a safer banking environment for all customers.

 

What the Tax Code Says About Your Losses

By Contributor
Banking and Financial Services

Scammed in a Crypto Scheme?

By Sean Wandrei

 

Have you received a text lately from strangers who think they know you or want to be your friend? I have been receiving those for a while now. I thought I was popular, and these people wanted to be my friend. Maybe a few of them want to be, but many of these texts are from people looking to find their next target.

‘Pig butchering’ has become increasingly prevalent in recent years. That’s the term for a scam that deceives individuals into giving up money under false pretenses. The scammer fattens the victim, the ‘pig,’ by slowly guiding them into making increasingly large investments before disappearing with the victim’s money. These schemes can be presented as an opportunity to help someone out, find love, or take advantage of an incredible investment opportunity. With the boom in the cryptocurrency market, many of these schemes involve investments in crypto.

The scammer gradually builds trust with the victim over time. Once the trust is built, the scammer tells the victim about a great investment opportunity where they made a lot of money from investments, or how they need money for other reasons. The scammer may show the victim evidence of investment gains.

Sean Wandrei

Sean Wandrei

“The key difference between these two situations is the victim’s intent — if the individual engaged in the transaction with the expectations of earning income or capital gains, then the loss suffered can be treated as an investment loss rather than a personal expense.”

Eventually, the victim is guided to a website or app to invest in crypto. The app could look like a platform such as Coinbase. The platform is set up by the scammer, and eventually the victim’s crypto is transferred off the platform and gone forever. Or the crypto never existed — the money the victim sent simply went into the scammer’s account.

 

Deducting Losses from the Scam

Internal Revenue Code (IRC) Section 165 provides the taxpayer with an opportunity to deduct losses incurred from various transactions, subject to specific rules and limitations. The deductibility of losses suffered from fraudulent schemes depends significantly on the nature of the transaction and the taxpayer’s motive at the time of the transaction. Two distinct scenarios arise in the context of pig-butchering schemes: losses incurred from transactions driven by personal motives (helping someone out or looking for love) and losses incurred from a transaction entered into for a profit (investing in crypto).

When a loss is incurred because an individual gives money to help someone out or in the pursuit of a romantic relationship, the transaction is typically characterized as a personal expense. These losses could be seen as a theft loss arising from non-business, personal transactions. Under IRC 165(c)(3), theft losses generally are not deductible due to the Tax Cuts and Jobs Act, which limited the deductibility of personal casualty and theft losses to those incurred in a federally declared disaster area.

In this context, the taxpayer’s motive was not profit-driven, but rather a personal connection or desire to help, which means this loss would be a theft loss and not deductible. The rationale is that the tax code does not provide relief for personal financial mistakes or misguided generosity when they lead to fraud.

Contrast this with the scenario where the pig-butchering scheme is one where the victim believes that they are investing in an asset such as crypto. In this case, the victim’s primary motive is to earn a profit by investing in crypto. Under IRC 165(c)(2), losses incurred from transactions entered into for profit, which are not connected to a trade or business, are deductible.

The key difference between these two situations is the victim’s intent — if the individual engaged in the transaction with the expectations of earning income or capital gains, then the loss suffered can be treated as an investment loss rather than a personal expense. The IRS treats crypto as property, so a case can be made that the victim was investing in property with a profit motive of investment income.

If the victim is going to deduct the loss under IRC 165(c)(2), he or she must adhere to substantiation requirements. Detailed records of the transaction, evidence of the profit motive, and clear documentation of the loss are necessary to support any deduction claimed on the tax return.

For example, consider a taxpayer who entered into a crypto scheme that ultimately turns out to be a pig-butchering scheme. If the taxpayer entered the transaction with a clear profit motive, expecting to realize gains from a booming cryptocurrency market, the loss from the scheme can be characterized as an investment loss. This categorization aligns with the general principle that taxpayers are allowed to deduct losses on investments when those losses result from a transaction entered into for profit.

 

Bottom Line

There is little case law on this subject, as it is relatively new. To deduct these losses, a taxpayer must maintain clear documentation of all interactions with the scammer, deposit dates, and evidence of profit motive.

Falling victim to these scams can have major financial consequences for the victim and his or her family. The monetary loss could be alleviated by deducting the loss and reducing the taxpayer’s tax liability. As mentioned above, there is limited tax precedent on this subject, so taxpayers should contact a tax professional to ensure the claim is legally sound and in full compliance with current laws.

 

Sean Wandrei, CPA, MST is a senior lecturer in the Department of Accounting at Isenberg School of Management at UMass Amherst.

UMassFive College Federal Credit Union Remains Focused on Growth

By
Rich Kump says UMassFive College Federal Credit Union is persevering
Banking and Financial Services Special Coverage

Setting Its Sites

Rich Kump says UMassFive College Federal Credit Union is persevering

Rich Kump says UMassFive College Federal Credit Union is persevering through challenging times for this sector.

Rich Kump says UMassFive College Federal Credit Union is in a mood to “make up for some lost time.”

Elaborating, he flashed back more than two years, to when the institution was starting to move ahead with plans to move its flagship location in Hadley to a new location just down Route 9, while also advancing efforts to make a push into Hampden County with a location in or near Springfield and a smaller satellite office within Springfield that would serve one of the city’s many banking deserts.

Returning to today, he said the credit union — which he serves as president and CEO — has made very little, if any, progress on those fronts, due to issues with all three sites that we’ll get into later.

He summed it all up with some understatement, and a needed sense of humor, saying, “what I have surmised from all this is that we’re not very good at picking branch sites.”

Now, the institution is looking at 2026 for the Hampden County locations, and a longer timeline for the new Hadley location, which he admits is less of a priority now than it was back in late 2022, due primarily to remote-work options that have alleviated space concerns that were a prime motivator for relocating the flagship branch.

“Moving the Hadley branch does not generate a whole bunch of new loans and deposits and members.It provides some great visibility, but not many growth opportunities.”

These are all still priorities, but they have been supplanted by larger concerns and dramatically changing times — for all banks and credit unions, one in which the rising interest rates of 2023 and early 2024 tightened already-thin margins, reduced profits, and pushed many credit unions to the point where they needed to merge with another institution or close.

“It’s been a troubling time, with many credit unions posting losses,” Kump said, noting that there were 41 credit-union mergers nationwide in the fourth quarter of 2024 alone, some of them generated by a need for small credit unions to expand services, but many others prompted by poor financial condition.

UMassFive has been looking to move its flagship branch in Hadley

UMassFive has been looking to move its flagship branch in Hadley (pictured) to a new location down Route 9, but other priorities are currently more important.

UMass Five, which has six branches across Western and Central Mass., including one at its namesake, UMass Amherst, is not so imperiled, but it has seen deposits tumble and overall performance slide due to these colliding factors.

“We had to increase our rates to keep the deposits we had, and, of course, that increased our cost of funds quite a bit. And while the cost of funds increased, we still have a loan portfolio, much of which was at much lower than market rates,” he said, explaining, in simple terms, the main challenge facing all institutions.

UMass Five, with roughly $570 million in deposits and around $700 million in total assets, didn’t load up its balance sheet with large numbers of low-interest borrowings, he went on, but it certainly felt the pinch.

“Our net interest margin did shrink a little — not as much as others, but overall, we saw our net income decline,” Kump said, adding that the bank grew at just 0.24% in 2024, what would normally be considered an off year, but, under these circumstances, acceptable.

Moving forward, the credit union, like many other financial institutions, must balance life in these more difficult times with the need to grow, attain more deposits, and create economies of scale, and thus become better able to handle the ongoing headwinds.

UMassFive is not in a position to be acquired, and it is not exactly looking for opportunities to acquire others, although it will certainly consider them as they emerge, said Kump, adding that, for now, the preferred method of growth is organic.

Which brings us back to those branches that have been in the planning stages. They are important parts of the credit union’s overall growth strategy, and while the institution will move forward, it is not going to rush anything.

Indeed, while he regrets losing time with these initiatives, as he said at the top, the process of selecting new branch locations — an art and science that involves everything from visibility to the volume of other traffic-generating businesses, to the number of competing banks and credit unions in the general vicinity — is necessarily slow and involved, and UMassFive will take its time and get it right.

“We’re back to square one,” he said of the Hampden County locations. “But it’s more important to do this well then do it quickly.”

For this issue and its focus on banking and financial services, we talked with Kump at length about what’s in the business plan for UMassFive, and just how the institution will make up for that lost time.

 

Points of Interest

Recapping what’s happened with those three planned branches, Kump said not much has gone right, and each story is different.

In Hadley, the property where the credit union intends to go is occupied by an auto-repair shop and a small single-family home being rented from the property owner. Long story short (we’ll do a lot of that), that tenant has not gone quietly — the matter has wound up in Housing Court in a protracted battle — and won’t be out for another six months or so.

“We’re still interested in that site … we’re putting together a new purchase agreement because we hadn’t anticipated such a lengthy delay,” Kump said. “But it’s still in our future, and we do want to move our flagship location to that more visible site on Route 9.”

Meanwhile, in Hampden County, at a location in East Longmeadow near the Springfield line, a site chosen after extensive research, a new branch has been scrapped due to issues with the sewer system. And that satellite location? After more than a year of deliberations, the owner of that property ultimately decided not to sell or lease it.

So UMassFive is now essentially where it was two and half years ago on all three projects — waiting to get started in Hadley and trying to find the right sites in Springfield, Kump noted, adding that, over that time, the landscape for credit unions and banks has changed when it comes to liquidity, profitability, and, in this specific case, priorities and growth strategies.

“As many other financial institutions are doing, we’re managing our growth,” he explained. “Your income fuels growth, and when your income is down, you can’t grow as much.”

Elaborating, he said the Hadley initiative is certainly still important, just less so in the larger scheme of things, adding that the relocation of that flagship branch is now targeted for completion in 2028 at the earliest, for a few reasons, starting with logistics.

A few years ago, the plan was to close an operations center in Hadley and move the employers there into space created by moving the headquarters branch to that aforementioned location at the Amherst/Hadley line. But with heavy use of telecommuting and hybrid schedules, the credit union has moved the last department from the operations center into the flagship site, with the branch still operating.

Meanwhile, with a focus on gaining new members and growing deposits, the credit union’s top priority now is expanding into Hampden County.

“Moving the Hadley branch does not generate a whole bunch of new loans and deposits and members,” Kump explained. “It provides some great visibility, but not many growth opportunities.”

He expects these to come in Hampden County, where the credit union has a small presence — a branch in Mercy Medical Center — with intentions to become a larger player in that region, through further use of what he called a “hub-and-spoke” operating philosophy.

Elaborating, he said this model calls for a main facility, such as the one in Hadley, with smaller, satellite facilities around it, including those at UMass Amherst, downtown Northampton, and the Veterans Administration facility in Leeds.

There were plans to create something similar in Hampden County, starting with the property at the East Longmeadow/Springfield line, as the hub. But, as we’ve seen, that site didn’t work out, a huge disappointment for the institution.

“We were very excited … we did an extensive branch study, used lots of data, socio-economic factors, traveling routes, destination points at this one location, and it came up roses for us,” he explained, adding that the roses soon wilted amid sewer-backup issues that could not be resolved, forcing the credit union to walk away from the deal four months ago.

Now, as he said, UMassFive is back to square one, and it will take its time putting a new plan together. With that, he gave some insight into the complicated nature of finding sites for branches, an undertaking many institutions are familiar with as they seek out growth opportunities in a no-growth area with many communities that could only be described as ‘overbanked.’

“There is a lot that goes into this … for bank branches, you have to be visible, you have to be in high-traffic areas, and there have to be destination points around you,” he said, adding that, to find such sites, institutions must invest time, money, and resources — and then hope things go right with the sites they choose.

But as difficult as finding good branch sites can be, securing them is critical, said Kump, adding that, in this environment, pursuing growth and achieving size are critical for all financial-services institutions.

“Eventually, you have to grow again, and we feel that will happen,” he said, adding, again, that, while the organic route is preferred, the credit union will certainly look at merger opportunities as they emerge.

“We’re not aggressively seeking mergers, but if there is a credit union that has interest in merging into us, we would definitely consider that, and that’s really who we’ve been throughout our existence,” he said, adding that the institution’s locations at Mercy and the VA facility came about through mergers.

 

Location, Location, Location

Looking ahead to the balance of 2025 and beyond, Kump said it’s difficult to project what will happen — with both the economy and financial-services institutions.

Indeed, only a few months ago, the Fed was projecting several interest rate cuts in 2025; by December, it was anticipating few, if any.

“All bets are off,” he said. “We see employment numbers coming down, inflation numbers seem to be going up, and if inflationary pressures continue to push, it wouldn’t surprise me if, in 2025, we saw some rate increases again.”

In this climate, UMassFive will continue to work to manage its growth and align its priorities to that end.

It will also endeavor to make up for some lost time and find some better luck and good fortune when it comes to picking branch sites and taking full advantage of those new locations.

It is certainly overdue.

St. Germain Marks a Century of Evolution

By
Banking and Financial Services

Investing in the Future

 

To put 100 years in perspective, Tim Suffish considered his own time at St. Germain Investment Management.

“It’s crazy to think I’ve been with St. Germain now 20-plus years, so 100 is a lot in our industry. That predates Fidelity Investments and big firms like that. But 20 years here … time flies,” said Suffish, senior vice president and head of equities at the firm.

But St. Germain has seen plenty of evolution, not only since it opened in 1924, but in the two decades Suffish has been on board.

“If you go back 50 years, firms like St. Germain tended to be brokers, and it was very transactional,” he told BusinessWest. “And portfolios were very different back then. St. Germain initially had a focus on bank and insurance stocks, seeing that we were just up the road from Hartford, Connecticut, the insurance capital of the world. That transitioned to being investment managers, managing diversified portfolios for clients, blue-chip stocks based in the U.S., and that was the way we operated through the ’90s.

Tim Suffish

Tim Suffish

“If someone comes in to us at 60 years old and they’ve got a handful of years left until they’re retiring, it’s going to be a different conversation.”

“But then, starting around the turn of the century in 2000, we in the industry have moved more toward being wealth managers,” Suffish explained. “We call it total financial planning — your retirement assets or your brokerage assets or saving for some big event down the road, like your children’s college tuition or saving for a second home, or whatever it is. We get more involved in all aspects of that, both the planning that goes in beforehand, setting expectations for what the returns might be, and the timing to get to that goal.”

In putting the company’s longevity in historical perspective, St. Germain’s website notes it has survived 17 U.S. presidents, six U.S. wars, a global pandemic, and much more … “and yet, we’ve stuck to one maxim across those years: do what’s in the best interest for our clients.”

“We have advisors that are salaried employees. We don’t sell commissioned products,” Suffish explained. “Our advisors can go into the typical client meeting and give what we think is the right advice, and there’s no conflicts of interest where this thing over here is going to pay me more if I put them in it, versus something else. That’s something that differentiates us a little bit from some of the competition out there.”

 

Goals at Any Age

Suffish and the team at St. Germain — including President Mike Matty, who has served in that role for the past quarter-century — have stressed that financial planning and financial management are a process, whether an investor is 25 or 75.

For a new client, the first meeting starts with an exchange of information, as the client learns about the firm’s overall approach and generally conservative philosophy, and the team learns about the client’s financial life: assets, liabilities, income, and expenses.

All that is the starting point for developing a strategy, which considers how assets are managed and allocated, beneficiary designations and how they fit within an estate plan, and more. Once in place, the plan isn’t static, but is reviewed and adjusted as needed, as the markets, the economy, and the client’s own life circumstances change.

“On an annual basis, you’ll come in, and we’ll review the plan and assess whether we are on track to meet your goals,” Suffish said. “And the goals can be five, 10, 15, 20 years away. So at the start, let’s set a plan, let’s set an asset allocation, let’s figure out some stocks or ETFs [exchange-traded funds] or mutual funds that are going to be the right tools to get us to that goal. And then, on an annual basis, let’s review the plan, review the assets, review how things are doing, and see if we’re still on track to be where we want to be in 20 years.”

Mike Matty has been president of St. Germain for the past quarter-century.

Mike Matty has been president of St. Germain for the past quarter-century.

While clients of all ages and stages of life partner with St. Germain, Suffish noted, “we’re in the business of wealth management, and when you look at demographics in the U.S., the wealth tends to be in the 50-plus-year-olds, not the 20-year-olds, so our client base mirrors that. But everybody has different goals when they come to us.”

For example, a young person just starting out at work, opening up an IRA, might want to be very aggressive because he or she can tolerate the volatility that goes along with that strategy.

“But if someone comes in to us at 60 years old and they’ve got a handful of years left until they’re retiring, it’s going to be a different conversation,” Suffish said. “It’s about replacing the income that they’re getting from their current job and their current salary and building a portfolio around that — building it around income and conservative growth.”

In any case, risk tolerance is important to assess up front, he added, and it does tend to diminish as time goes on, and the client gets ever closer to needing investments, rather than salary, to pay the bills. That’s even more critical at a time when Americans are living longer than ever before, and someone may need to fund 30 post-retirement years, or more.

“If you’re retiring at a traditional, 65-year-old retirement age and we’re doing the planning out to age 95, we do have conversations with our clients about longevity and family history and your personal history and your health — that’s all part of it. But just to be conservative, planning out to age 90 or 95 is something that we all need to do.”

 

Expanding Footprint

Again, Suffish said, 100 years is something to be celebrated, and even the firm’s growth in just his 20 years there has been impressive. In those two decades, St. Germain has grown from around seven employees to 50, now operating out of four offices — in Springfield, Northampton, Lee, and Plymouth — along with a satellite office in Mississippi and plans to open another office in New Hampshire.

Meanwhile, assets under management have grown from around $600 million 20 years ago to more than $3 billion today.

That’s a lot of investments supporting a lot of goals and plans, and Matty, Suffish, and the rest of the team don’t take the responsibility lightly.

“We’ve been around a long time,” Suffish said, “and it’s because we try to do things right for our clients all the time. It does make a difference.”

Berkshire Bank, Brookline Bank to Form Combined Company

By
Banking and Financial Services

Merger of Equals

Berkshire Hills Bancorp Inc., the parent company of Berkshire Bank, and Brookline Bancorp Inc., the parent company of Brookline Bank, Bank Rhode Island, and PCSB Bank, recently announced they have entered into a definitive agreement pursuant to which Brookline will merge with and into Berkshire in an all-stock transaction valued at approximately $1.1 billion, or $12.68 per share of Brookline common stock, based on the $30.20 closing price of Berkshire common stock on Dec. 13, 2024.

In conjunction with the planned merger, Berkshire also entered into subscription agreements with investors to raise capital to support the merger. In aggregate, $100 million of Berkshire common stock were issued at $29 per share. The proceeds of the capital raise are expected to support the pro forma bank’s balance sheet and regulatory capital ratios.

Nitin Mhatre, president and CEO of Berkshire Bank, said the merger announcement “marks a transformational milestone in the history of two storied institutions with a strong commitment to serving their clients and communities. The combined organization will be in an even stronger position to deliver exceptional client experience and create greater value for shareholders.”

“Scale and efficiency combined with our shared culture of true community banking is a powerful driver of value for all of our stakeholders.”

Paul Perrault, chairman and CEO of Brookline Bank, noted that “this transaction presents an opportunity to bring together two historic franchises in the Northeast market. By bringing together two complementary cultures and geographic footprints with shared values and client focus, we will be better-positioned to serve our customers, employees, communities and shareholders.”

Berkshire Bank Chairperson David Brunelle added that “this highly compelling combination is a true merger of equals that will create a pre-eminent Northeast financial institution. Scale and efficiency combined with our shared culture of true community banking is a powerful driver of value for all of our stakeholders.”

The creation of a $24 billion franchise with 148 branch offices positions the combined company to benefit from significant economies of scale and capitalize on meaningful growth opportunities through business diversification and improved competitive positioning. Together, the companies will have the scale to enhance investments in clients, employees, and markets, and increase lending capacity.

The combined company promise to preserve and build on the cultures of both Berkshire and Brookline, which include core values centered on respect, teamwork, accountability, and client focus, the press announcement noted, adding that the combined bank will maintain its strong ties with its communities and be better-positioned to elevate its impact through its community banking business model.

The combined company’s board of directors will consist of eight directors from Berkshire and eight directors from Brookline. Brunelle will serve as chairperson of the board of the combined company and the combined bank. Perrault will serve as president and CEO.

The combined bank will be divided into six regions, each led by an experienced local leader who will be responsible for the overall business performance in their market. Three will be from Berkshire and three will be from Brookline. This model will allow the combined company to achieve the efficiencies of operating one bank while maintaining a regional banking structure that enables local market leaders to make autonomous decisions with the support and balance sheet of a larger institution.

The transaction is expected to close by the end of the second half of 2025, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approvals from Berkshire and Brookline shareholders.

Local Banks, Credit Unions Emphasize Corporate Responsibility

By
Banking and Financial Services Special Coverage

More Than Writing Checks

 

A community bank should be about, well, the community.

That’s the prevailing thought, anyway, among bank and credit-union leaders throughout the Western Mass. region when it comes to philanthropy, volunteerism, and other activities under the broad umbrella of corporate responsibility.

“It’s identifying the needs of the communities we serve. We’re very consistent with that mission,” said Matt Garrity, president and CEO of Florence Savings Bank, who was quick to name several areas of focus for the institution’s giving-back strategy, including affordable housing, food insecurity, financial literacy, education, substance abuse, health and human services, and community redevelopment. “These are issues that impact the lives of people in the communities we serve.”

To that end, Florence funded close to 400 requests in 2024, and it’s far from alone in meeting those needs.

“For mutual banks and community banks here in Western Massachusetts, giving back to the community really is a core value,” Garrity said. “And it’s local — the overwhelming majority of the giving we do is centered on supporting communities in Hampshire, Hampden, and Franklin counties.”

UMassFive College Federal Credit Union focuses on the word ‘wellness’ a lot, said Craig Boivin, vice president of Marketing.

“That can mean different things. Obviously, financial wellness is the biggest thing. We’re a credit union, so we’re making sure we educate people on financial matters, with webinars and workshops on budgeting, understanding credit, and paying down debt. But another bucket of wellness has to do with basic necessities.”

That’s why UMassFive works with local survival centers, helping them meet needs and spreading the word to others, like through an annual coat and winter clothing drive that brought critical supplies to Amherst Survival Center, the Gray House in Springfield, and Net of Compassion in Worcester.

In fact, UMassFive partners with a host of area nonprofits on various giving and volunteering initiatives, including Community Involved in Sustaining Agriculture, the Food Bank of Western Massachusetts (through participation in Will Bike 4 Food), and health-focused organizations like the UMass Cancer Center (through the UMass Cancer Walk).

Matt Garrity

Matt Garrity says Florence Savings Bank prioritizes community needs including affordable housing, food insecurity, financial literacy, education, health and human services, and community redevelopment.

Dan Moriarty, president and CEO of Monson Savings Bank, says his institution is dedicated to enriching lives in the cities and towns where it does business, and surrounding communities as well, helping organizations that serve a host of constituencies, from senior citizens to veterans to people in need of health services and basic needs.

“Obviously, a bank can’t solve all the area’s problems, but when we do things along with other good corporate citizens, we feel we make a difference in people’s lives,” he noted, noting that the bank has adopted “when we all give back, we all move forward” as its philanthropic tagline.

“We are a community bank, and we’ve been doing that for over 150 years now. As we continue to grow and expand our market footprint, we expect to help with more needs in the community.”

Matt Bannister, vice president of Marketing and Corporate Responsibility for PeoplesBank, has said many times that his bank’s guiding philosophy is to give a little to a lot of groups.

“Obviously, a bank can’t solve all the area’s problems, but when we do things along with other good corporate citizens, we feel we make a difference in people’s lives.”

“Some organizations will give a lot to a few groups. If a hospital is building a new cancer wing or an emergency room or something like that, those tend to be very large donations because they are very large projects. We take the opposite approach. We want to be in as many places as we possibly can.”

As a result, PeoplesBank gave away $1.6 million last year to 550 different nonprofits, Bannister noted. “You do the math, and it’s about $2,500 or $3,000 per grant, which doesn’t mean much to a large corporation that’s building a hospital … but it does mean a lot to a small nonprofit with a shoestring budget. So the ability to impact many organizations as possible is the route that we choose.”

 

Making the World Better

That said, corporate responsibility goes well beyond writing checks, Bannister explained.

“Corporate responsibility, to me, means standing for something that benefits the public at large. It’s a way to telegraph the values that a company has, and a consumer can use that information to make decisions. One of the factors when they’re purchasing a product or a service is, ‘who am I buying this from, and what do they do that makes the world a better place,’ as opposed to ‘what are they not doing, or what are they doing that makes the world a worse place?’”

So, that extends not only to philanthropy, but to what vendors and suppliers a bank partners with, and whether they share similar values.

“You might say a certain percentage of the vendors of a company should be minority-led organizations or women-led organizations. So it’s not only how you telegraph your values, but how you put them into action; are you, as a company, spending money to encourage what we think are beneficial programs for society?”

That approach extends to volunteerism as well — an area of community support that virtually every bank based in this region emphasizes.

Dan Moriarty (left, with Veronica Garcia, CEO of Latino Marketing Agency, and John Perez, project office manager at the Hispanic-American Institute

Dan Moriarty (left, with Veronica Garcia, CEO of Latino Marketing Agency, and John Perez, project office manager at the Hispanic-American Institute) enjoys taking many of these big-check photos each year with organizations that benefit from Monson Savings Bank’s giving.

“When employees of a company volunteer in the community, that’s another way the company adds value to the community,” Bannister said, which is why PeoplesBank — and the other institutions that spoke with BusinessWest — pays employees to take volunteer days.

“So United Way has Days of Caring, where teams [of volunteers] will come out, or Habitat for Humanity has a build, where teams will come out, and that’s good for team building. But the company is also saying, ‘you’re not going to do your job today; we’re going to pay you to do something out in the community.’”

That makes a statement about corporate values, which is why Monson Savings Bank recently codified it.

“We’re launching a community service day policy where we pay our full-time employees to donate eight hours of a day, or two half-days, to an organization or a nonprofit,” Moriarty said. “We’ve done that kind of unofficially; now it’s an official policy. We allow employees to donate their time during the work week, and we pay them to go out and support the community. It’s a great thing.”

Such activities also expose employees to the good work being done in the community, and they can be enjoyable, he added. “We’ve had fun helping Revitalize CDC on volunteer projects, or helping out organizations from the United Way to Martin Luther King Family Services to I Found Light Against All Odds, and many others.”

The bank also collects $5 donations from employees every Friday for the ability to wear jeans to work, and those donations are pooled and given to local organizations as well.

At Florence, “volunteerism is a big part of what we do. We encourage it highly in our organization, and we’ll continue to do that,” added Garrity, noting that employees have recently volunteered at organizations including Hampshire Regional YMCA, Greater Springfield Habitat for Humanity, Square One, Caring Health Center, and many more.

At UMassFive, Boivin said, “the level of engagement of our employees is high — it’s the culture here to support others in the community, especially with fundraising that we do with Will Bike 4 Food and the Cancer Walk and Run. We raised over 25 grand combined for those two organizations this year.

“And a lot of that comes from grassroots stuff the employees are doing,” he added. “They’re selling baked goods, they’re creating artworks and selling them in the branches, they’re talking to their families and friends, and they’re donating themselves. We really support the causes we care about.”

UMassFive’s community support also extends to elevating local businesses, as it did when it partnered with UMass Athletics and UMass Sports Properties on a recent contest to recognize a small business that demonstrates service, innovation, and community involvement.

The winner, Sexton Roofing & Siding, received an ad package worth $10,000, allowing it to be featured on digital displays, radio reads, email blasts, and tabling opportunities during and surrounding the university’s sporting events. “That’s another way to practice corporate responsibility, by amplifying other businesses,” Boivin said.

 

Moving the Needle

And then, there are the votes.

Two local banks — Florence Savings Bank, through its Customers’ Choice program, and Monson Savings Bank, through its Community Giving Initiative — just finished another annual round of voting by customers and community members on what organizations they’d like the banks to support with donations.

“We began this back in 2010. We’re aware of a lot of different nonprofits that are doing a lot of good work, but not all of them,” Moriarty said, and since its inception, the program has grown significantly. “It’s exciting — now we have nonprofits say, ‘hey, Dan, when do we launch the CGI initiative, so we can get the information to voters?’ It’s been a great program for us, and we’ve met a lot of great organizations across the Pioneer Valley.”

Florence Bank’s program is in its 23rd year, and the most recent round of voting drew more than 7,000 ballots, Garrity noted. “We’ve even tried to provide, for the benefit of a lot of our nonprofit organizations, tips on how to get the message out to their supporters around Customers’ Choice. It’s really been something the community has embraced.”

Readers have probably noticed the word ‘community’ repeated often throughout this article — more than two dozen times, in fact. But there’s a good reason for that.

“The word ‘community’ can be overused, but it really does feel like we’re a community of people helping others in the community,” Boivin said. “Our whole mission is set up to help people. The biggest way we do that is in the financial world, but there are a lot of other pillars here.

“When you think about the budgets we have for marketing and outreach, they are not as big as some of the community banks in our area,” he went on. “And, yes, we write checks and donate money, but a lot of it, for us, comes down to volunteer efforts and fundraising and spreading the word about events organizations are having, or participating in those events when they have them.

“A lot of it is a boots-on-the-ground effort,” Boivin added. “We don’t just write checks; we show up. That’s an internal mantra of ours.”

Is a Backdoor Roth IRA the Right Choice for You?

By Contributor
Banking and Financial Services

Weighing the Options

By Keara King

 

With the rapid growth of social media, we are more connected than ever, allowing immediate and constant access to a wealth of advice and information. Some of the financial advice you run into online may be beneficial, but be wary of making financial decisions based on advice that is not specific to your financial situation, nor provided by a verifiable source. Financial decisions are far from a one-size-fits-all approach.

One piece of advice that has been making the rounds on TikTok is making backdoor Roth IRA contributions as a tax-advantage tool to build your wealth.

 

What Is a Backdoor Roth IRA?

A Roth IRA is a retirement account that allows individuals to contribute after-tax dollars. The contributions and earnings grow tax-free, and you can take tax-free distributions once certain requirements are met.

However, not everyone is eligible to contribute directly to a Roth IRA. Eligibility to contribute to a Roth IRA is based on your modified adjusted gross income (MAGI). For 2024, the maximum contribution starts to reduce at MAGI of $146,000 for single filers and $230,000 for joint filers.

However, there is a way around the income limitation for high-income taxpayers. A backdoor Roth IRA is a strategy that allows high-income taxpayers to contribute to a Roth IRA by converting funds from a traditional IRA. This is typically done by making your annual contribution to a traditional non-deductible IRA and then immediately converting this to a Roth IRA. Doing this as soon as possible prevents earnings on your traditional IRA from being taxable on the conversion.

Keara King

Keara King

“A backdoor Roth IRA is a strategy that allows high-income taxpayers to contribute to a Roth IRA by converting funds from a traditional IRA. This is typically done by making your annual contribution to a traditional non-deductible IRA and then immediately converting this to a Roth IRA.”

Some financial advisors offer support in handling a backdoor Roth conversion for their clients, so reach out for help before starting the process of converting.

Nevertheless, before leaping to follow internet advice to contribute to a backdoor Roth IRA, you should consider these three things:

• Do you already have an IRA or Roth IRA account(s)?

• Does your current employer offer a 401(k) with a company match?

• What is your expected income for the year?

The IRS views all of your IRAs as a single account when determining the tax you owe on distributions, including Roth IRA conversions. If your traditional IRA accounts include both pre-tax (deductible, retirement-plan rollovers) and after-tax (non-deductible) contributions, the pro rata rule dictates that your Roth conversion will be taxed proportionate to your pre- and post-tax percentages. You cannot dictate that your Roth conversion will use only after-tax funds.

For example, if you have an existing $100,000 traditional IRA and $7,000 came from non-deductible contributions, your non-taxable percentage would be 3% (or 7,000/100,000). This turns your IRA conversion of $7,000 into $6,510 of ordinary income on your tax return.

Alternatively, if you do not have an existing traditional IRA or all your contributions were non-deductible, your pro rata would be 0%, and none of your IRA conversion would be considered taxable income on your return. Backdoor Roth IRAs can be valuable for the right taxpayer. However, it isn’t right for everyone.

In addition to the backdoor Roth IRAs, there are several other options to consider for retirement planning.

 

401(k) Plans and Company Matches

A 401(k) is a retirement savings plan that allows taxpayers to make contributions through their employer to a defined contribution plan. The contribution limit for 401(k)s is $23,000 in 2024 or $30,500 for those over age 50. Some employers will offer a company match; typically, around 3% of the employee’s salary will be contributed to your account, up to a set limit. This is the biggest benefit of a 401(k), as it is essentially free money to the taxpayer. It’s also important to note that your employer’s contribution does not count toward the annual contribution limit.

When you open a 401(k) with your employer, you can usually decide for yourself between a traditional and/or Roth account. The difference is primarily how they are taxed. With a traditional 401(k), the employee contributes pre-tax dollars and thus reduces their taxable income in the current year. This is beneficial for high-income taxpayers, who are currently paying a premium tax rate. When the taxpayer withdraws the retirement funds, they should be in a lower tax bracket, thus the tax on the withdrawal (money contributed plus earnings) should be minimal.

On the other hand, with a Roth 401(k), the employee contributes post-tax dollars — thus, paying the tax on the income in the current year so that it can grow tax-free in your retirement account. There is no tax deduction on this type of contribution, as you reap the benefits in the future. This type of account is beneficial for taxpayers who want to shield themselves from potential increases in tax rates in the future by paying the tax now. Moreover, it is important to note employer contributions can be made to both traditional and Roth 401(k) plans no matter what option you pick.

If your employer doesn’t offer a company match, consider looking at other IRA or Roth IRA contributions. Going through a separate broker outside of your work plan will give you access to a larger selection of investments and help avoid administrative fees.

 

IRAs

Taxpayers are allowed to contribute a combined total of $7,000 to all traditional and Roth IRA accounts in 2024, or $8,000 if you are over age 50. There is no employer match for contributions to either type of IRA.

Traditional IRA contributions are ideal for taxpayers who are seeking an immediate tax break. However, if you are covered by an employer retirement plan, your deduction may be reduced or eliminated based on income levels. In 2024, single or head-of-household taxpayers who have an adjusted gross income of $87,000 or more (and are covered by a retirement plan through work) are not eligible for the deduction. Meanwhile, the phaseout from a full deduction to a partial deduction starts at $77,001 for single or head of household.

Similarly, married-filing-jointly taxpayers who have an adjusted gross income of $143,000 or more (and are covered by a retirement plan through work) are not eligible for the deduction. The phaseout for married filing jointly starts at $123,001. However, you are still eligible to contribute to a non-deductible IRA even if your income is over the eligibility threshold.

Roth IRA contributions are ideal for taxpayers who are not eligible for the traditional IRA deduction and for those who expect to be in a higher tax bracket in the future. They are also ideal for younger investors with a long-time horizon until retirement who can really benefit from the tax-free growth. A taxpayer’s eligibility for a Roth IRA is not impacted by their 401(k) retirement through work. However, as mentioned above, there are income limitations to keep in mind.

 

Bottom Line

When deciding what savings vehicle you want to contribute to this tax year, it is important to weigh the tax advantages, eligibility, and contribution limits beforehand. Talk with a financial advisor and/or your tax accountant about the best strategy to implement for your future today.

Finally, remember that this article is intended to serve only as a general guideline. Your personal circumstances will likely require careful examination and should be discussed with an appropriate professional.

 

Keara King is a senior associate with Meyers Brothers Kalicka, P.C. in Holyoke.

 

Banks, Credit Unions Moving On from a Tough Grind in 2024

By
Banking and Financial Services Special Coverage

Turning the Corner

Jeff Sullivan says the ‘drill’ is now part of doing business — an important part, and an expensive part.

He was referring to a recent exercise at Springfield-based New Valley Bank, in which a cyber attack was carried out and the staff’s response was chronicled, scored, and evaluated.

“You come in the morning and your screen is black — what do you do now?” said Sullivan, president and CEO of the institution. “Then someone gets an email, and it’s says, ‘pay X amount of ransom by the end of the day.’ What do you do? They test your preparedness for things that can happen.”

This simulated cyber attack is one of many aspects of disaster planning at the bank — there’s another drill where there’s a tripledemic and no employees can come to work — and at all banks, large and small. It represents aspects of a “brave new world,” as Sullivan called it, and one of many ongoing challenges and expenses for financial-services institutions.

And there are many others. They include:

• Continually growing competition, both from non-bank financial institutions (NBFIs) and players within the industry, including regional and national powers such as JPMorganChase, which has opened 75 branches in Massachusetts, including several in the 413 in an aggressive bid for market share;

Jeff Sullivan

Jeff Sullivan

“You come in the morning and your screen is black — what do you do now? Then someone gets an email, and it’s says, ‘pay X amount of ransom by the end of the day.’ What do you do? They test your preparedness for things that can happen.”

• The many aspects of technology, including the need to keep up with the larger players with deeper pockets while also correctly gauging what customers want and not investing for the sake of investing;

• Artificial intelligence, specifically the need to understand this emerging technology and then deploy it in ways that improve the customer experience and overall efficiency while maximizing the time of human talent;

• Margin compression, a function of rapidly rising interest rates and corresponding huge increases in the cost of deposits in 2023 and early 2024. Interest rates are coming down, and the situation is easing, but there will be a lag;

• A still-sluggish housing market marked by fewer sales because people don’t want to trade a lower-rate mortgage for a much higher one, and a virtually nonexistent refi market; and

• The ongoing need to grow, and the question of how to accomplish this given all of the above.

These issues and others were addressed by several area banking leaders as BusinessWest asked them to put 2024 in perspective and speculate on what they expect to happen over the next several quarters.

“The rate increases by the Fed really hammered bank margins and, therefore, bank profitability; it was a tough grind in 2024,” said Matt Sosik, president and CEO of bankESB, who described this year as one in which the price was paid for 500 basis points worth of interest-rate increases that started early in 2023. “Most banks are just now starting to turn the corner.”

Most area banks were fortunate to have their balance sheets structured in a way that allowed them to be resilient and absorb the blows, and even record decent, if less-profitable, years in 2024, but the rate hikes still took a toll, Sosik went on, adding that, as rates come down (the Fed approved another drop earlier this month), margins will start to improve. But there will be a lag, just as there was when rates started climbing.

Matt Sosik

Matt Sosik

“The rate increases by the Fed really hammered bank margins and, therefore, bank profitability; it was a tough grind in 2024. Most banks are just now starting to turn the corner.”

As for technology, it remains the quintessential combination of challenge and opportunity for banks. The opportunity comes in the form of improved service to customers and thus the ability to retain and perhaps grow market share. The challenge comes with keeping up, the cost of keeping up, not paying for something customers don’t want, and keeping customer information safe.

“You don’t want to be chasing shiny objects or next greatest thing,” said Matt Garrity, president and CEO of Florence Bank. “You really want to be rooted in understanding what it is your client wants from you and that you’re delivering the best possible product, the best possible service, to address what they’re after.”

 

By All Accounts

As he told BusinessWest that “banks have hit bottom,” Sosik acknowledged this might not be the best way to describe the current state of the industry.

But it works.

“We’ve seen the bottom, and we’re on the upswing,” he said, adding that, as interest rates come down and pressure on margins eases, banks should see some improvement on the bottom line. “There will be positive earnings impacts in the fourth quarter and into 2025, and slow movement back toward more normal margins.”

Matt Garrity

Matt Garrity

“You don’t want to be chasing shiny objects or next greatest thing. You really want to be rooted in understanding what it is your client wants from you and that you’re delivering the best possible product, the best possible service, to address what they’re after.”

Overall, while 2024 was, indeed, a grind, most area institutions fared comparatively well because they took a conservative approach, although performance, meaning profitability, was off from previous years due to the margin squeeze resulting from a slow, persistent, 550-basis-point increase in interest rates over roughly a year, which was largely unprecedented, by most accounts.

As a result, most institutions in this region were simply less profitable than usual, said Sosik, noting that 2025 should see the pendulum continue its swing back to where bottom lines were a few years ago.

Sullivan agreed, and projected improvement on everything from margins to the yield curve, although it may come at a slower pace than the industry would want.

“The bond market has sensed inflation being persistent, and it shows by the long-term rates running back up over the past two months,” he noted. “That is actually normalizing the yield curve; an investor should get paid more for locking her money up for a longer time period.

“The inverted yield curve that we’ve had the past two years [short-term rates higher than long-term] is really bad for community banks, so this change back to a normal yield curve is welcomed,” he added. “We’ll see about whether the Fed cuts interest rates a lot next year; there is now talk that the short-term rate reductions will be slower, but Trump will want them to be faster to juice the economy.”

But there are several caveats that make it difficult to project how pronounced a bounceback will be seen over the next few quarters. Indeed, while there is general agreement on perhaps another 100 basis points worth of rate cuts in the year to come, there is less consensus on the prospects for a recession or what will happen with inflation.

Dave Glidden

Dave Glidden

“As rates decline and the pressure relieves a little on margins, banks, if they’re smart, will stay laser-focused on the cost of funding and their deposit mix.”

Indeed, Glenn Welch, president and CEO of Freedom Credit Union, said the kinds of tariffs on foreign products trumpeted by President-elect Trump could cause inflation to spike — and have other repercussions.

“If those tariffs are put in place, we’re going to see higher inflation, and then the Fed won’t be able to drop interest rates as quickly as many are projecting,” he noted.

Meanwhile, although interest rates are expected to continue their downward trend, there will be a lag when it comes to the overall impact on deposit rates, especially with banks hard-focused on protecting their deposit bases.

“The competition for deposits will continue through the balance of this year and into 2025,” said Dave Glidden, president and CEO of Middletown, Conn.-based Liberty Bank, which has expanded its footprint into Western Mass. “Each bank will have to make their own decisions based on their deposit composition and cost of funding overall, but I expect that the rates on deposits won’t come down as fast as the Fed drops interest rates because deposits are the lifeblood of banks. As rates decline and the pressure relieves a little on margins, banks, if they’re smart, will stay laser-focused on the cost of funding and their deposit mix.”

 

Points of Interest

Glidden didn’t really want to speculate too much on Chase Bank’s strategy of adding new branches; like others, he preferred to talk about his own institution.

But he said the Jamie Dimon-led institution’s aggressive push is yet another indication that competition continues to increase — and come from seemingly everywhere.

That includes NBFIs, also known as NBFCs (non-bank financial companies), such as investment banks, hedge funds, private equity funds, private mortgage lenders, and other players. And it includes area banks and credit unions that are continually expanding their footprints — in this region, this state, and into neighboring Connecticut. It even includes the federal government. “People can get better rates on T-bills than they can get in the banks,” Sullivan said.

Dan Moriarty

Dan Moriarty

“Organic growth is becoming tougher and tougher. But as the bigger banks get bigger, we feel we can provide services and faster response times for small to mid-size companies. That’s our niche, and that’s what we’ll continue to focus on, but it’s getting tougher.”

As for Chase’s move, Glidden said there is lot of science and analytics behind it, and the bank, which he called the “900-pound gorilla,” is already making a dent when it comes to market share. “Branches are very expensive, and they’re always going to be a critical part of a bank’s distribution network, but you don’t build branches today haphazardly. Jamie Dimon hasn’t called me to let me know what he’s doing, but he puts a lot of science behind it.”

And this heightened competition from Chase and elsewhere comes as banks face the many challenges detailed above — at a time when they need to continuing growing in the wake of the many rising costs they’re facing and the need for economies of scale.

In this environment, the community banks that dominate this region need to focus on blocking and tackling, said those we spoke with, meaning an emphasis on what they do right, specifically a generally higher brand of personalized service.

“Organic growth is becoming tougher and tougher,” said Dan Moriarty, president and CEO of Monson Savings Bank. “But as the bigger banks get bigger, we feel we can provide services and faster response times for small to mid-size companies. That’s our niche, and that’s what we’ll continue to focus on, but it’s getting tougher.

“We’re trying to go against the super bigs and sell our services and our reputation,” he went on, adding that Monson Savings picked up some market share when a Citizens Bank branch closed.

Garrity concurred. He noted that, while mergers and acquisitions will continue — and perhaps pick up as the skies clear — the cleaner path is organic growth, and that comes through customer service, new branches when and where they are appropriate, and keeping pace with the larger institutions on technology.

Sullivan agreed, noting the sizable investments New Valley is making both in cybersecurity and new online banking products.

“We have to stay relevant with the big players, we’ve got to have the same sort of offerings that they have, and, in some cases, we have to be even better,” he said, adding that keeping up is a big part of doing business in this environment.

 

Technically Speaking

As he talked about technology, Sosik spoke for all those we interviewed when he said customer expectations are high — as in sky-high.

“When customers use technology, they want it to work. When you turned on your laptop this morning and the wheels spun a little bit or it took longer to load your email, you said, ‘what’s going on here?’” he told BusinessWest. “So the expectations are really high, and the margin for error is really thin; you have to have near-perfect execution.”

Couple high expectations with the equally high cost of technology, security, and compliance, and banks and credit unions are under enormous pressure to get it right.

“Twenty years ago, it was basically bad loans that could kill a bank,” Glidden said. They would kill a bank over time, and you could kind of see it coming. Today, with technology, a privacy breach, a cyberattack, ransomware … those things can change the fate or status of a bank in seconds.

“That’s why I call that side of technology ‘table stakes,’” he went on. “You have to invest, and invest heavily.”

By that he meant investments in new technology aimed at improving customer service, in training and drills like simulated cyberattacks, and in AI, which amounts to a new frontier for financial-services institutions, and another area where they need to get it right.

Welch said Freedom has recently deployed AI in its call center, a strategy with many goals.

“We’re rolling it out slowly, and we rolled out the first part over the past few weeks; it’s answering the phone and transferring people to where they want to go,” he explained. “Shortly, customers will be able to get balances and do transactions like transferring money between accounts.

“The whole idea is to free up the call-center people to deal with more complicated financial issues that customers have when they call in, rather than ‘what’s my balance?’ and ‘transfer $1,000 to this account,’” he went on, adding that maybe 25% to 40% of the calls to the center can be handled by AI.

Other area institutions are in similar early-stage rollout phases, but most are still doing research and deciding how to best implement the emerging technology.

Moriarty, like others we spoke with, said his bank is looking at AI not to replace face-to-face interactions and decision making, but instead to help make decisions faster.

And like other institutions we spoke with, Monson will measure twice and cut once when it comes to all aspects of AI, especially when it comes to security.

“Confidentiality is a critical component of a bank’s reputation,” he told BusinessWest. “If banks start using this too quickly, they could run into a situation where information might be out in the open or in the cloud somewhere. So we’re going to be very prudent about when and how we use AI to give information.”

Garrity agreed. “We want to integrate AI in our business, but it’s going to be a longer process overall to make sure that we understand what the risk components are,” he said. “We want to look at how we can use those tools to make our team members more efficient in serving our customer. It’s a tool to use, and a not a replacement of that team member.”

And it’s just one more challenge — and opportunity — banks face as they turn the corner from a tough 2024 into an uncertain 2025.

PeoplesBank, Cornerstone Merge Holding Companies

By
Brian Canina
Banking and Financial Services

Coming Together

 

Brian Canina

Brian Canina says the merger with Cornerstone Bank’s holding company will provide both institutions with opportunities to become more efficient — and more competitive.

Brian Canina says that, while it’s being called a merger, in reality, it’s more of a partnership.

He was referring to the recent announcement that Holyoke-based PeoplesBank, which he serves as president, and Worcester-based Cornerstone Bank will combine their holding companies — PeoplesBancorp, MHC and SSB Community Bancorp, MHC, respectively — into one entity, which will take the former’s name.

This transaction, the latest to merge multi-bank holding companies, will create an entity with approximately $6 billion in assets, said Canina, a number that brings with it certain competitive advantages and a stronger ability to withstand increasingly thin margins in this sector.

“What we’re trying to do is create some scalability,” he explained. “Through the holding company, we can look for ways we can work together and share the back-office services to become more efficient through size.”

Overall, and outwardly at least, not much will change with this partnership, said Canina, noting that both banks will continue to operate under separate names and brands for the foreseeable future. All account information, branch banking, and digital access will remain the same for both banks throughout the transaction.

It will be, as he put it succinctly, “business as usual.”

Behind the scenes, though, the merger will provide both institutions with opportunities to become more efficient and, in many ways, leverage each other’s markets.

“The banking industry is pretty transparent in terms of being able to see the cost of goods sold,” he explained. “If you look at what the current market interest rates are for deposits, and what people are looking to get for a savings account or CD, and then you compare that to what the market prices are for a 30-year mortgage or a commercial loan … you can see the spread between the two and also see how thin that is.

“As a mutual bank, we can’t raise capital from stock issuances; we earn our capital through hard work and bottom-line earnings. As a result, it can be more challenging for a mutual bank to stay up to speed with inflation, the cost of wages, and competing with stock banks that have more access to capital.”

“The only way to continue to manage like any other business that has shrinking profit margins is to become more efficient in your operations,” he went on. “And that’s where this opportunity is important; you need size in order to become more efficient, and that’s the same in any business.”

 

Strength in Scale

Canina said this transaction reflects a trend in the industry: a growing number of mergers, or partnerships, among mutual banks and their holding companies, something that wasn’t seen as much years ago, when more mergers involved publicly traded institutions.

And they’re coming about out of necessity, he went on, adding that the size and scale they generate amount to better opportunities to compete with those larger stock banks.

“As a mutual bank, we can’t raise capital from stock issuances; we earn our capital through hard work and bottom-line earnings,” he explained. “As a result, it can be more challenging for a mutual bank to stay up to speed with inflation, the cost of wages, and competing with stock banks that have more access to capital. But we do it because we want a mission that’s focused on our communities, our customers, our employees, and giving back — and not about shareholders.

“So I think you’re going to see more of these mutual-to-mutual mergers,” he went on. “We’re starting to see them already, but I’ll think you’ll see more of them because they need to partner with each other to maintain that mutual status — and to remain relevant.”

Elaborating, he said that, when it comes to such transactions, with no stock to acquire, it’s not as much about dollars as it is about culture. And these two institutions are very similar in that regard.

“We provide the same services and technology as the larger regional and national banks, but we’re also giving back to the community, which a lot of those banks don’t do,” he went on. “That’s what we do, and when we partner with other like-minded mutual banks, we can start really competing — and giving back more to the community.”

Indeed, as noted earlier, bringing these holding companies together creates a $6 billion entity — PeoplesBank has roughly $4.4 billion in assets, and Cornerstone is a $1.6 billion institution — which creates more economies of scale and, thus, opportunities to increase overall profits, Canina explained.

And while it will be business as usual for the time being, the two banks will, over time, seek out ways to share best-in-class technologies as well as resources to become more efficient.

“Over time, we’ll look for opportunities to share employees and to share technologies to be more efficient, as a larger organization would,” he told BusinessWest, emphasizing, again, the importance of scale in banking today.

 

Promising Partnership

This quest for size helps explain other mergers of holding companies, Canina said, adding that there have been several over the past few years, including a few involving bankESB and its holding company, Hometown Financial Group Inc.

Such mergers enable institutions, often on the other end of this state or in other states, to build on each other’s success in their respective markets. It’s the same with PeoplesBank and Cornerstone.

“We can’t build 11 banking centers in the Worcester County area, and Cornerstone can’t build 21 banking centers in the Western Mass. and Northern Connecticut markets,” he explained. “But by partnering, we’re able to leverage each other’s markets and find ways to enhance each other’s franchise values in those markets by partnering together.

“We don’t necessarily need to merge with Cornerstone — we’re financially strong, and we’re doing great,” he added. “It’s more of the opportunity and what we can do better with a partner.”

 

Country Bank CEO Paul Scully Announces Retirement

By
Paul Scully says customers are feeling more optimistic about the future.
Banking and Financial Services

Closing the Account

 

On July 1, CEO Paul Scully announced his retirement after a career of 28 years at Country Bank and 48 years in the financial-services industry. His retirement will be effective on July 31.

Scully, who started his banking career as a part-time teller while attending Bentley University, previously served as senior vice president of Country Bank, was appointed president in 2004, and later assumed the position of CEO in 2005.

“Throughout my career, I’ve been guided by the belief that success is not just about growth in numbers, but about the positive impact we make in the lives of our team members, customers, and communities,” he said. “It’s been an incredible journey, and I’m immensely proud of what we’ve achieved together.

“As I retire, I leave with a deep sense of gratitude for the opportunity to serve as Country Bank’s CEO for the past 20 years and with the utmost respect of my successor, Mary McGovern, and the entire Country Bank team to continue the bank’s legacy of excellence,” he added.

Paul Scully

Paul Scully

“Throughout my career, I’ve been guided by the belief that success is not just about growth in numbers, but about the positive impact we make in the lives of our team members, customers, and communities.”

McGovern, appointed president by the bank’s board of trustees on April 1, will assume the role of CEO effective Aug. 1. McGovern, who has been with the bank since 2011, previously served as executive vice president and chief financial officer before assuming the role of chief operating officer in 2023. With her extensive experience in the financial-services industry spanning more than three decades, she brings a wealth of knowledge and expertise to her new position.

“I am honored to have worked alongside Paul for the past 13 years,” McGovern said. As I assume the organization’s leadership, I am dedicated to the bank’s continued growth and supporting our customers, community, and team members. The bank is committed to providing best-in-class customer service; the latest banking services, safety and security; and ensuring Country Bank remains a trusted financial institution in our communities.

Country Bank’s board of trustees added that its members and bank employees “are deeply grateful to Paul for his exceptional leadership and unwavering dedication throughout his tenure. His visionary guidance has positioned the bank for continued success and growth. As the bank embarks on this new chapter, it looks forward to the leadership of Mary McGovern, who will undoubtedly build upon Scully’s legacy and drive Country Bank to new heights.”

Leader of Greenfield Cooperative Bank Focuses on Community

By
President and CEO Tony Worden
Banking and Financial Services Special Coverage

Lending Perspective

President and CEO Tony Worden

President and CEO Tony Worden

Tony Worden has worked at several banks in his career, of various types and sizes, but there’s something about a small community bank that … well, just suits him.

For starters, “there’s less pressure,” said Worden, president and CEO of Greenfield Cooperative Bank (GCB). “I mean, we certainly have to grow, and we have to make money, but there’s less emphasis on that and more emphasis on relationships. I’m not trying to pat us on the back because I know Florence is like this, bankESB is like this, Greenfield Savings, too — we all need to make money, we need to grow, but we also get how important we are to the communities that we serve.

“There are loans we make that, at a previous bank, we never would have made,” he went on. “They just would have said, ‘no, we’re not doing that.’ But community banks find ways to stretch to get people’s mortgages done, and even on commercial loans. As a community bank, we have to think about how we’re serving our community, and bigger banks worry less about that. It’s easier for them to turn loans down because they’re not as involved.”

Worden knows a lot about commercial lending after working in that realm for the vast majority of his career before former GCB President and CEO Michael Tucker persuaded him, in 2019, to pursue that role as Tucker prepared to retire. Worden knew he’d have a steep learning curve in areas ranging from finance to IT to human resources — but he embraced the challenge.

“My thought was, someday, if I play my cards right, maybe I’ll get a chance to be the senior lender somewhere. And I got to be that here. It was not part of my grand plan to be president.”

“A lot of people get into this business, and their dream or goal is to become president of a bank. But I never really thought about that. My thought was, someday, if I play my cards right, maybe I’ll get a chance to be the senior lender somewhere. And I got to be that here,” he said. “It was not part of my grand plan to be president.”

But Tucker was convinced Worden was the right candidate to put forth internally, and the board eventually chose him over two external candidates. Worden, a longtime senior commercial loan officer, initially worked alongside Tucker as chief operating officer through 2020, then took over as president at the start of 2021; Tucker stayed in the CEO role until the start of 2022, when he retired and passed that mantle to Worden as well.

The long transition period working alongside Tucker turned out to be a blessing in more than one way. Not only was Worden learning the ins and outs of a much broader job than his previous career in commercial lending, but the emergence of the pandemic threw a major wrench into the banking world.

“The transition got stunted a little by the pandemic,” he recalled. “Obviously, I was excited when I accepted the job, and we knew COVID was a thing that was happening, but no one knew exactly what it was going to do. And literally within a week, my excitement ended because it was, ‘OK, now we have survive this.’”

Greenfield headquarters

While nine of its 10 branches are in Franklin and Hampshire counties, including its Greenfield headquarters (pictured), GCB has been making inroads into Hampden County as well.

Worden said bank leaders will be telling stories for decades about the adventure of PPP loans and everything else they had to do to help customers navigate that whitewater, but they are gratifying stories to tell.

“It’s amazing, in hindsight, to think about what all the banks accomplished. There were certainly technological hurdles because the SBA was not set up to be doing this volume.”

But in the years that followed, Worden has become accustomed to many other challenges, from a shifting rate environment — and its impact on lending — to the continued evolution of digital banking platforms, to Greenfield Co-op’s own growth trajectory.

“As a community bank, we have a responsibility to serve our customers’ needs as fully as we possibly can,” he told BusinessWest. “So we all stretch a little bit more to get loans done, to get projects done.”

 

Steady Growth

Greenfield Cooperative Bank has grown in numerous ways over the past decade, most notably by merging with Northampton Cooperative Bank in 2015, which increased its branch total from five to nine; a tenth branch opened in South Hadley in 2020, the first outside of Franklin or Hampshire county.

At the time of the merger, Greenfield Co-op boasted roughly $350 million in assets, and Northampton brought roughly $150 million, to create a $500 million bank.

“Right now, we’re just under $800 million in total,” Worden said. “So, in a decade, we’ve had about $300 million worth of growth, which, obviously, for a bigger bank or a publicly traded bank, wouldn’t be acceptable. But we don’t have stockholders, so we can grow sensibly.”

“The real growth, from a demographic perspective, is in Hampden County. And with all the mergers and acquisitions, there are fewer banks in Hampden County than there used to be.”

That said, he views Hampden County as a big part of GCB’s future, and the South Hadley branch as a jumping-off point to do more business in that region. In fact, many of the bank’s lenders have worked at Springfield-area institutions in the past and have maintained relationships there.

“If you look at the demographics, Hampden County is growing. Franklin County is not; it’s actually retracting. Hampshire County’s growing a little bit, but the real growth, from a demographic perspective, is in Hampden County. And with all the mergers and acquisitions, there are fewer banks in Hampden County than there used to be.

“So we see opportunity,” he went on. “We’ve had some success on the commercial side, and this past winter, we hired a mortgage originator from a local competitor who’s based out of Holyoke and knows that market, and we’re making a push to start doing some residential mortgages in all of Hampden County. But our focus right now is Holyoke, Chicopee, and Springfield because we feel like we can handle that through a branch in South Hadley, which isn’t technically in Hampden County, but it’s not that far away. So we’re taking tentative steps to be more of a presence down there.”

Greenfield Cooperative Bank

Greenfield Cooperative Bank partners with many community organizations, such as Montague Public Libraries (pictured) for programs like its bilingual children’s music and movement program.

That said, when Worden joined the commercial lending team at GCB 15 years ago, the bank had $29 million in commercial loans; that number is now $260 million, and the bank employs more lenders, credit analysts, and administrative staff.

“But we’ve also seen some significant payoffs of our loans — not because they’ve gone and refinanced somewhere else, but because they sold their properties when the market got so hot,” he noted.

At the same time, “I think the rising rate environment has made people shyer about going out and pursuing things because, again, no one wants to finance something at the top of the market and have the rates start to go down the day after they do it. So I think what we’ve seen is people kind of sitting and waiting: ‘is the economy going to tank or not?’

“As time has gone on, I think more people are buying into this idea that there could be a soft landing,” he went on. “But I think it would help to see the rates drop because I think that would get people active again. There’s a lot of wait and see at this point.”

That said, a large swath of the customer base never lived through really high rates.

“When I first started, I was a junior commercial credit analyst at Vermont National Bank up in Brattleboro,” Worden said. “And people were saying, ‘you know, if prime would just get down to 10%, that would be perfect.’ And then we were so low for so long that people started to think that was normal.”

He recently watched a recording of a Red Sox game from the 1980s, complete with commercials, and one in particular made him laugh. “It was a car commercial, and it said, ‘low, 11.99% financing for well-qualified buyers.’ Today, people would see that, and their heads would explode.”

Historical perspective isn’t the only thing separating younger from older bank customers — they have different banking habits as well, as Millennials and Gen Z grew up with technolology and are more apt to eschew physical branches.

“They go in as little as possible. They want to do as much remotely and through their phone as they possibly can,” Worden said. “That’s a new reality, making sure we have the technology and the channels for them to bank the way they want to bank.”

But there will always be a need for a physical presence and face-to-face interactions, he added, which is why banks continue to expand geographically.

“For a decade or so before the pandemic, if you went to any banking-industry events, they said, ‘get rid of your branches, get rid of the bricks and mortar; they’re expensive. The fintechs are eating your lunch because they don’t have those costs. They’re not paying real-estate taxes. They’re not paying for AC. They’re not paying for the lights.’ But now, we’re hearing, ‘lean into your branch network because that’s your advantage over the fintechs. The fintechs wish they had a building on the corner that people could walk into.’

“If everything is going well for you as a customer, maybe you don’t need to talk to somebody face-to-face. But as soon as something goes sideways, it’s nice to know you can walk into a building and talk to somebody face-to-face and deal with them,” he went on. “We, as a bank and as an industry, have to do a better job explaining to people what the value is of having someone local working with you.”

 

Different Kind of Dream

That local face and relationship banking may be even more important at a time when mergers are creating ever-larger institutions — and fewer of them, Worden noted.

“Some people say to me, ‘you must be happy when you see these bank mergers because it’s one less piece of competition for you.’ But no — I think it’s a shame that local options are going away.

At a Massachusetts Bankers Assoc. meeting he attended last fall, attendees were told there are half as many banks in Massachusetts as there were 20 years ago, and it’s estimated that, over the next decade, that figure could be halved again. “I left there thinking, ‘we have to focus on what it will take for us to make sure we’re one of those banks that survive.”

But it’s a challenge he’ll enjoy, even though it’s not one he dreamed about taking on earlier in his career.

“When it was announced that I got this job, people would come up to me and say, ‘you got your dream job.’ And I’d say, ‘no, actually, I gave up my dream job for this job.’ If someone offers you the chance to be the president of a bank, you take the job. But what’s been fun is focusing on other parts of the bank than commercial lending.”

One of those is philanthropy, and Worden appreciates being in a place where community giving decisions are made locally, rather than regionally or nationally, as is the case at larger banks.

“The decisions we make about where we’re going to give our money happen right here in this building, for the most part,” he noted. “We certainly upped our giving during COVID, and then we never went back down to the historical level — not that it was low before.”

Overall, Worden said, GCB is a relatively uncomplicated bank to run. “We’re very vanilla. I think my senior staff gets sick of hearing me say that, but I say it as a good thing. We’re not in all kinds of weird things. We stick to what we know how to do, and we do them well.”

While Greenfield Co-op isn’t among the region’s largest banks in terms of assets, it’s well on its way to $1 billion, and Worden is looking forward to that milestone.

“Things will change a little bit; there’s more regulation,” he told BusinessWest. “But it’s gratifying to see the growth and to know I played a small part in that. A lot of the reason for the success was Mike Tucker. He did a great job for 20 years; he got the ball rolling. I’m just trying to keep the thing moving down the road.”

Community Bank to Expand Its Presence in Springfield

By
Community Bank’s branch inside Tower Square
Banking and Financial Services

Doubling Down

Community Bank’s branch inside Tower Square

Community Bank’s branch inside Tower Square will be complemented later this year by a second Springfield location on Boston Road.

 

 

 

When Community Bank expanded in 2017 with the acquisition of Merchants Bank, it gained a large network of branches in Vermont … and one in Massachusetts.

That office is located in Tower Square in downtown Springfield and had been NUVO Bank before hanging the Merchants banner. Located far from any other Community location — the organization has a strong presence in Pennsylvania and New York as well as its newer footprint in Vermont — it wouldn’t have been surprising had Community shed it altogether. But the bank saw value in a Springfield presence.

And now, seven years later, it’s doubling down, planning to open a second Springfield location on Boston Road later this year.

“It’s a market that’s not too far from Albany, but far enough where it’s a very distinct market by itself. And because it’s one branch, it’s been a little bit under the radar,” President and CEO Dimitar Karaivanov said. “But it’s a good market with good opportunities, and we have a really good team in the market, and the level of energy and activity in Springfield has been very hot.

“So almost a year ago, we decided we hadn’t given Springfield its rightful chance to succeed,” he went on. “We’re just one branch and have a good team, but we’re somewhat limited by the fact that it’s only one branch downtown. So we decided to kind of invest in the team and the opportunities that we have in the market, and we’re going to double our presence.”

The bank is doing so, he said, in locations that make strategic sense, and also, in some cases, investing in lower-income areas. “We’re looking at communities that offer opportunity from an economic perspective, but we also consider it our responsibility to invest in communities and bring them along in terms of growth. That’s how we’ve been selecting some areas that we’re going into.”

While Greater Springfield has been called overbanked, Karaivanov said Community Bank sees plenty of potential in expanding.

“We’re just one branch and have a good team, but we’re somewhat limited by the fact that it’s only one branch downtown. So we decided to kind of invest in the team and the opportunities that we have in the market, and we’re going to double our presence.”

“There’s no lack of competition in Springfield — there are a lot of banks, a lot of mutuals, a lot of credit unions,” he said. “But the reason that we feel like we can be successful is our team. So we’re really investing in our team. That’s how we look at expansion; it’s really people-based. Obviously, the market needs to be sizable enough for another entrant, but we feel like we’ve got a team that we have basically under-leveraged over the past several years. And now we’re trying to give them more runway and opportunity to be successful.”

 

Branching Out

As Community Bank expands in Springfield and other markets, it’s doing so, the organization explains, by reimagining the in-branch experience with clean, modern designs that encourage customer and banker collaboration, local community tie-ins, and staff that can handle a wide array of financial needs.

“Branches are still pretty important, and I think they will continue to be important,” Karaivanov said. “If you look at where most accounts, especially new accounts, are opened, it is still predominantly in the branch. People still get their mortgages predominantly in the branch. That initial contact with a financial institution is mostly in the branch.

“Now, when you open your second account, or if you are already a customer of a bank, you might go online to apply for a mortgage and other things. But to get into the ecosystem, usually the average person still starts in the branch.”

He cited the example of JPMorgan Chase launching an online-only bank six years ago, “and no one’s heard of it since,” he noted. “Instead, you’re seeing JPMorgan open branches all over the place. It’s hard to be just online. You need both parts.”

To that end, modern branch designs are different than the old, traditional model of counters and lines, he added.

“Today, the branch is really more advisory and consultative than transaction-based because transactions are easy to do on your phone, and you don’t need to go into the branch for a specific transaction anymore. But people do go to the branch for advice and for questions and when they have a problem. So spaces in the branch are designed in a much different way.”

Dimitar Karaivanov

Dimitar Karaivanov

“Transactions are easy to do on your phone, and you don’t need to go into the branch for a specific transaction anymore. But people do go to the branch for advice and for questions and when they have a problem.”

Community Bank currently boasts 28 branches in New England, all but one of them in Vermont, and its current expansion plans include the first New Hampshire branch in addition to the second Springfield location.

“Community Bank is not just expanding, but deepening our roots in New England,” said Matthew Durkee, regional president for New England. “Our branches are the cornerstone of our retail business, and each one allows us to support the community and deepen our relationships with our customers as we partner together throughout their financial journey.”

Those community relationships involve philanthropy and volunteerism in communities where the bank has a presence, Karaivanov added.

“We do a lot of that, led by our branch staff most of the time,” he told BusinessWest. “It’s in our name, right? So we live by it. Our people are involved, they’re on boards, they’re in the Rotary Clubs, they know their neighbors, they’re supporting the local schools, teams, and everything else. It’s how we distinguish ourselves. Those are our neighbors, they’re our friends, and being part of the community is just as important as being a financial institution.”

With its commitment to Springfield affirmed, he added that Community Bank could look to expand further in Massachusetts where it makes sense.

“Hopefully, as we are successful in this expansion, we would like to do more. I’m a big believer in getting behind your success. So if we continue to be successful in Springfield, we’re going to continue to grow.

“Again, this has been a little bit of an outpost for us. Meanwhile, the team’s been doing a great job. And now is the time for us to empower them to do even more.”

 

One-stop Shop

Earlier this month, Community Bank System Inc. — which encompasses four key businesses: banking, benefits administration, insurance, and wealth management — changed its name to Community Financial System Inc. to better reflect the company’s reach.

“The new name allows us to emphasize the evolution of our capabilities, solutions, and focus,” Karaivanov said. “In aggregate, over 39% of our revenue is comprised of diversified fee-income businesses, well over twice that of industry peers. Bringing all of that under the new name, Community Financial System, underscores our mission and drives our inclusiveness as one company.”

It’s a different model, he said, than financial-services organizations in which banking is 90% of the pie.

“We’re a bit of a unicorn because we have four different businesses, and the way we run the company, the bank is our largest business, but it’s not the whole business. With our benefits business, we help people with their 401(k) plans; we administer those all over the country. Or, if you’re an individual and you’re coming for a mortgage from us, we can directly give you a quote for the homeowners’ insurance as well.”

Meanwhile “if you have amounts in your banking accounts that clearly can be invested in better outcomes for you, we’ve got the wealth-management side of the house, or the trust capability. And on the commercial side, especially for small to mid-sized businesses, we can provide everything from capital to insurance to managing their benefit plans, actually helping them with HR consulting.

“It gives us a real leg up when we talk to customers because we’re not just a one-widget shop,” Karaivanov added. “We can provide comprehensive solutions.”

Mary McGovern Takes the Reins as President of Country Bank

By
Country Bank president Mary McGovern
Banking and Financial Services Cover Story

A Community Asset

 

Country Bank president Mary McGovern

Country Bank president Mary McGovern

 

Country Bank, according to its slogan, is “made to make a difference.”

Mary McGovern has taken that as a personal challenge.

“I’ve been at several institutions, public institutions, that run a little differently than mutuals, having to answer to shareholders every quarter,” said McGovern, who recently became Country’s first female president in its 174-year history. “With a mutual bank, we feel we take a different approach with our customers, and our involvement in the community means a lot to them. It’s a differentiator.”

McGovern brings three decades of context and experience — at different types of institutions — to that philosophy.

Prior to her 13-year rise at Country Bank, where she has served as chief financial officer, executive vice president, and chief operating officer, McGovern served in management roles at Danversbank, Capital Crossing Bank, and Boston Private Bank & Trust. Her areas of expertise include finance, operations, information technology, retail banking, commercial lending, financial and credit analysis, compliance, risk, sales, and strategic business and relationship development.

“With a mutual bank, we feel we take a different approach with our customers, and our involvement in the community means a lot to them. It’s a differentiator.”

“I started at Boston Private when it was a de novo with $80 million in assets. I was the 20th or 22nd person they hired. I came in on the ground floor in a finance role, in accounting, and grew with the department,” she recalled.

After that institution went public and was acquired, she left, earned her MBA, and moved to Capital Crossing in the late ’90s, doing a lot of work with distressed real estate. Danversbank, her next stop, was a reunion of sorts with some individuals she had worked with at Boston Private.

“They were like Country Bank is today, a nice, local, mutual community bank,” she said, adding that she served Danversbank as senior vice president and chief accounting officer. “But they went public in 2008 and were sold in 2011, and my position was eliminated.”

So, the same year, she joined the team at Country — and has never looked back.

“The mission is to be the bank of choice in Central and Western Massachusetts,” McGovern told BusinessWest. “I’m excited to lead as the first female president of Country Bank as we approach our 175th anniversary. It’s a good opportunity to get out and talk in the community, talk to our customers, put a new face in front of them. It’s been really exciting.”

Country Bank’s productive partnership with the WooSox

Country Bank’s productive partnership with the WooSox is reflected by its prominent right-field signage.

From a bottom-line perspective, she said, Country is doing well, even showing growth in the mortgage market, despite high rates and higher prices.

“Obviously people still have to buy and sell homes and move different places. The pipeline may not be as robust, but there’s still a lot of activity.”

On the commercial side, the bank is being selective, focusing on building lasting relationships and not targeting huge volume for its own sake, to maintain liquidity. “We’re looking for 5% to 6% growth in loans this year, so we’re keeping busy for sure.”

Geographically, the bank is in a growth mode as well. With a physical footprint that currently stretches from Springfield to Worcester, with the Ware headquarters between those two cities, County is adding two additional locations to the east this year — a second in Worcester and one in Uxbridge — while making plans to add two more branches to the west, in Springfield and another community.

Earlier this year, the board of trustees announced it had full confidence in McGovern to lead that strategy, as well as all of Country’s other operations and activities in the community. Paul Scully, who has been president and chief executive officer since 2004, remains in the CEO role.

“We are thrilled to announce Mary’s appointment as the next president of Country Bank,” James Phaneuf, board chair, said when the selection was announced. “Mary’s proven track record, dedication, and strategic vision make her the ideal candidate for this role.

“In a challenging time of food insecurity and other challenges out there, it’s important to give back to local nonprofits. They need our support to do their important work. That’s valuable to our staff, and I believe it’s valuable to our customers as well.”

“The board is confident that Mary’s leadership will drive the bank’s continued success and growth,” he added. “With her extensive experience, strategic mindset, and dedication to excellence, Mary is poised to lead the bank into a new era of innovation and customer satisfaction while maintaining its position as one of the most highly capitalized financial institutions in the region.”

 

Community Partner

Country is also well-known for its community involvement. Those efforts have focused in recent years on a number of priorities, including food insecurity, health, and education, as well as homeless shelters, senior-serving programs, youth organizations, and more.

To that end, Country reported more than $1.2 million in donations in 2023, with 463 organizations receiving grants. In addition, the bank’s team members volunteered 1,255 hours of community service in 2023, while 37 employees served on a total of 65 nonprofit boards and committees.

“We are a valued piece of the community. We try to give back to all the communities we serve,” McGovern said, adding that the bank’s financial-literacy programs continue to be a priority, as is a partnership with the WooSox — signified by a very prominent Country Bank sign in right field at Polar Park — and the team’s WooStars awards and its teacher-recognition program.

“We’re just continuing to build on a great foundation set by Paul in his 20 years here,” she added. “Being a community bank, we’re really invested in the health of our communities.”

McGovern speaks the language of community-bank presidents in Western Mass. that place a high value on local philanthropy.

“We’ll continue to do a hybrid approach. It seems to be working. The staff seems to be happy. We don’t see that changing — in the foreseeable future, anyway.”

“We’re different from a big commercial bank that’s not as worried about the individual communities that they serve,” she said. “As a mutual bank, obviously it’s important to make money, but making money also allows us to give back. So we’re trying to give back to our communities. In a challenging time of food insecurity and other challenges out there, it’s important to give back to local nonprofits. They need our support to do their important work. That’s valuable to our staff, and I believe it’s valuable to our customers as well.”

Also of value to customers is a physical presence in their communities, even at a time when online banking is dominant.

“There are differences of opinion among financial institutions, some of whom are pulling back from their banking centers,” McGovern said. “But we feel it’s important to support the different ways our customers want to bank.

“There are plenty of the younger generation who don’t want to talk to people, who would prefer to do everything online; self-service is important to them,” she added. “But we have a good component of customers who like to go in and talk to people face to face. Even younger people want to sit down and talk to somebody when they’re buying their first house; it’s an important, life-changing kind of event.”

In addition, she said, “I feel it’s important that we show our presence. It’s hard to say that you’re in Springfield without having signage there. We have a business center in Tower Square, but it’s not quite as visible as having a branch location with a sign.”

Country Bank has consolidated in some cases as well — for instance, it used to have three branches in Ware, but now only houses its headquarters and a digital banking center there. And many branches are staffed with fewer employees than in years past, to reflect how many customers bank online only.

“But while there’s less foot traffic, we’re still there to serve people, allowing customers to bank how they want.”

Other elements of the bank experience have changed over the years as well, including how — and where — employees work.

“Since the pandemic, it’s been a different way of working,” she told BusinessWest. “For some time, we were fully remote. Over time, we went with a more flexible work arrangement. So the average employee works three days in and two days out. There are some with a little more flexibility based on what kind of job it is.”

While some employees prefer to come in five days a week, and do so, McGovern added, for most of them — those who don’t deal face to face with the public, anyway — working remotely at least part of the time is a valued part of their job. “I don’t see how we can be competitive without that. I know different institutions that have lost staff when they requested people come in five days.

“So we’ll continue to do a hybrid approach,” she went on. “It seems to be working. The staff seems to be happy. We don’t see that changing — in the foreseeable future, anyway.”

 

Making a Difference

McGovern also doesn’t want to change a culture at Country Bank that she feels benefits both employees and customers.

“It’s hard to be a differentiator when all banks sell the same products, but I feel we are different,” she said. “Our people are spending a lot of their life doing something they like in an institution they like with peers they like. And we’re trying to keep that culture going.”

The challenge, she said, is understanding that employees want and appreciate hybrid work schedules, while maintaining a positive office culture whether they’re in the office or not.

“It’s a fine line managing both aspects,” she said. “But I think we’ve got a good thing going, and hopefully I can keep it going into the future.”

Hometown Financial Group Continues Course of Acquisition

By
Matt Sosik
Banking and Financial Services

Branching Out — Again

Matt Sosik

Matt Sosik says Hometown’s latest acquisition is part of an ongoing initiative to gain needed size and extend the institution’s footprint.

 

Matt Sosik referred to it as a “mutual admiration society.”

That’s how he chose to describe the respect that he developed for the manner in which Kevin Tierney had grown North Shore Bank into a force in that region of the Commonwealth and, likewise, how Tierney respected what Sosik had done with Easthampton-based Hometown Financial Group, using acquisition and organic growth to transform it into a $4.7 billion multi-bank holding company with a reach that extends across Western and Central Mass., the South Shore, and into Northeastern Conn.

This mutual admiration eventually became the catalyst for talks to bring the institutions together, said Sosik, chairman and CEO of Hometown Financial, adding that North Shore will become part of the Hometown family of banks through a merger of Abington Bank, acquired by Hometown in 2019, into North Shore.

The combined bank will have more than $3 billion in assets and 25 full-service retail locations across the Bay State’s North and South Shore regions and Southern New Hampshire. Meanwhile, Hometown will become, with more than $6 billion in assets, one of the largest mutual banks in the country, said Sosik, adding that the merger gives the group more of what banks need in this challenging day and age — size.

“Margins have been falling steadily, and the only way to beat that back and try to win that battle is drive down costs, at least on the average.”

Indeed, when asked what greater size — $6.4 billion in assets compared to $4.7 billion — provides, Sosik started by saying simply, “survival.”

“Margins have been falling steadily, and the only way to beat that back and try to win that battle is drive down costs, at least on the average,” he explained. “So scale is the way to achieve that; when you put more assets under one roof and achieve more efficiencies, you’re driving down per-asset costs, and that’s what this business model tries to attain.

“We want to use that $6.5 billion chassis that’s headquartered in Easthampton to run the back offices of all of our three subsidiary banks,” he went on, listing bankESB, bankHometown in Central Mass., and the soon-to-be-much-larger North Shore Bank. “We can liberate those banks to do what they do best, which is use the power of their local brand in their communities they’re serving and let the shared service model of the holding company do the grungy stuff to produce efficiencies.”

That business model he mentioned has been an aggressive course of acquisitions that makes sense on every level, but especially those involving new opportunities for achieving growth and diversity when it comes to markets and regional vibrancy.

For this issue and its focus on banking & financial services, we take an in-depth look at the latest of these acquisitions for Hometown Financial and what it means for the institution moving forward.

 

Another Transaction of Note

As he talked about Hometown’s latest expansion effort, Sosik broke it down into two parts, essentially.

The first is the merger of North Shore into Hometown Financial Group, and then the merger of two of its subsidiary banks, North Shore and Abington, under the North Shore banner — although the Abington name will live on.

Putting those two institutions together under one roof, if you will, gives Hometown a dynamic presence in the eastern part of the state, which, like Western Mass. — and all corners of the state, for that matter — is a highly competitive region charactized by a strong mix of local, regional, and national banks, Sosik said.

Elaborating, he noted that the joining of Abington and North Shore brings a number of benefits, everything from resolution of succession issues at Abington — long-time President and CEO Andrew Raczka is entering retirement — to needed size and scale for North Shore.

“For North Shore, this makes a lot of sense strategically because they’re going to expand their footprint around Boston, gain market share … all the important things,” Sosik told BusinessWest. “But they’re also sliding underneath this $6.5 million company. They’re going to get to run their bank, and yet they can have their cake and eat it too in the sense that they’ll have access to our shared services and gain the efficiences of a much larger company. The benefits are the same for us — ensuring long-term viability and relevance in a very slim-margin industry.”

Rewinding the tape, Sosik said the talks between him and Tierney began just over a year ago and accelerated over the past few months. The merger was announced early last month, and the transaction is anticipated to close in the second half of this year.

It is the latest of seven strategic mergers for Hometown Financial Group over the past nine years, an aggressive pattern of acquisition that has taken the institition well beyond the 413. Indeed, its reach now extends across most of the state into neighboring Connecticut and New Hampshire.

Recounting those acquisitions, Sosik said they started in June 2015, when Citizens National Bancorp and its subsidiary, Citizens National Bank, merged into bankESB, which was operating at the time under the name Easthampton Savings Bank. In April 2016, Hometown Community Bancorp and its subsidiary, Hometown Community Bank, joined Hometown Financial Group to become the second subsidiary of the holding company; Hometown Community Bank has since changed its name to bankHometown. And in January 2019, Pilgrim Bancorp and its subsidiary, Pilgrim Bank, joined Hometown Financial Group.

Later that year, Abington Bank merged into Pilgrim Bank, with the name of the combined bank changed to Abington Bank, and Millbury Savings Bank merged into bankHometown. In October 2022, Randolph Bancorp and its subsidiary, Envision Bank, merged into Abington Bank, and last month, North Shore Bancorp and its subsidiary, North Shore Bank, announced plans to merge with Abington Bank; at transaction closing, Abington Bank will operate as a division of North Shore Bank.

 

Moves of Interest

This latest merger transforms North Shore into a $3.1 billion powerhouse, one of the largest mutuals in that part of the state, with reach across Eastern Mass., where, again, there are many competitors, size is an all-important asset, and meaningful, organic growth is far more attainable than it is Western Mass., which is typically described as a slow- or no-growth area.

“It’s a very competitive market, but also a very vibrant market,” said Sosik. “When you look at our demographics in the Pioneer Valley, they’re not very impressive; we love that market, and it’s very stable, but it’s not high-growth.

“It’s different in the eastern part of the state,” he went on. “In spite of the depth of the competition, it’s still a great market to be in; there are opportunites for growth.”

From a bigger-picture perspective, this latest merger provides an opportunity to take the stability of Western Mass. and juxtapose it against the “higher highs and lower lows” that define the far more dynamic eastern part of the state, he continued, adding that this diversity of regions and markets is another solid asset for Hometown Financial Group.

It’s an asset most other banks in the region are seeking as well, he said, noting that several banks in Western Mass. are pushing into Connecticut and other regions, and some Connecticut-based banks are moving north.

It’s all a function of gaining access to higher-growth areas and, overall, much-needed size, said Sosik, as he returned once again to the topics of margins — and how they became even smaller in the wake of repeated interest-rate hikes last year — and scale and the importance of attaining it.

“Banks are not built to withstand that kind of pressure,” he said in reference to climbing deposit rates and an inability to increase yields on existing loan portfolios beyond a certain point. “So you’re seeing banks in various degrees of duress becase of that predicament.”

The pace of interest-rate increases has certainly slowed, and rates may even decline somewhat this year, but this will remain a challenging climate for banks of all sizes, he went on, adding that the only course of action is to achieve greater size.

“In a low-margin business of any kind, and banking is certainly right at the top of that list, you have got to grow, or you’re going backward,” he went on. “That’s the nature of the beast. How do you acomplish that growth? We’ve chosen one model, and there are other successful pathways.”

Thus far, this model has chosen to be successful at achieving its various goals — from territorial expansion and regional diversity to much-needed scale.

And Sosik expects this pattern to continue with the acquisition of North Shore Bank.

Area Banks, Credit Unions Stress Philanthropy, Volunteerism

By
Mary McGovern, incoming president of Country Bank.
Banking and Financial Services Special Coverage

Community Interest

Mary McGovern, incoming president of Country Bank.

Mary McGovern, incoming president of Country Bank.

 

When asked why Country Bank supports local nonprofits, incoming President Mary McGovern gave a simple answer. “It’s a way for us to make a difference in our community.”

Then she elaborated.

“We have a tagline we adopted two years ago, ‘made to make a difference.’ We feel that encapsulates what Country Bank is all about, trying to make a difference in our community. It’s something we’ve done over the history of Country Bank, and we continue to make a positive impact by supporting local nonprofits, specifically the kind that rely on donations from their local businesses to help support them.”

Those efforts have focused in recent years on a number of priorities, she added, including food insecurity, health, education, and financial literacy, as well as homeless shelters, senior-serving programs, youth organizations, and more.

To that end, Country reported more than $1.2 million in donations in 2023, with 463 organizations receiving grants. One highlight last year was a partnership with (and $30,000 donation to) the Wonderfund, which aims to improve the lives of individuals in the Department of Children and Families system.

That large number of supported nonprofits resonates with Matt Bannister, senior vice president of Marketing and Corporate Responsibility at PeoplesBank, who was named a 2024 Difference Maker by BusinessWest last month for his extensive role in the bank’s community-support efforts. PeoplesBank recorded $1.6 million in donations last year to more than 550 area nonprofits, making the average grant just under $3,000.

“We continue to make a positive impact by supporting local nonprofits, specifically the kind that rely on donations from their local businesses to help support them.”

“We give a little to a lot of groups. We don’t tend to do large capital campaigns,” he said. “One big ‘yes’ often means a lot of little ‘no’s.’ So many nonprofits out there are doing good work, so it feels wrong to say ‘no’ to people.”

So, outside of a few big splashes — like a major donation to help the Food Bank of Western Massachusetts build its new headquarters — spreading the wealth around is a guideline the bank tends to stick with.

“The overall philosophy for our funding is we want to level the playing field — give opportunities to those who are disadvantaged and need more help,” Bannister added. “We have funding areas — food insecurity, housing, economic development, etc. — and the overarching principle of all these funding areas is to level the playing field.”

Many area institutions share their donation figures each year; Pittsfield Cooperative Bank donates nearly $200,000 — a striking number, considering it boasts around $385 million in total assets — through its charitable contributions to regional scholarships, youth mentorship programs, and nonprofit, economic-development, and health and human-service organizations.

Meanwhile, the Liberty Bank Foundation granted $1,453,742 to local nonprofits in 2023, including $10,000 as an annual ‘holiday gift’ from the bank, with the recipient chosen by bank customers. And Greenfield Savings Bank (GSB) gave more than $1 million in 2023 to more than 300 organizations.

Peter Albero, GSB’s chief financial officer and treasurer, noted that, while profits have been challenged over the past couple years by rising interest rates, the bank has not cut back on its financial support in the community, or its level of employee volunteerism.

Freedom Credit Union President Glenn Welch (right) presents a check to John Beaulieu

Freedom Credit Union President Glenn Welch (right) presents a check to John Beaulieu, president of the Westover Galaxy Community Council, one of the recipients of Freedom’s Month of Giving campaign.

“Profitability may be reduced, but we have not reduced our commitment to our communities. I think we are a pillar of Greenfield and the broader community,” Albero said. “So we continue to reinvest in the community, and everyone benefits from that.”

A.J. Bresciano, first vice president and commercial loan officer at GSB, agreed.

“Even in a higher-interest-rate environment, we’re taking measures to ensure our impact in the community is not being impacted and not deteriorating. So many local organizations throughout the Pioneer Valley rely on contributions of time, talent, and treasure. We make supporting those organizations a priority at Greenfield Savings Bank, and we want our team members to invest going forward.”

 

Philanthropic Priorities

Bannister made it clear that banks are required, to some degree, to be involved in their communities in a charitable way, noting that bank examiners make sure a bank’s locations and loan activities are representative of where it does business — meaning not just serving and lending to those with high incomes or profits — and they also ask how the institution gives back to the community.

“The challenge with that is there’s no right answer. We just have to go to the examiners each year and say, ‘here’s what we did.’ And when we give, we make sure a substantial amount that we give away benefits LMI — lower- to middle-income communities.”

Area banks and credit unions have increasingly inspired employees and customers to involved in giving efforts as well. In 2023, Freedom Credit Union contributed $181,898 to more than 70 charitable organizations throughout the four counties of Western Mass.

Of that, corporate charitable giving accounted for $130,432, but throughout the year, Freedom also conducts Month of Giving campaigns, in which customers can support a specific organization each month; those programs raised $17,316 in 2023. And local branch and department giving contributed an additional $34,150 to local charities.

“Our members and staff are passionate about supporting the community where we live, work, and serve,” Freedom Credit Union President Glenn Welch said. “In 2023, we were proud to donate funds for a wide variety of deserving institutions.”

“We give a little to a lot of groups. We don’t tend to do large capital campaigns. One big ‘yes’ often means a lot of little ‘no’s.’ So many nonprofits out there are doing good work, so it feels wrong to say ‘no’ to people.”

Other institutions take customer involvement to the polls. Both Florence Bank and Monson Savings Bank boast popular programs — called the Customers’ Choice Community Grants Program and the Community Giving Initiative, respectively — that complement other bank philanthropy by letting customers vote for nonprofits to support.

Through that initiative, Florence Bank awarded $150,000 to 46 area nonprofits in 2023, the 21st year of the program; the higher-than-usual total commemorated the bank’s 150 years in business.

“It’s amazing to see so many community organizations being recognized, and the fact that the recognition comes from Florence Bank customers in the form of votes is really special,” President and CEO Matt Garrity said.

Meanwhile, in the 14th year of its community-giving program, Monson Savings Bank awarded a total of $15,000 to the 10 top vote-getting nonprofits.

PeoplesBank employees volunteers

A team of PeoplesBank employees volunteers at Kent Memorial Library in Kent, Conn.

“Everyone’s passion for our annual Community Giving Initiative is always so exciting,” said Michael Rouette, the bank’s executive vice president and chief operating officer. “As a locally operated bank, Monson Savings has a great desire to support the residents, businesses, and nonprofits of the communities that we work in and live in.”

President and CEO Dan Moriarty added that “these organizations are worthy nonprofits that supply important resources to our communities. It is clear why they were chosen by our community members to receive support from Monson Savings.”

 

More Than Money

But community banks and credit unions in Western Mass. aren’t just giving money; many also emphasize a culture of volunteerism, even providing time for their employees to get involved in the community.

For example, employees at UMassFive College Federal Credit Union raised more than $18,000 for two local nonprofits last fall — $13,677 for the UMass Cancer Center via participation in the UMass Cancer Walk and Run, and $4,800 for the Food Bank of Western Massachusetts via participation in Will Bike 4 Food.

A supporter of the UMass Cancer Walk and Run for more than 20 years — during which time it has raised more than $186,600 for the cause — UMassFive employees join together annually as Team UMassFive to raise funds, both personally and in branch locations. In 2023, fundraising efforts included raffle baskets, bake sales, candy sales, and art and jewelry sales, and the credit union’s corporate partners also pitched in.

Will Bike 4 Food is a more recent priority at UMassFive, as employees have taken part since 2020, raising a total of $17,500 in just four years, which equates to providing 70,332 meals to neighbors in need.

“We are so proud of our employees for supporting local causes that they care about,” said Cait Murray, Community Outreach manager at UMassFive. “Together, our team can make a more significant impact than if we all participate in events on our own. These organizations make such a big difference in our communities, and we are thrilled to support those efforts.”

Country Bank reported that its team members volunteered 1,255 hours of community service in 2023, while 37 team members served on 65 nonprofit boards and committees.

“Oftentimes, we can supplement or replace a monetary donation with volunteers, whether it’s picking vegetables at a local farm to be donated out, or helping nonprofits clean up the facility, or doing outdoor work like volunteering with Habitat for Humanity,” McGovern said. “We’re still putting the bank’s dollars to work, but the hands of our employees are helping to sustain some of these nonprofits as well.”

Liberty Bank reported 13,721 employee volunteer hours, including nearly 170 hours at Connecticut Foodshare, the aforementioned recipient of the bank’s holiday gift in 2023. The bank also actively solicits nonprofits to share information on what types of volunteer help is needed — whether working on a project or serving on a board or committee — and aims to meet those requests.

At PeoplesBank, employee volunteerism is considered part of the bank’s culture, Bannister said — part of its DNA, in fact, and something made clear to job applicants.

“We report volunteer hours to the bank examiners, and we were third in the state last year in hours volunteered per employee. It’s something that’s expected, and it’s something that builds camaraderie,” he said.

And it’s something that community banks simply should do.

“We’re more engaged in the community, where national banks are not known for that as much,” Bannister told BusinessWest. “And we consider it a competitive advantage. When you’re choosing a bank, hopefully the bank’s values are something you consider, and hopefully that volunteerism reflects well on the brand.”

 

PeoplesBank Restructures Leadership Roles, Plans Further Growth

By
Banking and Financial Services

Lending Perspective

 

Tom Senecal has been president, CEO, and chairman of PeoplesBank since 2016, and moving forward, he’s shedding the ‘president’ part of that title. But that doesn’t mean he’s slowing down.

“It’s more of a transition of the daily responsibilities,” he said, explaining why Brian Canina has been promoted to president and chief operating officer, and Hayes Murray has been promoted to executive vice president, chief financial officer, and treasurer, taking on some of Canina’s former duties.

“I reassigned to Brian three or four different responsibilities, but when you look at both of us, it’s still a lot on both our plates,” said Senecal, who retains his CEO and chairman titles. “This is a recognition of Brian’s success and talent and the timing of the growth that we’re going through. And quite frankly, the operational side of things needs more daily attention. And Brian really has the fortitude, the wherewithal, the work ethic, and the strategy to execute all the daily operational things. So it just made sense at this point in time to transition those responsibilities.”

Tom Senecal

Tom Senecal

“This is a recognition of Brian’s success and talent and the timing of the growth that we’re going through.”

After working together for almost 15 years — Canina as CFO and controller, Senecal as president and CEO — it just made sense to reward Canina for him efforts, Senecal added, “and, quite frankly, to make sure that we have our eyes on the ball as we continue to grow.”

Canina said he has prepared for this transition over the past year or two, operating in more than just a CFO role, and more like a COO, driving strategic initiatives and monitoring and managing the strategic plan of the bank along with Senecal.

“That will continue to be a focus of mine going forward, taking more responsibility away from Tom in terms of administratively managing the strategic plan and working with him as he identifies other strategies that he’s working on,” Canina explained. “So it’s not really a significant change; it’s something that we’ve been working toward, and with the size of the bank and how we’ve grown, it was a good timing to make this more formal change.”

The leadership changes will provide Senecal with more opportunities to plan and manage the growth and revenue activities of the bank, including retail operations, consumer lending, small business, municipals, and commercial and industrial divisions. Canina will continue to be responsible for finance, facilities, PeoplesWealth, the Business Solutions Group, and information technology. In his new role, he will also be responsible for human resources, marketing, and corporate responsibility.

“I’ve kind of shed some meeting responsibilities and a few of the operational responsibilities, but my focus is on growth,” Senecal said. “We have both an organic strategy of growing the bank by opening branches, and also non-organic opportunities. We’re constantly having conversations with other banks, and we will never be bought or sold, but we are looking at opportunities with other banks that might want to partner with PeoplesBank.”

Connecticut in particular continues to present growth opportunities. After adding branches in East Granby and Suffield through acquisition, then expanding the bank’s branch footprint into South Windsor and West Hartford, the bank’s board of directors has approved plans to open banking centers in Glastonbury and Avon, in addition to seeking other opportunities for future expansion.

Brian Canina

Brian Canina

“It’s something that we’ve been working toward, and with the size of the bank and how we’ve grown, it was a good timing to make this more formal change.”

“Our commercial-lending business has been extremely successful in the Connecticut market,” Senecal noted. “We’ve hired some commercial lenders and residential lenders in the Connecticut market. We’ve always had a large presence on the commercial side, but since we’ve developed the retail side, it has brought us some synergies in the relationships with those commercial customers, bringing them in as retail customers as well. It’s been hugely successful.”

Canina agreed. “We’re at a very important time right now to really continue pushing the growth of People’sBank down into Connecticut and looking into other areas to grow. That’s what we’re really focused on, and I feel confident we’re going to have a lot of success.”

 

Soaring Assets

The numbers tell the story of PeoplesBank’s recent upward trajectory.

“When I took over as president and CEO in 2016, we were a $1.8 billion bank,” Senecal told BusinessWest. “We ended 2023 just shy of $4.1 billion. So we’ve more than doubled in those seven years.”

The bank also boasts more than 300 employees and operates 20 banking centers across Massachusetts and Connecticut, with an additional five locations when its headquarters, ATM, and VideoBankerITM locations are included, he noted. “That’s quite a bit of recent growth, which is a credit to the hard work of our entire team.”

Over the past couple years, PeoplesBank also began partnering with Zynlo, a digital bank, Senecal said. “That is starting to really take off. When we talk about growth, traditionally, brick and mortar has been our main source of banking growth. With the digital bank, that has taken on a whole different perspective.

“We’ve got different lines of business, and we’re starting a personal banking division of the bank,” he added. “We have the PeoplesWealth division. Those weren’t in existence a few years ago, so these different banking channels are really what’s driving some of our growth.”

Other expansion opportunities exist because of the merger-and-acquisition environment among large banks and how that disrupts a marketplace, Canina said, citing as one example M&T Bank’s acquisition of People’s United Bank. “That acquisition opens up opportunities for us to jump in on the disruption down in the Connecticut market and, in some cases, Western Massachusetts as well, but mostly down in the Connecticut market, which is why we have our sights set on organic growth down there.”

Opportunities will also arise from banks that aren’t faring as well as PeoplesBank, he said, due partly to the compression on interest margins coupled with increased costs for human resources and compliance, as well as coming regulatory changes.

“Some of these smaller banks are really going to be challenged,” Canina explained. “And I think that we’re at a size — more than $4 billion in assets — where we’re in a very good position to partner with another bank that’s smaller and having challenges, so I think there’s going to be opportunity there for us.”

Of course, PeoplesBank continues to grapple with those same headwinds, he added.

“The challenges right now are coming from the interest-rate environment, where the margins have really compressed from the short-term rates coming up and long-term rates coming up a bit, but not as much as the short end of the curve. So we’re paying deposits on the short end and then lending out on the long end, and there’s not a big spread there. It makes it challenging, not just for us, but for all banks.

“At the same time, a lot of the pandemic deposits that came in have started to flow out; people started spending more money, and they have the ability to to move deposits anywhere they want very easily,” Canina continued. “So the industry has been challenged with managing the interest-rate environment and maintaining deposit levels, and I see that continuing into 2024. Depending on what happens with interest rates, it’s not likely going to let up until we see the short end start to come down. And then we’ll face some different challenges when that happens, because most likely there will be some potential recessionary concerns.”

On the residential side in particular, Senecal added, “I think it’s tough for every bank these days, even though interest rates have come down a little bit from their all-time highs in the last 20 years or so. But there’s no inventory. So, even though interest rates are high, what we’re seeing is, when something comes on the market, it sells, and it’s financed. It’s just that the inventory is so low. And that will be a challenge heading into 2024 for almost all banks.”

 

Hometown Focus

As he broadens his responsibilities in dealing with these issues and working with Senecal and other bank leaders on growth strategies, Canina added that he aims to continue — and grow — PeoplesBank’s commitment to the communities it serves, noting that the bank’s charitable giving continues to be a strength, with almost $6 million donated over the past three years alone, and more than $11 million over the past 10 years.

“I think what really separates us from the larger regional banks and the national banks — we’re so invested in the communities that we’re banking with, and even though we’re contributing the amount of dollars we are back to the community, we’re still paying interest rates that are competitive with any other bank out there.”

Meanwhile, employees donate thousands of hours of volunteer service to area nonprofits and charitable causes, he noted. “More than half of our bank is on a nonprofit board of some sort, and the amount of volunteer hours is very strong; that’s something that all of our employees hold near and dear to them and really keeps them engaged.”

Lawsuit Seeks to Limit Federal Reach into State-legal Cannabis Industry

By
Banking and Financial Services

A Matter of Survival

 

When asked what it takes to thrive in the cannabis business these days, Meg Sanders paused before noting that ‘thrive’ is the wrong word.

“I think thriving is part two. Right now, surviving is really the topic of the day. That’s what we need to be looking at,” said Sanders, CEO of Canna Provisions, which operates dispensaries in Holyoke and Lee.

And it’s not just because of the heightened competition that has arisen, both within Massachusetts and from across state lines, though that factor has caused some shops to close, with others likely to follow, as the market begins to settle, eventually determining how many dispensaries is too many.

No, that development has only exacerbated one of the key challenges for cannabis entrepreneurs: the fact that the drug is federally illegal, which makes financing thorny, normal business activities difficult, and the tax environment severe, to say the least.

“Our accounting bill is probably super elevated from a normal business. Our legal bill is probably way larger than a normal business because there are just so many T’s to cross and so many I’s to dot. And that’s just part of it,” Sanders said before detailing issues with access to financial services and lending. “What if we could get SBA loans? What if we could apply for federal grants? I mean, there’s so much money out there that a small business should be eligible for, but we can’t do any of that because we’re federally illegal.”

Meg Sanders

“What if we could get SBA loans? What if we could apply for federal grants? I mean, there’s so much money out there that a small business should be eligible for, but we can’t do any of that because we’re federally illegal.”

With that in mind, a coalition of U.S. cannabis operators and investors filed a lawsuit late last year against U.S. Attorney General Merrick Garland. The coalition asserts that the federal government has no basis for enforcing the Controlled Substances Act against intrastate, state-regulated cannabis operations. The plaintiffs include Canna Provisions; Gyasi Sellers, CEO and founder of Treevit; and Wiseacre Farm, all of which are independent operators in Massachusetts that claim to have suffered significant harm and business challenges due to federal prohibition.

Verano Holdings is also named as a plaintiff, while foundational supporters of the suit include Ascend Wellness Holdings, TerrAscend, and Green Thumb Industries, as well as Eminence Capital and Poseidon Investment Management.

The lawsuit seeks to confirm the rights of Massachusetts and other states to regulate cannabis within their borders, and to limit the federal government’s power to regulate commerce.

The Controlled Substance Act bars the production, distribution, and possession of marijuana, regardless of whether those activities cross state lines or, as in the case of the plaintiffs’ businesses, are intrastate. According to the lawsuit, “this unjustified and unconstitutional prohibition on intrastate cannabis harms plaintiffs and hinders the efforts of states to provide patients and adults with access to strictly regulated and tested cannabis.”

“The purpose of the lawsuit is to basically challenge the constitutionality of the Controlled Substance Act on intrastate activity. Basically, the suit alleges that the federal government has no say what happens within state borders,” Sanders told BusinessWest. “I wasn’t aware of this lawsuit until somebody recommended me to be part of it. So we had substantial meetings with our legal team and our board about this particular issue, and we all felt like there’s something here, and that this is an important way to approach it.”

 

Tough Environment

Cannabis banking has softened somewhat in Massachusetts, Sanders was quick to note. “I would say Massachusetts is probably one of the friendliest banking states in the United States as far as cannabis. We have a lot of very thoughtful, kind, smart bankers out there that are trying to service the industry. And that’s great; we have checking accounts, we have saving accounts, some of us are able to do debit-card acceptance. But we can’t take credit cards. I can’t get a business loan. Equipment loans are out there, but they’re at a really high interest rate. And also, I can’t get access to normal payroll services. So I can’t work with an ADP or a Paychex or some of the big guys that are really good at what they do.

“If you’re signing up to be in cannabis, you’re signing up for all of these headaches. This is the nature of the beast. And it’s not negotiable; those are the facts. This is what we have to deal with every single day. And it’s really, really hard.”

The lawsuit also takes aim at what’s known in the IRS tax code as Section 280E, which originated from a 1981 court case in which a convicted cocaine trafficker asserted his right under federal tax law to deduct ordinary business expenses. In 1982, Congress created 280E to prevent other drug dealers from following suit.

So, while state-legal cannabis businesses are allowed to deduct the cost of goods sold when paying taxes, they can not take other deductions normal to most non-cannabis businesses — salaries, health insurance, utilities, maintenance, and much more. “So I have an effective tax rate of 73%,” Sanders said.

In 2005, the U.S. Supreme Court rejected a challenge to the Controlled Substance Act’s cannabis prohibitions.

But, according to a press release announcing the new lawsuit, “a critical factor in that decision, Gonzales v. Raich, was that the federal government intended to ‘eradicate’ the market for cannabis nationwide. The court concluded that the federal goal of eliminating commerce in cannabis, combined with the assumption in 2005 that intrastate marijuana could not be differentiated from interstate cannabis, justified the Controlled Substances Act’s prohibitions on intrastate cannabis. Neither of those facts, however, are true today. In the 18 years since Gonzales, Congress and the executive branch have abandoned any intent to ‘eradicate’ cannabis, and numerous states have developed regulatory programs for legal marijuana that is not fungible with, and is readily distinguished from, illicit cannabis.”

Indeed, the plaintiffs note, today, 38 states and Washington D.C. have medical or adult-use cannabis programs with significant regulatory oversight, requiring compliance with stringent regulations aimed at protecting patients, customers, and the public, including video surveillance and seed-to-sale tracking.

“Absent the relief sought in this lawsuit, plaintiffs and other state-regulated cannabis operators will continue to suffer severe harms,” the release notes. “State-regulated cannabis businesses are deemed illegal under the CSA; their everyday activities are considered federal crimes. As a result, they are cut off from numerous federal programs and protections (including small-business loans), they are subject to discriminatory tax penalties, and many organizations — including banks and credit-card processors — refuse to do business with them, rather than risk being deemed conspirators, aiders and abettors, or money launderers.

“The result is that many cannabis businesses are suffering, people are losing their jobs, and individual wealth is being destroyed,” the statement continues. “In addition, social-equity licensees harmed by the war on drugs and who were supposed to have equal access to the industry do not have the same benefits as otherwise situated business owners to start a business and build their wealth.”

 

Appetite for Change?

Sanders sees this lawsuit as a kind of parallel track to other ongoing efforts to disentangle federal and state laws, thereby easing the cost of business in the cannabis industry, with many hoping Congress steps in at some point and removes cannabis from the Schedule 1 list of controlled substances.

“There are a lot of legislators that really support and see cannabis as an industry for their constituents and understand that jobs are being created and there’s a lot of revenue. And, bottom line, their voters want to buy weed from a regulated dispensary,” she told BusinessWest. “That’s what we see every single day. We still have more people coming in. And what voters are telling legislators is they want safe access to cannabis.”

At the same time, Sanders understands that Congress has many competing priorities, and that they struggle to come together in a bipartisan way on any issue.

“Until politicians see voters saying, ‘well, because you’re negative on cannabis, we’re not going to vote for you,’ I don’t think you’re going to see a change. I mean, that’s their business. Their business is to get votes. As voters, we want legalization, but there are so many other things that are separating us as a country, and those are way more important, probably, in the eyes of legislators.”

Liberty Bank Continues Expansion into Western Mass.

By
Banking and Financial Services Special Coverage

Moving North

President Dave Glidden

 

Dave Glidden has long referred to it as the “I-91 corridor strategy.”

This is the growth plan for Middletown, Conn.-based Liberty Bank, one that, as the name suggests, focuses on the I-91 corridor, which stretches from New Haven into Southern Vermont.

The bank has followed that strategy, increasing its presence in Southern Conn., and now Western Mass. as well, taking another important step in what could be called its northward advance with the opening last month of its first branch in this region — on Shaker Road in East Longmeadow, just a few miles from the state line.

The facility, a former United Cooperative and then PeoplesUnited branch, was home to a commercial loan-production office that Liberty opened in 2021 and eventually moved to the 23rd floor of Monarch Place in downtown Springfield — after that LPO gave Liberty a foothold of sorts and convinced Glidden, the bank’s president, and other members of his leadership team that it was time to open a full-service branch in the 413.

“We generated a lot of volume and a lot of new customers out of there, and some good deposits,” he said. “When it got to that point, I said, ‘OK … we’ve proven that there’s space and a place for us in this market,’ and that’s when I decided to move the commercial-lending team and their support staff to Monarch Place and tear down the sheetrock and outfit a nice branch on Shaker Road.”

“We are selectively and cautiously considering where to go next. We don’t have to be in a rush, but I can see a total of maybe three to six branches over the next few years — if the right opportunities present themselves.”

With that move, the logical questions — and Glidden was ready for them — is where will the bank go next within the 413, and when?

“We are selectively and cautiously considering where to go next,” he told BusinessWest. “We don’t have to be in a rush, but I can see a total of maybe three to six branches over the next few years — if the right opportunities present themselves.

“I wouldn’t force the issue,” he went on, saying there is no firm timetable and no specific number of locations as a firm goal. “Maybe three to six branches, strategically located, with drive-thrus, with the focus on catering to small to medium-sized business owners. That’s our future plan.”

How this plan shakes out remains to be seen, obviously, and we’ll delve more into where the Liberty name and logo might appear next. For now, the bank wants to continue solidifying its beachhead and take the I-91 corridor strategy to different corners of the 413.

For this issue and its focus on banking and financial services, BusinessWest talked with Glidden about the next possible steps with this strategy and how the drive north will unfold.

 

Points of Interest

Glidden laughed when he noted that, when people tell him they see the bank’s TV commercials — “the ones with the emu and that guy with the mustache” — he no longer makes the effort to correct them and inform them that those are for the insurance giant Liberty Mutual.

“Why bother — what am I fighting it for?” he asked rhetorically, adding quickly that the last four words of each of those frequently, as in frequently, aired spots — ‘Liberty, Liberty, Liberty … Liberty’ — constitute solid name recognition that he doesn’t have to pay for. “Every time I see that commercial, I’m cheering; people come up to me and say, ‘I saw your commercial.’ I just say, ‘thank you; let me open a checking account for you.’”

Bank employees and elected officials

Bank employees and elected officials cut the ceremonial ribbon last month on Liberty Bank’s East Longmeadow branch.

This form of free advertising, if you will, is just one of many things that have gone well for Liberty over the past several years. In fact, Glidden said 2023 may be the bank’s third straight year of record profits, though the final numbers are not yet in.

But even if it’s not a record, the bank is maintaining a strong upward trajectory, which it owes to several factors, but especially its aggressive I-91 corridor strategy and the qualities needed to carry it out and gain market share across that wide area.

Elaborating, Glidden said the bank has several advantages, from a name that resonates and crosses state lines easily to a broad portfolio of products on both the commercial and consumer sides of the ledger; from a commitment to the latest digital technology to an attractive size.

Indeed, with more than $7 billion in assets and 56 locations in Connecticut and two in the Bay State, Liberty, the oldest mutual bank in the country, can “out-local the national banks and out-national the local banks,” said Glidden, a native of Holyoke who is well-known in this region and has long considered Western Mass. the next logical area of expansion for the bank.

“We can deliver a balance sheet that’s going to be large enough for 99.9% of the companies up there to grow to whatever they want to be,” he said, adding that this size, coupled with lenders who know and hail from Western Mass., has enabled Liberty to make solid inroads in the local market and presents opportunities to gain market share in this region.

And many changes to the banking landscape, but especially the advent and continued evolution of digital platforms and mobile apps, make it easier to cross state lines, he went on.

“The habits of consumers and small businesses, what they’re looking for from a bank, are not the same as they were 15 years ago.”

“The habits of consumers and small businesses, what they’re looking for from a bank, are not the same as they were 15 years ago,” Glidden explained. “Do they want to know that their bank has a branch so that, if there’s an issue, they can go in and sit with someone and get advice? Yes. But, across the board, transactions and visitations to branches continue to decline, and that decline is not projected to slow down any time soon.

“And that kind of changes the playing field in the sense of being able to go over the line with maybe a toe in the market,” he continued. “If this was 10 to 15 years ago, and I made the decision that I wanted Liberty to go into Western Massachusetts and compete, I probably would have looked to do it through an acquisition strategy. That doesn’t mean that acquisition strategies are off the table, but you don’t have to do that now with digital and mobile apps.”

 

By All Accounts

As for the growth strategy in the 413, Glidden said that, as with the initial thrust into the region in East Longmeadow, the focus — the ‘macro strategy for this market,” as he called it — is an emphasis on small business and commercial lending, realms that build customers, relationships, deposits, and more, and cement the need for additional branches.

This was the strategy followed in New Haven, where the bank established an LPO, and again in Hartford. And it is the same strategy being deployed north of the border in Greater Springfield.

As he scans the Western Mass. landscape — and, again, he knows it well from his years as regional president at TD Bank — Glidden acknowledged that Western Mass., is, by and large, a no-growth area. And most of its communities — and East Longmeadow is squarely in this category — are considered overbanked.

But there are opportunities, he noted, adding that his team is looking at maps and crunching numbers as they consider where to go next.

There are what would be considered obvious landing spots, he said, mentioning larger population and commercial centers such as West Springfield, Holyoke, Chicopee, and Westfield, and these may well be the next push pins on the wall map.

“The analytics you use on this stuff gets so complicated … sometimes you need to just take a step back and say, ‘where are all the people, and where are all the businesses?’” he said. “And just put them there.”

‘There’ probably doesn’t mean Hampshire County, at least not at this time, he went on, adding quickly that he certainly wouldn’t rule out putting a branch in a community like South Hadley, which borders Holyoke, Chicopee, and Amherst, and is another of those ‘overbanked’ communities in Western Mass.

“Right now, we’ve had success on the commercial and small-business side; let’s look at Greater Springfield and the surrounding communities,” he told BusinessWest. “If Springfield is the hub, then look at the spokes around there and find the right places to sprinkle a few more branches to service our growing customer base there.”

As he looks ahead, Glidden isn’t expecting another record year when it comes to profitability for Liberty Bank.

Indeed, while 2023 was a very strong year, the pace of growth started to slow during the third and fourth quarters, and this trend will, in all likelihood, continue in the year ahead.

But what will also continue is implementation of the bank’s I-91 corridor strategy, one that has seen Liberty makes its first moves in the Western Mass. market and establish a foothold.

The goal for 2024 and the years to follow will be to strengthen that hold and take the brand to different communities across the region. Just where, when, and how the next steps will take place remain to be seen, but one thing is clear: Liberty’s march north is just getting started.

Country Bank Creates Strategies to Build Its Brand, Enter New Markets

By
Banking and Financial Services Special Coverage

Signs of Progress

Country Bank’s display at Polar Park in Worcester has given many businesses what Paul Scully calls “sign envy.”

Paul Scully didn’t want to say how much Country Bank has invested in that 60-foot-long sign that sits atop what is known as the Worcester Wall at Polar Park (that facility’s version of Fenway’s Green Monster), easily the most visible manifestation of the bank’s partnership with the WooSox.

Instead, he offered a gracious “you can ask…”

But he certainly did want to say that he considers the overall investment in this sponsorship, and especially that sign, well worth it.

Indeed, it is certainly an attention getter, at all times but especially at night — it’s one of the few illuminated signs at the home of the WooSox and the second-largest after the one for the beverage company that bought naming rights.

Scully told BusinessWest that he has talked with a number of business owners in Worcester, Springfield, and in between who are suffering from what he called “sign envy.” Meanwhile, upon introducing himself at various occasions, he said he’s been greeted with the response “that’s the bank with the big sign at Polar Park.”

So the display is doing what is was designed to do, although fully leveraging it and other aspects of the partnership with the WooSox is an ongoing learning experience in a different kind of branding exercise (more on that later). And it’s merely one of many signs of progress, growth, and expansion — figuratively but also quite literally — at the Ware-based institution.

Another would be the bank’s business center on the 17th floor of Tower Square in downtown Springfield, opened in 2022. There’s only a small sign at the office, but the facility gives the bank a much larger presence at this end of Hampden County. Meanwhile, Country is adding some new products, including a WooSox debit card, and it recently completed a comprehensive digital upgrade on both its consumer and business banking platforms.

Still another sign, this one not of the visible variety, is the bank’s resiliency during what has been a challenging year for all financial institutions amid skyrocketing interest rates and a sagging housing market, due in large part to those soaring interest rates, but other factors as well.

Overall, Scully said Country Bank remains in a growth mode and, like other institutions, understands the value of size to continued success. The bank is looking at where to bring its brand next, he said, adding that there are many opportunities within its current footprint between Springfield and Worcester and perhaps beyond.

And there are, obviously, many factors to consider when it comes to where to go, when, and in what fashion.

Indeed, the 3,000-square-foot branch with a few drive-up lanes is largely a thing of the past, he said, adding quickly that while customers, and especially the younger generations, have fewer reasons than ever to visit a branch, they still serve a purpose. Actually, several of them.

“What we continue to look at are smaller footprints that will provide several things; getting your name on a building or a storefront is a form of marketing and the ability to get our name and our brand out there,” he said, adding that the bank’s broad strategy will be to maximize both brick-and-mortar facilities and digital banking platforms — often at the same address.

The team at Country Bank’s business office

The team at Country Bank’s business office at Tower Square in Springfield, another sign of the bank’s continued growth and expansion.

As to what additional addresses might become reality in the future, he said that’s one of many questions to be answered in the years to come.

For this issue and its focus on banking and financial services, BusinessWest engaged in a wide-ranging discussion with Scully, who addressed everything from broad strokes in the bank’s business plan to the outlook for the year ahead when it comes to the economy, interest rates, and other factors; from the bank’s adjustments to a changing workforce to that big green sign in downtown Worcester.

 

Home Field Advantage

Like the famous Citgo sign outside Fenway, the Country Bank sign at Polar Park is always on, Scully said, adding that he can see it outside the apartment he has in the city.

“They do great things at the park and with the city to keep it going year-round,” he explained, noting that the bank’s visibility certainly doesn’t end when the games stop in September. “Whether it’s a Holy Cross football game or the charity walks that are constantly going on … every time the park is being used, or whether you’re in the DCU Club, a beautiful function venue at the park, that Country Bank sign is right in your face.”

And having his bank’s name in lights — big lights — is just one component of the bank’s partnership with the Red Sox’ Triple-A affiliate, Scully said, noting that it will soon be introducing a WooSox debit card — ‘the official debit card of the Worcester Red Sox.’ Meanwhile, the organizations collaborate on a ‘teacher of the month’ program, a ‘community heroes’ initiative, and other endeavors, he noted, adding that the investment in the team and its ballpark continues to pay dividends.

And the key to a successful partnership in such cases is effective leveraging of the signage and other elements of the collaboration, he said, adding that, in many respects, this remains a learning experience for the bank. And he used the DCU Center, the indoor arena in Worcester, to get his point across.

“I was with someone a few years ago, and I said something about DCU, noting that this was Digital Credit Union,” he recalled. “And she looked at me and said, ‘that’s what that stands for?’ So you need to make sure that, if you’re going to do something like this, you have to figure out what it’s going to get you.

“And you have to really work at leveraging it,” he went on. “Whenever you take a new approach to how you market your brand, you have to do the research, and you have to know when to shift gears. Clearly, it’s not just about turning on a sign; it’s about how you leverage that to be an expansion and an awareness of your brand.”

He said the bank’s marketing team spends a lot of time with the marketing personnel at the WooSox to develop strategies for how to fully leverage the partnership between the organizations.

Elaborating, he said the bank does this in various ways — through visibility from the sign, obviously, but also with the debit card, ticket giveaways, work with the WooSox Foundation, and being on the field for promotional events, such as the police-fire charity baseball game staged at the park in September.

“We were there, and we were a big sponsor of that event,” he went on, “and that allows you to reach out into various mediums of people and get your brand out there, so they get to understand what the brand is and what it stands for.”

 

Covering His Bases

Overall, the brand stands for many things, Scully said, noting that Country is a community bank that is large enough to provide the services required by its commercial clients and consumers, but small enough to deliver a personalized brand of service, qualities that have served the bank well during what has been a year of challenge for most all financial-services institutions.

Indeed, Country has enjoyed what Scully called a “decent year,” not on par with those that immediately preceded the pandemic, but solid from an earnings perspective and in most areas, including the mortgage side of the ledger and home-equity loans.

“We’re one of the most highly capitalized banks in the Commonwealth — our capital ratio is over 15%, and we’re quite profitable,” he said, adding that such stability bodes well at a time when not all banks can make such claims.

As for the mortgage business, Scully said it was definitely more vibrant than he would have expected over the past year, adding quickly that there are challenges within certain sectors of the market, especially the first-time homebuyers.

“They got the double whammy — the pricing of housing went up, and now interest rates have gone up,” he said. “There’s that segment of the population that’s looking to buy a home, but they can’t find it within their price range because their price range has been altered by the increase in interest rates.

“But we’re seeing people who have sold a home and are buying another one and trading up who don’t seem fazed by interest rates,” he went on. “Part of it is because a large percentage of the mortgages we are doing are adjustable-rate; they’re at a lower rate than a fixed rate, and I think the thought process is, ‘I’ll get an adjustable, and then, when rates come down, whether that’s in 12, 24, or 36 months, I’ll just refinance.’”

Overall, consumers continue to spend, despite the higher interest rates and historically high inflation.

“We see a younger segment seemingly unfazed by interest rates,” he told BusinessWest. “If the debit card works … they have a good time for themselves; that’s what’s happening.”

Things are slower, overall, on the commercial side of the ledger, Scully noted, adding that many business owners are fazed by higher interest rates. Meanwhile, with commercial real estate, many potential investors are waiting and seeing what’s happening with the office market, he said, adding that that the shift to remote work and hybrid schedules, seemingly permanent in the eyes of many, have brought a hesitancy to many investors.

Country Bank is one of those companies that has embraced a hybrid approach — and Scully is one of those who works remotely at least a few days a week on average.

He said these strategies have better enabled the bank to recruit and retain talent and, overall, become what he called “an employer of choice.”

“It’s really understanding evolution — an evolution of the workplace and an evolution of the economy,” he said, “and being able to adapt to it.”

 

Knowing the Score

Scully was quick to note that his office is not equipped with a crystal ball, but he said there are many signs, especially on the employment side, that the economy is still chugging along. Companies are hiring, he noted, and this trend generally yields sufficient levels of optimism among consumers.

And with interest rates, he projects they will stay pretty much where they are — a level that is considerably higher than what has been seen over the past decade, but, from a historical perspective, acceptable in most respects.

“We need some stabilization to get a sense of what real is these days,” he said. “The rates were so low for so long, but were those rates real? That’s the big question. If we step back 10 or 15 years ago, if you were getting a mortgage at 6%, that was pretty darn good.”

The other lingering question about 2024 concerns what will happen on the business and commercial real-estate sides of the ledger, he said, noting that there is a great deal of uncertainly when it comes to the future of retail — and the office.

“We’re hybrid, and we have a lot of office space,” he said. “We don’t have plans to condense it, but I’m sure there are companies that are looking at that. What will that do to the prices of things? That’s what we’ll start to see in 2024.”

As he talked about possible opportunities for expansion and bringing the Country Bank name (and green sign) to different communities, Scully acknowledged that the bank already has a rather large footprint, one that includes the state’s second- and third-largest cities and the territory between them.

There is the banking center in downtown Springfield and full-service branches in Belchertown, Brimfield, Charlton, Leicester, Ludlow, Palmer, Paxton, Ware, West Brookfield, Wilbraham, and two in Worcester, including a recently opened facility in Tatnuck Square. That footprint covers three counties — Hampden, Hampshire, and Worcester — and communities large and small.

The bank has been steadily growing its presence in Worcester, he went on, adding that it has always had a strong commercial-lending book of business, and has gradually increased its visibility and its overall presence with branch locations.

“We’re looking for opportunities throughout the Central Mass. and Western Mass. area,” he said, acknowledging that this certainly covers a considerable amount of real estate.

With the exception of that business office in Tower Square, the bank does not have a physical location west of Ludlow, he noted, adding that Country is certainly looking at opportunities to change that equation.

But the opportunity has to be right, he added quickly, noting that the bank isn’t interested in expansion for expansion’s sake.

“We continue to look at both markets, Worcester and Springfield, and say, ‘what opportunities are there in towns that are not already overbanked?’” he said. “We don’t want to be the 10th bank in the town.”

Getting back to those businesses he mentioned with ‘sign envy,’ Scully said they’re going to have to live with that condition for the foreseeable future.

“That’s their problem because we’re going to be there for a long time,” he said, using that phrase to refer to the sign, but also the bank’s presence across an ever-wider stretch of the state. This is an institution that is hitting it out of the park — in all kinds of ways.

Cooley Dickinson Receives $100,000 from Greenfield Co-op

By Contributor
Banking and Financial Services

Kicking Off a Campaign

 

Cooley Dickinson Hospital announced last week that it has received a $100,000 gift from Greenfield Cooperative Bank to support the expansion and renovation of its 50-year-old Emergency Department. The bank’s donation also serves as the kickoff gift for a $1,000,000 challenge opportunity.

“This incredibly generous gift in support of the Emergency Department is an investment in our shared commitment to a healthy Pioneer Valley,” said Dr. Lynnette Watkins, president and chief operating officer of Cooley Dickinson Health Care. “We are honored and grateful to Greenfield Cooperative Bank for this gift of support, which will benefit their customers, our patients, and our collective communities by providing access to the region’s top providers and leading healthcare services in a newly renovated and expanded Emergency Department.”

The gift will support the $26 million expansion, reconfiguration, and renovation effort to allow Cooley Dickinson to meet the ever-evolving emergency-medicine needs of the community it serves. To accomplish this goal, the hospital has embarked on an ambitious and comprehensive fundraising campaign, with nearly $7.2 million has been raised to date.

“Cooley Dickinson Hospital is a vital part of the health of our neighbors in the Valley,” said Tony Worden, president and CEO of Greenfield Cooperative Bank. “This donation is a way for us to show our support for the hospital and the people it serves. Many of our staff, family, and friends have needed to receive care at the Emergency Department. We are grateful for the work that the hospital does, and we are thrilled to help them continue their mission.”

Worden added that “Greenfield Cooperative Bank is committed to giving back to the community, and we believe that supporting our local hospital is one of the best ways to do that. We are proud to be a part of this community, and we want to do our part to make it a healthier place.”

Diane Dukette, Cooley Dickinson’s chief Development officer, noted that the generosity of Greenfield Cooperative Bank will have a transformational impact as the kickoff gift for the $1 million Harold Grinspoon Foundation Challenge, which launched on Sept. 1.

Through Aug. 31, 2024, she noted, every new cash donation to Transforming Emergency Care: The Campaign for the Cooley Dickinson Emergency Department will be matched 50%, up to $1 million, by the Harold Grinspoon Charitable Foundation. “When successful, that means that we will raise up to an additional $2 million for this campaign.”

Cooley Dickinson is expected to serve 40,000 Emergency Department patients this year. That care will be provided in a 1970s-era building that was designed for 17,000 patients annually and is currently 40% undersized. A shortage of space means some patients are treated in hallways. The Emergency Department also needs to expand its services to care for an aging population (triple what it was just 10 years ago). In addition, the expansion will provide additional beds for people experiencing mental-health emergencies.

The two-year project calls for adding 6,600 square feet of space, including nine new patient rooms; eight behavioral-health beds, which can ‘flex’ as patient needs arise; and a family waiting area. In addition, a computerized tomography (CT) scanning machine, which provides timely access to diagnostic imaging, will be added to the Emergency Department.

“This campaign is critical to the health of our community,” Dukette said. “In the newly renovated Emergency Department, patients will see a nurse when they arrive, they will be treated in single patient rooms that allow for privacy, and a central nurses’ station means our clinicians can respond better to patient needs. Overall, this is about making the Emergency Department as efficient and up-to-date as possible to enable our talented providers to take the best possible care of their patients. We are so truly grateful for Greenfield Cooperative Bank for stepping forward and supporting Cooley Dickinson Hospital so generously.”

As It Marks 175 Years, MountainOne Strives to Be the Berkshires’ ‘Go-to Bank’

By
Banking and Financial Services Special Coverage

Peaking Their Interest

Bob Fraser (left) and Matt Lauro

Bob Fraser (left) and Matt Lauro

 

Bob Fraser acknowledged there’s a good deal of real estate between the Berkshires and the Bay State’s South Shore. He knows because he traverses that distance regularly.

But for the somewhat unique financial-services institution known as MountainOne, which can trace its roots back to 1848, having bank branches and other facilities on opposite ends of the state, with nothing in between, really … works.

“It has worked out well for us,” said Fraser, MountainOne’s president and CEO. “In the Berkshires, we have tended to be more of a traditional retail, community-based bank, and on the South Shore, we are much more commercially oriented. We do a lot of construction lending in and around the Greater Boston markets, and we also do commercial lending; we have a pretty strong group of commercial lenders.

“In the Berkshires, we see ourselves being able to fill a void, with a high level of expertise in commercial lending within Berkshire County and surrounding areas,” he went on, adding that this void has been created through large regionals either moving their headquarters from the Berkshires (as Berkshire Bank did) or expanding in other areas — leaving what Fraser considers opportunity for his bank in their wake.

Actually, there are many things that work for MountainOne, besides these differing focal points on either end of the state, including that aforementioned strong focus on commercial lending; the diversity of the business (there is an insurance division and an investment arm); its size — large enough to handle the needs of most businesses but small enough to provide a brand of personalized service — a strong focus on technology and how to use it to better serve customers, including a new digital platform for commercial customers to go live this month; and even the name, which doesn’t tie it to one community or one region and now has strong brand recognition in the Western Mass. region, with a mascot — actually, a ‘spokesgoat’ — named Mo.

“Being headquartered in the Berkshires, we want to be seen as the go-to bank for commercial accounts and borrowers throughout Berkshire County and the surrounding areas in Western Mass.”

MountainOne, now with roughly $1 billion in assets, will continue to maximize these various strengths and qualities and work to attain greater market share in both regions it serves, especially in the Berkshires, said Matt Lauro, senior vice president of Commercial Lending, noting that, like the rest of Western Mass. — and the state, for that matter — the region is overbanked.

But it is also, in his view, underserved to some degree.

“There aren’t enough banks that are servicing large commercial clients, or commercial clients as a whole, that are really focused in Western Massachusetts,” he said. “You do have players that are primarily focused here, but there is a void resulting from the larger regionals that have tended to pull back on lending capabilities in Western Mass., and it has left C&I clients, and larger commercial-development clients, with less service than they’ve had historically.”

Added Fraser, “being headquartered in the Berkshires, we want to be seen as the go-to bank for commercial accounts and borrowers throughout Berkshire County and the surrounding areas in Western Mass.”

Both Fraser and Lauro noted that the bank’s strong roots, diversity of services, and strong track record in the Berkshires will serve it well during what can only be described as a time of challenge and uncertainty — when it comes to the economy, banks, and the foreseeable future.

Bob Fraser

Bob Fraser says MountainOne can grow as effectively through online banking as it can through geographic expansion.

“This environment we’re in … I’ve never experienced so much uncertainty as to where we’re headed,” Fraser said. “And an environment of uncertainty makes decision making so difficult, whether it’s running a bank or running your company; it’s incredibly challenging to feel confident about what the next few years are going to look like.”

For this issue and its focus on banking and financial services, BusinessWest talked with Fraser and Lauro about MountainOne and what can and should come next for this bank as its marks an important milestone.

 

Scaling the Heights

Team members at this institution are known as colloquially as ‘mountaineers.’

And on Sept. 19, all of the MountainOne offices will close at 1 p.m. so that the mountaineers can attend a celebration for all employees marking the bank’s 175th anniversary.

There will be much to celebrate, said Fraser, listing a rich past, and a potential-laden future, for the reasons cited earlier.

The institution can trace its roots to 1848 in North Adams, when it was known as Hoosac Bank. Fast-forwarding considerably, Fraser noted that, in 2000, Hoosac Bank and Williamstown Savings Bank came together to create the holding company to be called MountainOne Financial, which became the mutual holding company for those two banks.

“If you’re a sophisticated business owner, you understand that you don’t need a branch at the end of your street; you need a relationship manager, a loan officer who is going to be at your business when you need him, to speak with him, to work with him.”

And in 2007, South Coastal Bank, headquartered on the South Shore, merged its holding company into MountainOne’s holding company, creating what Fraser, formerly president and CEO of South Coastal, believes is the first three-bank mutual holding company.

“We’ve seen a lot more of that now, but MountainOne was the first to actually do it,” he said, adding that, over time, the three banks have been merged into one entity under the Hoosac charter and rebranded as MountainOne. Additionally, Hoosac Bank had owned two insurance agencies, which were merged under the name MountainOne Insurance Agency, while the investment division was rebranded MountainOne Investments in 2013.

Today, MountainOne has some combination of bank branches, ATMs, insurance offices, and investment offices in six communities, three on each end of the state: Quincy, Rockland, and Scituate on or near the South Shore, and North Adams, Pittsfield, and Williamstown in the Berkshires.

When asked if there was future expansion under consideration in the Berkshires region — and, if so, where — Fraser said it’s possible, but what is more likely is continued commitment to advancing internet banking capabilities that allow banks to serve customers more efficiently, with less reliance on brick-and-mortar facilities.

“The world is changing,” he explained. “You don’t need as much of a physical presence in a specific geography as you did before to manage and serve a business customer’s banking needs.”

Lauro agreed.

“If the client is in the surrounding area, we are wherever the client is,” he explained. “Wherever the client is, we are happy to be there, to work with them; that has been our opportunity, and it’s a big thing for us. If you’re a sophisticated business owner, you understand that you don’t need a branch at the end of your street; you need a relationship manager, a loan officer who is going to be at your business when you need him, to speak with him, to work with him.”

Matt Lauro

Matt Lauro says the considers the Berkshires to be overbanked but its commercial customers underserved, leaving opportunity for MountainOne.
Staff Photo

And this is what MountainOne brings to the table, Fraser said, noting that, despite the ability to serve clients through the use of technology, commercial banking is a “personal relationship-oriented service,” said Fraser, noting that MountainOne boasts lending professionals like Lauro and Richard Kelly, also a senior vice president of Commercial Lending based in Pittsfield, who are focused on the region and its economic health and well-being.

“Our vision, at the end of the day, is to help ensure the economic vibrancy of the community,” he said. “And by doing that — by supporting local businesses and entrepreneurs — we’re helping to fulfill that mission.”

 

Economies of Scale

As he talked physical expansion — new branches — in other communities within the Berkshires, Fraser told BusinessWest that it would be “challenging to invest in a branch location in a market that has a declining population base and is already overbanked,” and that the bank’s strategy is, as he said, geared more toward technology.

But he noted quickly that the Berkshires has seen an uptick in population in the wake of the pandemic, with some choosing more rural areas over larger cities, as well as some demographic shifts, with more young people moving to the area, and a surge in entrepreneurship, in part because of COVID and how it prompted many to pursue long-held dreams of working for themselves.

And all of these trends are certainly positive signs for the Berkshire County market and its business community.

Indeed, as they talked about the next chapters in MountainOne’s history, Fraser and Lauro noted that, independent of what is happening with the economy, interest rates, and other factors, there are many reasons for optimism when it comes to broadening the book of business and gaining additional market share.

Some of this has to do with COVID-related population surges, demographic shifts, and that aforementioned surge in entrepreneurship, the size and scope of which are still to be determined. But much of it comes down to what the bank can bring to the table beyond what all banks can provide — money.

“Hospitality is the number-one industry, and we’ve been involved in a number of projects involving hospitality-related businesses, but we also have a number of commercial accounts that involve meaningful employers and well-known companies in the Berkshires,” Fraser said. “And I think there’s a greater opportunity for us over time to continue to expand in that market as we see younger entrepreneurs establishing roots in the Berkshires. Businesses may be looking for an entity that is based in the Berkshires, is local, and obviously has a commitment to the region; we’ve been here since 1848.

“Being a mutual organization, we can look a little bit longer-term strategically than if we were a stock-owned company,” he went on. “It’s just a different business; we can be patient and look beyond the next quarter or two quarters — we have that luxury.”

Elaborating, he said MountainOne has experienced lenders who understand business and what it takes to succeed and can step into the role of adviser as well as banker.

“We’re not just a vendor that is providing you a product, which is the loan,” he told BusinessWest. “We’re also a resource. It’s a relationship, and it’s probably the most unique relationship a business will have. Anyone can sell you something — we’re the only relationship where we have to get what we sold you back.

“Another aspect of it is that we really enjoy this part of the business — it’s in our DNA,” he went on. “We love being with our customers, and we love understanding their businesses. We love talking about what we know, what we’re thinking about, and sharing those ideas.”

 

Mo-mentum

As for Mo the mountain goat, he’s the perfect spokesperson for the bank, as detailed in a bio on its website. “Goats are tough,” it reads. “They turn challenges into opportunities every day, and even in the most demanding, unforgiving environments, goats know how to adapt and thrive.”

MountainOne has done a lot of that over the past 175 years, and that collective work has put it in a position where it can turn challenge into opportunity and scale new heights — in all kinds of ways.

Corporate Transparency Act Generates New Requirements

By Contributor
Banking and Financial Services

Roadmap for Reporting

By Jennifer Sharrow, Esq.

 

Businesses, get ready. The federal government is implementing new reporting requirements that will bring even the smallest businesses under the purview of the U.S. Department of Treasury. All entities registered with a secretary of state are now required to make mandatory reports which require specific and detailed information, and a failure to file these reports can result in serious penalties.

Jennifer Sharrow

Jennifer Sharrow

This new reporting system is like nothing that has ever been required for the majority of businesses, either locally or elsewhere in the country, but the passing of the Corporate Transparency Act (CTA) represents a fundamental change to the information that must be provided to the federal government by small businesses and single-purpose limited liability companies and corporations.

The Corporate Transparency Act was passed in 2021 as part of a suite of efforts from the federal government to crack down on money laundering across various parts of the economy. The CTA specifically targets efforts to hide monies under the guise of complicated corporate entity structuring. Whereas these entities previously enjoyed a significant amount of privacy regarding matters of ownership, under the CTA, these entities will now be required to disclose detailed, personal information about their beneficial ownership.

Every small-business owner, and every business that assists in the formation and annual reporting requirements of the business, needs to know about this new reporting requirement, as non-compliance can result in substantial penalties of $500 a day up to $10,000, and up to two years in jail.

 

Who Needs to File?

While certain exemptions are available within the statute, in general, any corporation, limited-liability company, or any similar entity formed by a filing with the secretary of state needs to file reports with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement applies to most small businesses, fund-manager entities, and real-estate holding companies.

Additionally, FinCEN is gathering information on what is described in the CTA as the ‘company applicant’ — the person or organization who actually files the paperwork on behalf of the entity. For law firms, where formation documents are generally filed by a paralegal, FinCEN will require information on both the paralegal and their supervising attorney. For other service companies, this will be information on the specific person filing the organizational paperwork.

“This new reporting system is like nothing that has ever been required for the majority of businesses, either locally or elsewhere in the country.”

There are 23 exemptions from the CTA reporting requirements. Most exemptions are for entities that are already subject to considerable federal or state regulation. Examples of exempt entities include publicly traded companies and other entities that file reports with the SEC, tax-exempt entities, banks, credit unions, money-services businesses, insurance companies, securities brokers and dealers, state-licensed insurance producers, public utilities, and accounting firms.

There is also an exemption for what’s called a ‘large operating company,’ which is an entity that employs more than 20 full-time employees in the U.S., has an operating presence at a physical office within the U.S., and has filed a federal income-tax or information return in the U.S. for the previous year with more than $5 million in gross receipts or sales.

 

What Is Being Reported?

• Entity information. This includes full legal name, ‘doing business as’ name, principal office address, jurisdiction of formation, and IRS employer identification number.

• Beneficial owner information. A ‘beneficial owner’ is anyone who owns more than 25% of the entity and anyone who exercises ‘substantial control’ over the entity’ such as directors, LLC managers, and certain trustees. The entity will need to provide, for each beneficial owner, their full legal name, date of birth, current residential address, governmental identification information from a passport or driver’s license, and a copy of that identification document.

• Company applicant information. For new entities formed after Jan. 1, 2024, the entity will need to provide essentially the same information on the appropriate company applicant individuals as they provide for the beneficial owners.

 

When Are the Reports Due?

There are two timelines, one for existing businesses formed prior to Jan. 1, 2024, and one for those new businesses formed after the start of the new year. The existing businesses have until Jan. 1, 2025 to submit their initial reports. New businesses will have to file their initial reports to FinCEN within 30 calendar days of their initial formation. Additionally, whenever there is a change in beneficial ownership or a change to the information of a beneficial owner, the entity will have 30 days from that change to file an updated report.

 

Where Is This Information Being Kept?

The disclosures will be made to a centralized federal database under FinCEN. These reports will not be accessible to the general public, but will solely be used by law-enforcement agencies, government regulators of financial institutions, the Treasury Department, and certain foreign authorities requesting information through federal agencies.

 

How Should You Prepare Now?

Entities should first consult with an attorney to understand whether they qualify for an exemption or whether the CTA will require them to submit reports to FinCEN. Then, the owners and managers should decide when they want to file their initial disclosure and begin the process of gathering the required reporting information.

Finally, it is highly recommended that they implement a system to keep the reporting information accurate and up to date, so they know when updated reports need to be filed. The reporting companies should communicate with their clients to assist in filing these new reports and to have their own information ready and available to disclose to FinCEN.

 

Jennifer Sharrow is an associate at Bacon Wilson and a member of the firm’s business and corporate department, specializing in business matters, financing, and commercial real-estate transactions.

Banks Fight Upstream from Domino Effect of Higher Interest Rates

By
Banking and Financial Services Community Spotlight Special Coverage

An Uphill Climb

Dan Moriarty was among the participants in the recent IRONMAN competition that wound its way through many Western Mass. communities.

The president and CEO of Monson Savings bank, Moriarty is also an avid biker, and decided to take things up a notch — or two, or three — with the IRONMAN, which featured a mile swim, downstream, in the Connecticut River; a 56-mile bike trek; and a half-marathon (13 miles and change).

Moriarty said his time — and he doesn’t like to talk about time — was roughly seven hours, and joked that that he believes he met what was his primary goal: “I wanted to come in first among all the local bank presidents.”

As things are turning out, the IRONMAN isn’t the only test of endurance he will face this year and next (yes, he’s already scheduled to take part again in 2024). He and all other banking leaders are facing another stern challenge, and where they finish on this one … well, there are several factors that will ultimately determine that, as we’ll see.

Indeed, the past year or so has been a long, mostly uphill, upstream stretch for banks, which are being severely tested by unprecedented interest rates hikes implemented by the Fed, which have a domino effect on banks — and their customers. For banks, these moves are squeezing margins that were already tight, with some margins off 50 basis points or more from last year. And for public banks, their stocks have, for the most part, been hammered.

This domino effect involves everything from the huge increase in interest paid to customers on their deposits to the manner in which those interest-rate hikes have brought the home-mortgage business to a virtual standstill.

To quantify that increase in interest paid to consumers, Tom Senecal, president and CEO of PeoplesBank, recalled a quote he read from the president of a large national bank that put things in their proper perspective.

“I won’t even call this a short-term problem anymore when it comes to profitability. It’s a medium-term problem that we’re all having to adjust to.”

“He said, ‘my raw-material costs have increased 600%,’” Senecal noted. “His raw materials are the funding for deposits for his wholesale assets, which have literally gone up 600%. If you look at any business and their profit margins — our raw materials have gone up 600%, so that squeezes our margins.”

Meanwhile, with interest rates more than double what they were a year or so ago, the refi market has obviously disappeared, said Kevin O’Connor, executive vice president of Westfield Bank, adding that, with home sales, those who might be thinking about trading up wouldn’t want to trade a 2% or 3% mortgage for one closer to 7% mortgage, so they’re taking what could be called a pause.

As is the Fed, which is taking a close look at the impact of its interest-rate hikes before deciding what to do next, although most experts expect at least one more rate hike this year.

And that will keep banks on this current treadmill, said Jeff Sullivan, president and CEO of Springfield-based New Valley Bank, adding that, while there has been talk that rates might start coming down this year, that likely won’t happen until at least early next year.

By then, the country may well be in recession, adding new levels of intrigue, said Moriarty, noting that the yield curve is currently inverted, a historically accurate predictor of recession.

“We’re going to eventually get into a recession in the third or fourth quarter of this year,” he said. “We were anticipating it might happen a little earlier with hopes that the Fed would have cut rates before of 2023, but now, we’re guessing that interest rates are going to be elevated another year out until they start cutting.”

Tom Senecal

Tom Senecal says unprecedented interest-rate hikes have put a great deal of pressure on banks large and small.

Overall, banks’ fortunes are tied, ironically enough, to how well the economy is doing, and they are in the unusual position of hoping that things cool off a little, said O’Connor, adding that, like the Fed itself, banks don’t want to see efforts to curb inflation throw the economy into reverse.

The biggest question, among many others, concerns when the pendulum might start swinging in the other direction and things will improve for banks. There is no consensus there — not with the economy still doing well, a presidential election looming in 2024, and other factors.

But the general feeling is that the uphill portion of this trek won’t be over soon.

“I won’t even call this a short-term problem anymore when it comes to profitability,” Sullivan said. “It’s a medium-term problem that we’re all having to adjust to.”

Moriarty agreed, noting that, while the first two quarters of 2023 has been a difficult year for most banks, the rest of this year and 2024 might be an even more of an uphill climb.

 

Points of Interest

Senecal told BusinessWest that, as he was heading home for the first weekend in March, he planned to take a break from his phone and spend a few days unplugged.

And he did … until news broke that Silicon Valley Bank (SVB) in California had failed after a bank run on its deposits.

So he started looking at his phone again. And he kept looking at it.

“The weekend that SVB failed, the four largest banks in the country took in roughly $140 billion in new deposits, and community banks, in general, lost $130 million in deposits. There was a huge move to larger institutions out of fear.”

Indeed, there were many discussions with other leaders of the bank about how to communicate with customers and convince them that their deposits were safe.

“That whole weekend, myself and our commercial team and our retail people were on the phone explaining what was going on, answering their questions, and putting their minds at ease,” he recalled. “And I talked to a number of my competitors, and they were doing the same thing.”

Such discussions were necessary, he said, because even though those deposits were becoming far more burdensome, cost-wise, as he noted earlier, all banks need them to have the money to grow their loans, and consumers were getting skittish.

Jeff Sullivan

Despite the interest-rate hikes, the economy is still humming in many respects, Jeff Sullivan says, meaning the Fed may still have some work to do to slow it down.

“The weekend that SVB failed, the four largest banks in the country took in roughly $140 billion in new deposits, and community banks, in general, lost $130 million in deposits,” he said, citing a combination of concern fueled by social media and the ease with which consumers can now move money electronically as the dominant causes. “There was a huge move to larger institutions out of fear.”

Overall, there was less fallout in this region, said O’Connor, another of those banking leaders who was the phone to customers assuring them that their assets were safe, adding that the failure of SVB and a few other banks this spring, and the resulting fallout from depositors, were just one of the many speedbumps encountered by banks in 2023.

Indeed, this was a year the industry knew would be challenging — or more challenging — going in, especially with regard to rising interest rates. Just not this challenging.

“Just a year ago, rates were quite low, and everyone thought rates were going up a point and a half, maybe 2%, something in that ballpark — that was the consensus prior to August of last year, when Chairman [Jerome] Powell said, ‘no, we’re really going to stomp on the brakes,’” Sullivan said. “Up to that point, we thought that rates would go up slightly, and we were modeling our projections on that; I don’t think there’s anyone who projected that rates would go up 5% in seven months — that’s unprecedented territory, and that’s what is causing the squeeze.”

O’Connor agreed. A year or so, banks were paying maybe a half-percent interest on deposits, he recalled, adding that most new CD products being advertised are featuring rates in the 4.5% to 4.9% range on the higher end, while rates on money-market accounts are coming up as well, numbers that reflect both the need to garner new deposits and growing competion for those assets.

“You have competition from other banks, internet-only banks, the security brokers — everyone is clamoring for those deposits,” O’Connor said. “And that certainly puts pressure on all banks, including community banks.”

Institutions are adjusting to this landscape, said those we spoke with, but it’s going to take some time to fully adjust because the rate hikes came so quickly and profoundly.

And such adjustments take several forms, they said, including efforts to trade fixed-rate assets for variable-rate assets, initiatives that take time and come with their own set of risks — indeed, rates could, that’s could, go down quickly.

Dan Moriarty

Dan Moriarty says many ominous signs point toward a recession, which could bring more challenges for banks and their customers.

On the mortgage side of the equation, there aren’t many options. Senecal said PeoplesBank has been working to acquire mortgages written in areas that are still relatively hot, such as Cape Cod. Meanwhile, O’Connor said Westfield Bank and institutions like it are pushing home-equity loans, and there is a good market for them as homeowners look to take that equity and put it back into their homes or make other large purchases.

“It certainly doesn’t make up for what we’re losing in mortgages and refis, but it does help,” O’Connor said. “We’re seeing a lot of interest in home-equity loans.”

 

No Margin for Error

While banks cope with the present, there is just as much discussion, if not more, concerning what will happen next and when conditions will improve for this sector.

And most of that discussion obviously involves the Fed and what will happen with interest rates, because it’s these rates that determine what happens with all those dominoes.

There is some general uncertainty about what the Fed will do, said those we spoke with, because the jury is still out, in some respects and at least in some quarters, on whether it has accomplished its mission when it comes to slowing down the economy and curbing inflation. This uncertainty led to intense discussion at the most recent Fed board meeting, Senecal said.

“There are two schools of thought on this. One is, ‘let’s wait and see what our rate increases are doing to the economy, because it’s like steering a battleship — it doesn’t happen right away,’” he told BusinessWest. “So the Fed took this pause trying to gauge what happened, and what happened? Inflation came down little bit; it was up to 6 or 7%, and now it’s 3.5% or 4%. But their goal is to get it to 2%. So do they continue to raise rates and wait to pause, or do they raise and do a long pause to see if inflation comes down to their target level of 2%?”

“I don’t think there’s anyone who projected that rates would go up 5% in seven months — that’s unprecedented territory, and that’s what is causing the squeeze.”

While inflation slowed in June — the consumer price index rose 0.2% last month and was up 3% from a year ago, the lowest level since March 2021 — core inflation is still running well above the Fed’s 2% target. And Moriarty is among those saying there is ample evidence that the Fed still has work to do to slow the economy and further decrease inflation.

“Employment numbers are surging, and that’s an indication the economy is still moving fast and hot,” he said. “My uneducated crystal ball is telling me we might see a few more interest-rate moves, which means it’s going to be more difficult for the economy to continue on this path.”

Many are saying that the probable course will be another rate increase and then that pause, he went on, adding that there is more conjecture about what will then happen. Will rates stay where they are, or will they start to come down and perhaps reverse the trends seen over the past year or so?

Kevin O’Connor

Kevin O’Connor says rising interest rates have slowed the mortgage business — and destroyed the refi business.

“The consensus is that the economy is starting to slow down — not quickly, but it’s starting to slow down — and that rate cuts will probably start to happen in 2024 because inflation and economic growth both show signs of slowing down,” Sullivan said. “When that happens, we can start to price the deposit costs down.

“We’re probably not going back to where we were before,” he went on, meaning rates near zero. “We’re going back to normal, or what could be a new normal — deposit rates in the 3% range. They’re not going to be zero, and they’re not going to be 5%; they’re probably going to be somewhere in the middle once all this settles out.”

When things will settle down is another question that is difficult to answer because the economy is still chugging along, and, with the notable exception of the mortgage market, consumers are still borrowing money.

“Borrowers have gotten used to paying loan rates in the 6s and 7s — they’re not happy about it, but it doesn’t seem to be stopping anyone’s appetite for acquiring assets and borrowing money,” Sullivan said. “There’s still plenty of business out there, and that would support what Powell has been saying — that they haven’t really slowed the economy yet; in fact, it’s pretty darned good. We’re taking applications every day, and we’re writing loans every day; we’re running our business as usual.”

 

Taking Account

Well … not quite usual at most institutions, especially with regard to mortgages and refis, a huge part of the success formula for the region’s community banks and credit unions.

In this environment, O’Connor said, Westfield Bank and institutions like it are putting even more emphasis on customer service, attracting new customers and retaining existing customers.

“We have to make sure that we’re the bank of choice and remain that,” he said. “We work hard at the commercial relationships, the consumer relationships … our branch teams, our cash-management teams, our lenders, everyone is out there being very available to our customers and working hard to attract new customers from other banks.”

Banks are always working hard on attracting and retaining customers, he said in conclusion, but this year, and in this climate, there is even more emphasis on such initiatives.

It’s all part of a broad response to something that is a little more than your typical economic cycle. It’s somewhat unprecedented, in fact … and certainly a long, uphill climb for most banks.

 

Despite Deposit, Rate Challenges, Banks Remain on Solid Footing

By Contributor
Banking and Financial Services

Checks and Balances

 

By Mark Morris

About a year into the pandemic, banks found themselves in a strange position.

When the federal government pumped stimulus and Paycheck Protection Program (PPP) money into the economy to help consumers and businesses regain their footing, it created an unprecedented glut of deposits.

In normal times, banks would have celebrated the excess in the form of making more loans — and generating more revenue — but these were different times. Consumers and businesses kept their money in banks to take advantage of FDIC protection while they figured out their next moves.

Despite record-low interest rates, uncertainty from the pandemic also resulted in reduced loan activity. When deposits sit idle, banks don’t generate revenue — or profits. As one executive noted at the time, all these deposits became a burden, a concept that went against everything they were taught about banking.

Another executive said simply, “back then, cash was a four-letter word.”

“There’s a rate battle these days because, with higher interest rates, we have to offer more generous rates on CDs to keep deposits here and attract new funds.”

Mary McGovern

Mary McGovern

Things began to change by the third and fourth quarter of last year as excess deposits began flowing out. Some people withdrew money to pay for increases in daily living expenses, while other depositors sought to move their money into financial products that pay higher rates than banks.

As a result, what was once a problem of too much liquidity became a matter of banks competing for deposits.

“There’s a rate battle these days because, with higher interest rates, we have to offer more generous rates on CDs to keep deposits here and attract new funds,” said Mary McGovern, executive vice president and chief financial and operating officer for Country Bank.

Jeff Sullivan, president and CEO of New Valley Bank, added that, with excess liquidity a thing of the past, his staff is working harder to bring in deposits because demand for loans remains strong for his four-year-old institution.

“If we can raise new deposits, we can keep generating new loans and keep growing our franchise,” he noted.

These forces have been compounded by recent events in the banking world, which was rocked in March when Silicon Valley Bank (SVB) failed and was shut down by the state of California. News like that can create panic in bank customers everywhere. The bankers BusinessWest spoke with all said they communicated with their respective customers early and often to allay any fears.

“When I saw the news about Silicon Valley Bank, I sent emails and text blasts to our members to let them know everything was safe, secure, and that we are well-capitalized,” said Michael Ostrowski, president and CEO of Arrha Credit Union. He also credited the Massachusetts Division of Banks for calling every institution to make sure there were no problems.

Sullivan agreed the industry did a good job preventing a bigger problem.

“We certainly made phone calls with our customers and communicated as much as we could,” he said. “As a result, we did not see any outflows caused by people worried about the system.”

Dan Moriarty, president and CEO of Monson Savings Bank, said the deposit spend-down, along with higher interest rates for loans, particularly mortgages, have caused a paradigm shift.

“If we can raise new deposits, we can keep generating new loans and keep growing our franchise.”

Jeff Sullivan

Jeff Sullivan

“Most banks have seen a drop in their residential mortgage business due to higher interest rates, low inventory of available houses, and the high cost of houses,” he explained. “So we are seeing a couple different forces at play, and that’s a dramatic change compared even to last year.”

For this issue and its focus on banking and financial services, BusinessWest looks at these colliding forces and how they are impacting local banks — or not, as the case may be.

 

Points of Interest

The foundation of the banking system has long been the Federal Deposit Insurance Corporation (FDIC), which insures accounts up to $250,000, an amount that provides sufficient protection for most people. McGovern noted that, in today’s banking world, people with higher assets don’t usually keep their money in one place.

There are situations, however, when FDIC coverage isn’t enough for an account. For example, a small business that keeps its payroll in a savings bank or a consumer who has sold a house or other large transaction can exceed the FDIC limit.

To address those needs, Country Bank and Monson Savings Bank are two of 78 savings banks in Massachusetts that take part in the Depositors Insurance Fund. The DIF is supplemental insurance to protect deposited amounts that exceed $250,000. McGovern and Moriarty said having the extra protection of the DIF gives everyone peace of mind.

“We made sure to educate our customers that all the deposits in Country Bank, even the ones over $250,000, are safe and insured,” McGovern said.

“Because Monson Savings has both FDIC and DIF, it calmed a lot of nerves during the weekend when Silicon Valley Bank failed,” Moriarty added. “We had conversations with some of our customers, but their concerns quickly subsided.”

Having conversations with clients and explaining acronyms like FDIC and DIF has become a somewhat unexpected addition to the workload for area banks, which have been placed in a situation of explaining what has happened at SVB and other institutions, and why the fallout has not extended to the smaller community banks populating this market.

Indeed, those we spoke with pointed out that Silicon Valley Bank’s troubles stemmed from mismanagement and went against the norms of good banking practices. “By contrast, the bankers in our area do things the right way, and the regulators do a good job, too,” Ostrowski said.

Silicon Valley Bank also had a handful of customers with billions of dollars in deposits. Money movements by these few contributed to destabilizing the bank. When Silicon Valley failed, it provided an opportunity for McGovern to reassure Country Bank customers.

“We explained that we have $1.3 billion in deposits, and we are in sound financial condition,” she said. “We have a diversified depository clientele, so there was no risk of large outflows of the kind Silicon Valley experienced.”

“We are seeing a couple different forces at play, and that’s a dramatic change compared even to last year.”

Dan Moriarty

Dan Moriarty

While local bankers remain mostly unscathed by these highly publicized events, they are keeping their focus on raising deposits and managing the fallout from increases in interest rates.

Ostrowski noted that first-time homebuyers face perhaps the sternest challenge because housing prices are at an all-time high and interest rates are higher than they’ve been in recent years.

“Young people buying their first home have never experienced anything but very low interest rates,” he said, adding that today’s mortgage rates of 6% to 7% aren’t exceedingly high, but when combined with high housing prices, they can keep buyers on the sidelines.

Still, while loan volume might be down, mortgage activity continues.

“People are still moving and buying houses,” McGovern said. “Many are taking out adjustable mortgages thinking that rates may adjust down.”

In recent years, many homeowners refinanced their mortgages to take advantage of the low interest rates. Sullivan pointed out there’s no incentive for people to pursue refinancing today. “The folks who refinanced at 3% a few years ago are obviously not looking to do it again at today’s rates.”

 

By All Accounts

Even with the challenges they face, the bankers we spoke with remain optimistic. Interest rates have begun to stabilize and, in some cases, go down.

“We may find that the crisis at Silicon Valley and the other banks may have caused a credit pullback and stabilized the market without the federal government having to raise interest rates,” McGovern said.

Sullivan predicted there may be smaller bumps in the road, but nothing of the magnitude of SVB in the near future.

While the remainder of the year looks slow and steady on the retail side at Monson Savings, Moriarty believes there may be better news on the commercial side of his business.

“We’ve been hearing that some areas of manufacturing are still robust,” he said. “There could be opportunities for us if a manufacturer decides to expand or purchase some new machinery.”

Despite all the challenges local bankers have seen, they are moving forward in a strong position.

“The system is working correctly, just as it was designed,” Ostrowski said. “That’s important to hear because people need to have trust in our financial system. The good news is, it’s not going anywhere.”

Is a Recession Inevitable?

By Contributor
Banking and Financial Services

And If There Is One, How Will It Affect You?

By Barbara Trombley, CPA

 

It seems as if we have been waiting for a recession for quite a while now. Economists initially thought 2022 would bring a recession. Certainly, it seemed as if a recession was inevitable as the stock market (S&P 500) dropped more than 19% in 2022.

But, by definition, a recession never occurred. Many people think that two consecutive quarters of negative GDP define a recession. Technically, this is not true. The National Bureau of Economic Research considers a wide range of economic indicators when declaring a recession rather than only negative GDP. It defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts for more than a few months.”

Warning signals often precede a recession. The U.S. economy has slowed from January through March of this year to just a 1.1% annual pace. Business inventories have reduced; companies usually slash inventories when they anticipate a downturn. Employment also declines before a recession. I would argue that we have started to see this decline with the large layoffs in the tech industry by companies such as Meta, Google, Microsoft, and Amazon. Higher interest rates have slowed housing sales, and rents are stabilizing. Compounding these economic signs is the debt-ceiling debate; House Republicans say they will raise the debt limit in exchange for sharp reductions in spending.

“The Fed is walking a tightrope of slowing inflation and trying to prevent further damage to our economy.”

Barbara Trombley

Barbara Trombley

These signs, which we all can see, may just be the tip of the iceberg.

The actions of the Fed in the coming months may dictate the strength of the potential recession that we are facing. As we all now know, the U.S. has been experiencing critical inflation mainly because of the easy money that was distributed during the pandemic and the pent-up demand for consumer goods and travel after COVID.

The only way for the Fed to combat inflation has been to raise interest rates, making it more expensive for businesses and consumers to borrow money, thereby slowing the economy and lowering inflation. Unfortunately, inflation has been stubborn and has not decreased as quickly as the Fed would like. The quick rise in interest rates contributed to the bank failures that we have seen recently. The Fed is walking a tightrope of slowing inflation and trying to prevent further damage to our economy.

The main questions that people need to ask is how a recession may impact them and how to prepare. Unfortunately, many people lose jobs during recessions.

‘Recession-proof industries’ typically are unharmed. The medical field, education, and government jobs may be unaffected by a recession. If you do worry about the future of your job, have you saved emergency money to live on for a while? Can you network in your industry to see what other positions may be available if the worst-case scenario occurs and you lose your job?

How about your bank? Is it possible that it collapses as others have? Most people are aware that the FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit-insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. If you are still nervous, utilize the services of two or more banks.

“Credit is also reduced during recessions. Banks may be choosier about whom they loan to as unemployment rises. If you need a loan, be prepared to be scrutinized and pay a higher interest rate.”

Credit is also reduced during recessions. Banks may be choosier about whom they loan to as unemployment rises. If you need a loan, be prepared to be scrutinized and pay a higher interest rate. Tight lending leads to consumers putting off larger purchases, compounding the depth of the recession, as spending slows.

Many retirees worry about a recession and the impact of the stock market on their portfolios. A deep recession could mean a drastic drawdown in stock prices. Making knee-jerk reactions to economic situations never bodes well for the long term. It is impossible to time the market. Most retirees know that they need to stay invested to grow their assets to mitigate inflation. Having a conversation with your advisor to make sure that you are properly allocated to your risk tolerance is a good way to start. If you find yourself overly concerned, perhaps a portfolio adjustment is due. A proper allocation to bonds or ‘like’ investments is always a good idea in volatile times.

From political turmoil to world events, it is easy for investors and consumers to feel concerned. Stress and recession go hand in hand. Know that you can only control your own personal situation. Reassess your budget, evaluate your employment, and review your investments.

Historically, there have been many terrible things the world has endured. People still have money and plan for the future. The markets still function. Recessions are an unavoidable part of life, but are a precursor to an eventual healthy economy.

 

Barbara Trombley is a financial planner with Wilbraham-based Trombley Associates Investment and Retirement Planning. Securities offered through LPL Financial. Member FINRA/SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity from LPL Financial. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Meyers Brothers Kalicka Celebrates 75 Years of Change — and What Hasn’t Changed

By
The five partners at Meyers Brothers Kalicka
Banking and Financial Services Special Coverage

Marking a Milestone

The five partners at Meyers Brothers Kalicka

The five partners at Meyers Brothers Kalicka: from left, Jim Krupienski, Kristi Reale, Howard Cheney, Rudy D’Agostino, and Kristina Drzal Houghton.

It’s called the ‘Founders Room.’

This is a small conference room at Holyoke-based Meyers Brothers Kalicka featuring a table that can comfortably seat six or seven people, which makes it a popular spot for smaller meetings and an attractive alternative to the cavernous main conference room, which can host more than 40.

There are a few other gathering spots at this accounting firm, but this one is unique because it pays homage to those who were there at the beginning — and in the decades that followed — for both Meyers Brothers and Joseph Kalicka and Co., two accounting firms that started the same year, 1948, and came together in a consequential merger in 2004 that created the firm known to most by the letters MBK.

The Founders Room takes on a little more importance this year as the firm celebrates a milestone — its 75th anniversary. As it does so, it looks back at the important work of the three Meyers brothers who went into business together — Ben, Raymond, and Maurice (there’s a photo of them on the wall in the Founders Room) — and Joseph Kalicka, founder of the firm that took his name (there’s a photo of him with former Massachusetts Gov. Michael Dukakis).

But the present and the future are the dominant topics of conversation on this occasion, and there was much to discuss as we gathered thoughts from the five partners now setting a course for the firm — Howard Cheney, Rudy D’Agostino, Kristina Drzal Houghton, James Krupienski, and Kristi Reale — as well as David Kalicka, partner emeritus.

Collectively, they said the tenets put in place by the founders of both firms in 1948 — everything from a laser focus on customer service to a tradition of innovation and an emphasis on anticipating what the future might bring (and being ready for it) — are still serving MBK well as it copes with an onslaught of change coming from every direction.

“I’ve always felt that the strength of our firm is the people here. It’s a collaborative effort. People work really well together; we’ve got a lot of smart people who work hard. From the top down and the bottom up, everybody works as a team.”

This change involves everything from technology and how it is used to better serve both the company and its clients to creating a workplace that recognizes emerging needs and enables several generations of employees to work effectively — work that was in some ways impacted by, and accelerated by, the pandemic and the many ways in which it impacted the workplace.

For this issue and its focus on banking and financial services, BusinessWest talked with MBK’s partners about the past 75 years, but mostly about what will come next — for both the firm and the industry.

 

Addition by … Addition

It was in early 2003 that talks began about merging Meyers Brothers and Joseph Kalicka and Co., two firms that were in ‘friendly competition’ — a phrase heard early and often — for more than a half-century and had a lot of things in common.

Looking back on those days, Drzal Houghton, who joined Meyers Brothers in 1995, said that, while the firms were operating in many of the same spaces, or sectors of the business community, they had different niches. Also, Meyers Brothers had a benefits-consulting business as well as a wealth-management business. So a merger made sense on many levels.

“Both firms had a lot of clients in the medical field, but Meyers Brothers had a lot of clients in the nonprofit industry, so there was a lot of summer work,” she explained. “Whereas, Joseph Kalicka and Co. didn’t have as much summer work, so that was a good fit. Meanwhile, Joseph Kalicka and Co. had a lot of work in the construction and real-estate industries, so it was just clear that we would be stronger together.”

Kalicka agreed. “We decided that it had been 50 years since we’ve been competing against each other and we’d both do better if we merged,” he explained. “It’s worked great; it’s helped us to survive different challenges. We’ve been around for a long time and have been approached by several bigger firms to merge and have turned them down.”

D’Agostino, who joined the Kalicka firm in 1995, noted that there were several young partners with that firm at the time, a core of leadership that appealed to those at Meyers Brothers and made a merger even more attractive.

“The opportunity to make the firm stronger, work on some bigger accounts, and have a good nucleus of young partners — those were all driving forces in the merger,” he noted. “And the culture was very similar.”

The firm that emerged from that merger is now the largest accounting firm based in Western Mass., with more than 60 employees. And that size brings with it several advantages, said the partners, including the ability to attract young talent, a challenge that has only grown in size and scope in recent years as competition for talent grows and the need for young leaders to replace retiring Baby Boomers increases.

MBK serves individuals, privately held businesses, family and independent businesses, and not-for-profit organizations in Western Mass. and well beyond. Services include taxation, accounting, auditing, and business-advisory work. The client list is deep and diverse, and it reflects the many business sectors served and the niches the company has developed. That client list includes Peter Pan Bus Lines, the Springfield Thunderbirds, the construction firm Fontaine Bros., the nonprofit agencies Square One and Mental Health Assoc., and small to mid-sized businesses such as New England Dermatology and Tyler Equipment Corp.

Partners Kristi Reale and Jim Krupienski

Partners Kristi Reale and Jim Krupienski, seen here in MBK’s Founders Room, say the firm has priorities for the future, but especially the need to develop the next generation of leadership.

As they talked about what makes MBK different, and successful, the partners used different words and phrases, but essentially said it comes to down to people — those at all levels of the organization.

“I’ve always felt that the strength of our firm is the people here,” Cheney said. “It’s a collaborative effort. People work really well together; we’ve got a lot of smart people who work hard. From the top down and the bottom up, everybody works as a team.”

Drzal Houghton agreed. “We believe here that it’s family first,” she said. “Our clients think of us as family, and I think it’s just that whole feeling … the clients feel it, the employees feel it. And it really makes us different — we care about every member of our team and every client, like family.”

As they look ahead, the partners again spoke with one voice as they talked about the priorities moving forward and what will be needed for this firm to thrive for another 75 years.

Remaining an independent firm at a time when mergers remain the order of the day and the partners field calls from private-equity firms about acquisition on a regular basis is an important goal — and also a major challenge, said those we spoke with.

“We’d like to remain independent; it’s a tough fight to stay independent, but it’s worth it because it benefits the clients,” D’Agostino said. “We make the decisions here, the philosophy that the client comes first — we can keep that. We all have to follow the same regulations, but we like to make sure we are doing things responsibly and really know our clients.”

Drzal Houghton agreed. “We definitely want to stay independent,” she said. “In the industry, there have been a lot of mergers; a lot of private equity is trying to buy firms, but we have worked very hard to be independent, and we want to give that opportunity to our rising stars.”

 

Crunching the Numbers

MBK’s partners told BusinessWest that, years ago, the firm’s leadership team would conduct an annual two-day retreat to discuss matters and set in place a strategic plan for the future.

Now, they stage four- to five-hour strategy sessions every six to seven weeks. The shorter, more frequent sessions are ultimately more productive — people are tired and less effective at the end of the second day of a retreat, they noted — and follow-up and accountability are more manageable. Meanwhile, change is coming at such a constant and profound rate that more frequent strategy meetings with shorter agendas are certainly necessary.

“We’re maintaining the momentum and holding ourselves more accountable,” said Krupienski, adding that items for discussion include everything from staffing to succession planning; from IT conversions to client services and client development.

Staffing is certainly a common agenda item, and there are layers to this issue, said those we spoke with, adding that these include everything from attracting and retaining talent to creating policies for remote work.

“We definitely want to stay independent. In the industry, there have been a lot of mergers; a lot of private equity is trying to buy firms, but we have worked very hard to be independent, and we want to give that opportunity to our rising stars.”

“A major issue with all businesses, and especially accounting firms, over the past few years has been staffing — staff costs, recruiting staff, and maintaining staff have all been significant concerns within this industry,” said D’Agostino, adding that there are some issues unique to the accounting sector, such as the compression of work during tax season and a reluctance on the part of many younger workers to “want to work the kinds of hours the previous generations have.”

“So we need to adapt to that,” he said, adding quickly that this is one of the many reasons why firms need to embrace technology — especially the technology that can handle some of the more mundane accounting tasks and thus enable professionals in the industry to focus more on consulting and advising clients.

“A lot of the bigger firms are embracing artificial intelligence,” said Reale. “We’re not there yet, but we should look at it and determine if there is anything that AI can help us with.”

Elaborating, she said that, while there is concern in some sectors about AI and its potential for eliminating jobs by doing work that humans can do (see related story on page 32), forward-looking accounting firms need to focus on its potential to create efficiencies and free up professionals to serve clients in different ways.

“AI is not going to be able to have meaningful discussions with a client and help grow its business,” she explained, adding that, increasingly, clients are looking for such consulting services — everything from contracts to mergers and acquisitions — from their accounting firm.

To provide these services effectively, firms need a pipeline of talent, said the partners we spoke with, adding that maintaining such a pipeline has become more difficult in recent years, and for a number of reasons, some of them amplified by the pandemic.

Indeed, Krupienski noted that, years ago, local and regional firms might have had a leg up when it came to the graduates of local colleges and their accounting programs, but now, those same individuals are fielding offers from firms on the other side of the country offering remote work opportunities at wages higher than those traditionally offered in Western Mass.

And that’s one of many challenges this firm and others in the region face as they try to recruit and maintain talent, said D’Agostino, adding that the firm generally likes to hire people with three to five years of experience, but there are simply fewer people with that background available to hire in this market.

Thus, the firm is hiring more individuals out of college, training them, and hoping to hang on to them when they have that three to five years of experience.

 

Then and Now

As they talked about what’s changed in the industry and for this firm, and what hasn’t, the partners we spoke with started with the later.

And Krupienski offered the obligatory “death and taxes.”

That was his way of saying that many of the services — basic and complex — have remained the same over the past 75 years. How they are provided, and sometimes when … well, that’s a different story.

This firm has been essentially paperless for years, said Reale, noting also that the phone has been replaced by email, which has, to a large degree, been replaced by the text, which can come at all hours of the day or night. And, for the most part, it needs to be answered soon after it’s received.

The midnight or 5 a.m. text comprises just one of the many changes that have taken place within the industry, said the partners, adding that many significant changes have also come in the workplace.

Elaborating, they said the younger generations now dominating workplaces like MBK have different needs and priorities than those that preceded them, and firms that want to be successful must acknowledge this and respond accordingly.

And flexible schedules are just part of the equation, said D’Agostino, adding that these generations place a premium on work-life balance and how to achieve that balance.

As an example, he recalled a few younger team members departing at 5:15 p.m. during the height of tax season to go to spinning class, something those in his generation wouldn’t think about doing.

But beyond a need to go to the gym when they need to go the gym, these generations want different things from their work, and they want them more quickly than previous generations, he went on.

“They want diversity in their work situation,” D’Agostino said. “They don’t want to just do a tax return; they want to do consulting work, they want to do something above and beyond that, they want to do things that are interesting to them, and they want challenges.

“In order for this firm to continue to survive, we have to be flexible and accommodate the next generation,” he went on. “That’s what every firm is dealing with; I’m resistant to change, but things have to change, because this is the next generation of leadership here, and this is how they operate.”

Meanwhile, another change that has taken place at MBK is a greater focus on giving back to the community and getting involved with its many nonprofits and causes, said Reale, who couldn’t speak to how things were 75 years ago, but can point to a dramatic change over the 23 years she has been with the firm.

“Twenty years ago, we would do one or two charity days,” she recalled. “And now, every other Friday, there’s a specific dress-down for charity, and some of our team members pick a special organization each month, and we do something for the community each month, whether it’s a service, or stuff the bus, or bringing in toys for the holidays, or providing needed items for the homeless … as a firm, we’re much more involved.”

As an example, she cited work involving an employee who was born in Ukraine and whose family was still in that country when the war with Russia started.

“When that war began, they needed certain things,” she recalled, adding that a local church put out a call for items, and the firm answered that call. Indeed, clothing and other items were donated by employees and clients alike over several days during tax season.

“You couldn’t walk in our lobby; they took three truckloads of items to that church,” she went on. “And that really hit home because it affected one of our team members.”

This heightened involvement in the community is important to the younger team members at MBK, said D’Agostino, and it’s one of the many cultural traits that will aid efforts to recruit and retain talent.

“They want to feel that the firm is behind certain community activities and certain charities because that’s important to them beyond the work environment,” he said. “Usually, it’s one of the staff people that takes the lead on these initiatives, and they really do enjoy it.”

 

Bottom Line

The photos along the walls in the Founders Room generally speak to another time. Indeed, most of those in the pictures have passed away, and the black-and-white images are stark reminders of just how much technology has advanced and the world has changed.

Still, the partners we spoke with said that, when it comes to the business of accounting and auditing, what truly matters most hasn’t changed since 1948, and it won’t change. This would be the matter of working closely with clients to handle their needs and help them set a course for success. And the ability to do this, as stated earlier, comes down to having people who care.

This has always been the main ingredient in the success formula, and as MBK looks forward to the next 75 years, it isn’t about to change that recipe.

Chase Bank Continues Ambitious Growth Plan in Springfield

By
Oumkar Tobaran
Banking and Financial Services

Branching Out

Oumkar Tobaran

Oumkar Tobaran says the human element is critical in banking even amid the rise of online and mobile tools.

At a time when a bank’s customers can conduct business from anywhere with a few clicks, dramatic branch expansion may seem outdated.

But it’s not, Ali Zaidi said, explaining why Chase Bank is looking to double its presence in Massachusetts over the next several years, starting with the opening of a downtown Springfield office on March 7.

“When you think about the important life events that customers go through, whether it be retirement planning, buying a house, or the birth of a child, people still have an appreciation for that face-to-face conversation. That makes an impact,” said Zaidi, Chase’s market director for Western and Central Mass. “And about 75% of our customers that have balances with us still come to the branches. So, clearly, the customers are telling us they would love to have that face-to-face interaction, especially with complex life events.”

Oumkar Tobaran, branch manager for the new location in Harrison Place — which has a long history of housing banks, including Third National Bank and, in recent decades, Bank of Western Massachusetts and People’s United Bank — said the human element is critical.

“With all the technology and innovation we have, think of the amount of things that we can go on our phones to do on a daily basis,” he told BusinessWest. “But the minute something doesn’t go right or the minute you need support or additional advice on something, we want to show that customer service matters, with a physical presence.”

The branch is Chase’s 38th in Massachusetts since opening its first Bay State location in Boston in 2018 — an impressive growth trajectory, and a number the institution is looking to double by 2025, including a location to open this spring in the former Silverscape Designs building on King Street in Northampton.

“This is a central point,” Zaidi said of downtown Springfield, noting that Chase has an office a few miles down I-91 in Enfield, but this is technically the first in Western Mass. “There’s definitely a rich history here on Main Street and its local businesses, as well as larger clienteles with MGM and the Hall of Fame. We’re serving clients of different demographics, and I’m very excited that we were able to secure this spot on Main Street.”

Tobaran said he expects plenty of foot traffic downtown, as well as visits from customers who may have been banking in Enfield or branches to the west, while Chase has been conducting outreach to build a larger base of business in the region.

“About 75% of our customers that have balances with us still come to the branches. So, clearly, the customers are telling us they would love to have that face-to-face interaction, especially with complex life events.”

“We wanted to make sure that we have a convenient place for them to visit because it’s important to be able to interact with the community,” he added. “There’s a lot of development happening in Springfield, and we wanted to be part of that momentum as well.”

Zaidi agreed. “Springfield is a key cog that gives us an entry point into expanding into Western Massachusetts and brings convenience to our customers. Springfield is being revitalized, and I feel we can be an integral part of that.”

He also feels there’s an opportunity to add customers who might already be familiar with Chase through its mortgage products and credit cards. “That’s what people know. So one of our consumer-banking priorities is to be a bank for all and make it easy for people to do business with us. And technology-wise, where customers were able to bank with us remotely, this now gives them a physical location to meet their diverse needs.”

Ali Zaidi

Ali Zaidi says downtown Springfield is the first Chase branch in Western Mass. and the springboard to an eventual doubling of the bank’s branches in Massachusetts.

As he showed off the space at 1391 Main St., from the tellers and ITM machines up front to the various offices further back, Zaidi said the new Springfield branch can do all of that.

“We will help our customers with any needs, and we have more licensed specialist bankers to navigate those complex life events — retirement, financial planning, or just navigating your credit-history trajectory if you’re looking to purchase something down the road. We’re so excited to be providing that face-to-face value, and we’re looking forward to continuing the expansion.”

 

Set Up to Help

This first Western Mass. branch is about 3,000 square feet in size and features a modern, bright design with plenty of natural light, quiet meeting areas, and state-of-the-art banking technology, including those ITMs, which allow a higher withdrawal limit than traditional ATMs, as well as access to Chase professionals.

“For customers who have commercial or small-business banking needs, we have our team of experts, partners who will be working out of here and supporting other branches to connect customers. So it’s a one-stop shop.”

A dedicated Chase Private Client team provides premium banking services, personalized attention, and access to the expertise and investment capabilities of J.P. Morgan to help families reach their goals. Customers may also meet with financial and home-lending advisors and business-banking relationship managers.

“Our retail banking operations are here, and we have our licensed bankers to deal with client management,” Zaidi explained, “and for customers who have commercial or small-business banking needs, we have our team of experts, partners who will be working out of here and supporting other branches to connect customers. So it’s a one-stop shop.”

Tobaran said the open layout will help customers easily navigate what they need. “We will have associates in the lobby greeting clients, interacting with them. And then, depending on the transactions they’ll need to leverage, we can go back here and figure out what we need to help them with,” he explained, gesturing away from the front door toward the offices in back.

“But we equip a lot of our associates with tablets,” he added. “So in addition to helping them back there, however we can help support them face to face, sitting down in the lobby area, we will do that with the resources and tools we have.”

Besides banking business, Chase also wants to connect with Greater Springfield in other ways, Zaidi said, through financial-literacy programs and other types of community outreach.

“The idea is to have our branches be community anchors. So when we think about financial-literacy conversations, be it with young professionals or small-business owners, we want to host workshops and assistance in that space as well,” he explained, noting that Chase is working on several community-development efforts around financial literacy, including a partnership with Western New England University. “So this would serve as an anchor for us where we could do before- or after-hours seminars and events. It makes sense.”

Harrison Place

Harrison Place has been home to several banks in the past, from Third National Bank to the Bank of Western Massachusetts and People’s United Bank.

Tobaran added that the bank’s employees also reflect its region, as the branch hired locally, including people who hail from the Latino and Vietnamese communities, among others.

“We want some familiar faces to be representing Chase, saying, ‘hey, these are the resources we have to help you accomplish your goal.’ It was important for us to get local talent, people who had ties to the community, people who are passionate about giving back and who genuinely want to see Springfield succeed.”

 

Only the Beginning

Zaidi and Tobaran know Chase is making an ambitious surge into a region some have called overbanked, and where community banks have long dominated. But they say Chase is committed to local residents and organizations in much the same way locally headquartered banks are, while also bringing vast financial resources to the table.

“When you think about Chase, we have the resources of a large global corporation,” Zaidi said. “And our vision is, how do we take those resources and localize the solutions for our customers? Our technology and data analysis help us strategize and take a more targeted approach, because all the branches are going to operate differently based on the community-specific needs.”

One example is a partnership with Habitat for Humanity, one of the organizations that will be on hand on March 15 for the branch’s official grand-opening festivities.

“That’s one way Oumkar and his team have been making an impact in the community already,” Zaidi said. “We feel that we can be a valued contributor in that space among all the other banks. The competitive edge that we have is not only through our resources, but with the community aspect that we are trying to drive here.”

New Accounting Standards Impact Business Leases for 2022

By Contributor
Banking and Financial Services

Details, Details

By Matthew Nash, CPA

 

The implementation of the Financial Accounting Standards Board’s (FASB) new lease accounting standard, ASC 842, presents a major challenge for companies that produce financial statements under Generally Accepted Accounting Principles (GAAP).

Matthew Nash

Matthew Nash

After almost seven years since the release of Accounting Standards Update (ASU) 2016-02 in February 2016, these organizations must now work toward implementing ASC 842 for the 2022 fiscal year. This article will provide an overview of the key changes that need to be made in order to ensure compliance with the new lease-accounting standard.

 

What Is ASC 842?

This standard intends to provide visibility on a company’s capital needs and obligations, improve consistency in financial-statement presentation, provide enhanced disclosures to the readers of the financial statements, and improve the comparability of lease practices across entities and industries.

Under the new standard, lessees are required to account operating leases with terms longer than 12 months on the balance sheet, resulting in the recognition of a right-of-use asset and the corresponding liability. Under the previous standard, ASC 840, the only leases that were required to be accounted for on the balance sheet were capital leases, which are now referred to as finance leases under ASC 842. Prior to ASC 842, operating leases required disclosure only in the notes to the financial statements.

Lessor accounting practices remain largely unchanged from ASC 840 to 842.

 

What Qualifies as a Lease Under ASC 842?

To better understand the new lease standard, you must first understand the definition of a lease. A lease is defined as the contract, or part of a contract, that conveys the right to control the use of an identified property, plant, or equipment for a period of time in exchange for consideration.

To simplify this definition, a lease is a physical asset that a company has the right to direct the use of for economic benefit. The most common examples of leases are office space, machinery, vehicles, equipment, and land.

 

What Steps Should Companies Take to Prepare?

To prepare for adoption of this standard, companies first need to account for all their existing leases and thoroughly review the contracts to determine whether they include an operating or a finance lease.

 

Do You Have an Operating Lease or Finance Lease?

If the lease meets any of the following criteria, it will be classified as a finance lease:

• Does the lease transfer ownership at the end of the lease term?

• Does the lease grant the lessee a right-to-purchase option that is lessee is reasonably certain to exercise?

• Is the lease term for the major part of the economic life of the underlying asset?

• Does the present value of the sum of lease payment and any residual value guaranteed by the lessee not reflected in the lease payments equal or exceed substantially all of the underlying asset’s fair value?

• Finally, is the underlying asset of such a specialized nature that it is not expected to have an alternative use to the lessor at the lease term end?

If the answer to all five of those questions is no, then the lease qualifies as an operating lease.

 

Lease Details

After concluding the lease type, it is time to dig into the lease details:

• When does the lease start?

• When does the lease end?

• Are there early termination or renewal options?

• Are there variable expenses related to the lease?

• What is the monthly cost of the lease?

The answer to all these questions is integral to the calculation of the asset and liability to be included in the financial statements. Once the total future lease obligation has been calculated, the obligation will be presently valued using one of three discount rate options. The newly recognized right-of-use asset and liability will then be amortized over the life of the lease, based on the lease type.

For income-statement purposes, operating leases will continue to be classified as lease expense, and finance leases will be split between amortization expense and interest expense.

 

Transition Methods

As part of the initial adoption of the new lease standard, there are certain practical expedients that can be adopted to help make the transition easier. Companies are not required to assess existing lease classifications. Existing operating leases with terms extending beyond 12 months will be included on the balance sheet effective Jan. 1, 2022, the date of required adoption. Existing capital leases will continue to be included with property, plant, and equipment, and will be amortized over the remaining life of the lease.

 

Financial-statement Disclosure Impacts

Aside from the impact on the balance sheet, the standard will also provide enhanced disclosures in the notes to the financial statements. The required disclosure will include qualitative and quantitative disclosures, including descriptions of the existing leases, disclosure of lease expenses as included in the income statement, cash paid for leases during the current year, new right-of-use assets obtained through operating and finance leases, weighted average of discount rate used to present value the lease obligation, and the maturity analysis disclosing the future obligations to be paid.

 

In Conclusion

The new lease standard is expected to have the biggest impact on those companies with a large volume of real-estate leases that have previously been required to be disclosed only in the footnotes to the financial statements. The overall expectation is that most companies with leases will see some impact related to the adoption of the new standard. Because the new standard has a balance-sheet impact, it is recommended that all companies review any financial covenants and proactively work with financial institutions to consider whether amendments to covenants may be required.

There are many intricacies within the new lease standard, and it will be a learning process for all of those involved in preparing their company’s financial statements. The best thing a company can do is take the time to make sure that they fully understand how each lease is written, and to have an open dialogue with their CPA.

 

Matthew Nash, CPA is a senior manager at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

 

Matt Garrity Focuses on Continued Growth as He Takes Helm at Florence Bank

By
Matt Garrity
Banking and Financial Services Special Coverage

Forward-looking Statements

Matt Garrity

Matt Garrity

 

Matt Garrity says it was a few years ago, when he was established in his role as executive vice president and chief lending officer at Premier Financial Corp. in Ohio, that he determined that the next logical career step would be to preside over his own bank.

As time went on, and the calls from recruiters started multiplying, the major questions to be answered concerning this ambition were … where, and what?

The ‘where’ involved geographic regions, and Garrity had his preferences, especially the Northeast — he grew up in Lee. As for the what … he desired to be at a bank with a long history, a solid track record, a strong growth pattern, and a plan to continue along that path.

Not long after being encouraged to consider succeeding Kevin Day as president and CEO of Florence Bank, he concluded that all of those boxes could be checked — with authority.

“It’s a perfect fit — this is such a great bank, and it’s got a terrific board,” said Garrity, adding that there many things that stood out about the institution. “From a financial standpoint, this is a very strong and well-positioned bank, and what also came across loud and clear in my conversations with the board was what a great culture this organization has; this is a very customer-focused, community-minded culture that we have here, and a very engaged workforce.”

Garrity, who arrived at the bank in January, takes the helm at a very intriguing time in its history. Indeed, the institution will celebrate its 150th anniversary this year — May 6 is the actual anniversary date. It will mark the occasion in a number of ways and over the course of the year, he said, adding that the planning process is well underway, and details will emerge in the coming weeks.

“We’ll look to continue to grow the bank in Western Massachusetts, looking for opportunities to grow not only in Hampden County, where the bank has started to grow in recent years — we’ll look to continue that strategy — but also with our commercial business within the bank.”

Meanwhile, the institution that started as Florence Savings Bank to serve that growing village has moved well beyond its roots, most recently with a push into Hampden County. Where the next steps in that progression will take place have yet to be determined, but they will likely be in that corner of Western Mass., said Garrity, adding that, like most institutions, Florence is eying controlled, orderly growth, not growth for growth’s sake.

“We’ll want to continue that growth pattern in Hampden County,” he said, noting that branches opened the past several years in Springfield, West Springfield, and, most recently, Chicopee. “That’s certainly on the drawing board for us.”

For this issue and its focus on banking and financial services, BusinessWest talked at length with Garrity about his new assignment and his vision — still very much in the formative stages — for the next 150 years for this Western Mass. institution.

 

Points of Interest

Garrity said he’s spent his entire career in financial services, most of it focused on the commercial-banking side of the spectrum. It was at Premier Financial Corp. that he started taking on additional responsibilities and work in areas “other than the one I grew in,” as he put it, which put him on a path to the corner office at Florence Savings.

Among these areas was residential lending, he said, adding that gaining traction in this and other realms created learning experiences on a number of levels, not just adding lines to a résumé.

“That was a real step in my career,” he said. “Being able to work effectively and work with the team and run that business successfully was something that was really important in my career development.

Florence Bank’s branch on Allen Street

Florence Bank’s branch on Allen Street in Springfield is one of three in Hampden County, where additional expansion is expected in the coming years.

“As careers go on their paths like they do, and your responsibilities begin to grow and you get exposed to new businesses that maybe you weren’t the subject-matter expert in, and you begin to show your ability to effectively manage those businesses and work with the people in those businesses, that’s when you start to think that you can do this on a broader level,” he said, adding that it was several years ago that he considered himself both ready and willing to consider those calls from recruiters asking him to consider bank-presidency positions.

And there were many of them in recent years, Garrity noted, adding that he was, in a word, selective about which ones to pursue.

“Not every bank CEO position was in a part of the country that my wife and I would be comfortable going to, or you really wanted to go to, since we had optionality,” he told BusinessWest. “We were somewhat selective about the ‘where,’ the ‘what,’ and the ‘who’ we would be working with.”

As noted earlier, Florence, now with $2 billion in total assets, checked many of the boxes on his list, especially financial strength, corporate culture, and a long history of service to, and involvement in, the community.

In recent years, that word ‘community’ has come to mean much more than Florence, he said, and its definition will continue to broaden in years to come.

As he talked about the bank’s growth strategy and the next steps in that plan, Garrity acknowledged that there is a great deal of competition in the region, and it comes with institutions of all sizes, from smaller community banks — Florence is still in that category — to very large regional and national banks, like Chase, which just opened a branch in downtown Springfield and will soon open another in Northampton (see story on page 18). But he also acknowledged that banks like Florence need to continue growing at a time when size certainly does matter.

Florence Bank’s branch on Allen Street in Springfield is one of three in Hampden County, where additional expansion is expected in the coming years.

“We’ll look to continue to grow the bank in Western Massachusetts, looking for opportunities to grow not only in Hampden County, where the bank has started to grow in recent years — we’ll look to continue that strategy — but also with our commercial business within the bank.”

 

Taking Things into Account

Florence currently has 12 branches, nine in Hampshire County and those three in Hampden County. Future growth will likely be within that footprint, Garrity said, adding that, while several area banks have ventured into Northern Connecticut, Florence has no immediate plans to follow suit.

“As we look to continue to build the franchise, we’ll be strategic about that and determine what makes the most sense for us, and where the Florence Bank story makes the most sense for the community and for the bank.”

Despite advances in technology and the ability of consumers to do much of their banking remotely, he added, there is still a place for brick-and-mortar branches, for reasons that include everything from quality of service to marketing.

“Branches are more than deposit-taking propositions,” Garrity noted. “Not only do they represent the bank out of the market, it’s a place for outbound activity, for a bank to get out in the community and to make its presence felt.

“I think branch banking is really evolving,” he went on. “For us, that doesn’t mean we need a branch in each and every town and on every corner — that wouldn’t be our model — but we’ll need more in Hampden County to get the most out of our network.”

Within this very crowded banking marketplace, Florence has what Garrity describes as some competitive advantages.

“It gets down to people,” he explained. “As we look at what our strategic advantages are as we compete in these markets, we have terrific people, and that’s always a big strength that we’re going to have. We’re also very locally focused; the deposit dollars that we take in from Hampshire County and Hampden County are being redeployed in Hampshire County and Hampden County, and from a philanthropic perspective, this organization is focused on these communities as well.

Florence Bank’s branch in Chicopee

Florence Bank’s branch in Chicopee is the latest addition to the portfolio.

“Over the past five years, this organization has donated to charitable causes in this region close to $3 million,” he went on. “So there’s a significant commitment that we have, and this is part of what helps us continue to be relevant over these past 150 years. One of the founding principles of the bank back in 1873 was ‘neighbors helping neighbors,’ and that’s as important to us today as it was back then.”

People, meaning the team at the bank, are also a key component in the growth strategy for the commercial-lending side of the ledger, said Garrity, adding that there is no shortage of competition in this realm, either.

“It’s the people that help you stand out, people and the ability to bring solutions. The advantage of working with a bank such as Florence Bank, given our size and what I’ll call our flat structure and local decision making, is we can get the right people around a table to make a good, common-sense answer for our client — a custom solution. That is a distinct advantage that we would have over some of our larger competitors that are more decentralized and a little more pigeonholed from a policy perspective.”

He noted that the commercial market was strong in 2022 because many businesses that were on the fence decided to move ahead before interest rates went up. They did rise, considerably, and these increases, coupled with uncertainty concerning the economy and other headwinds, has slowed the commercial market in recent months, he went on, adding that this is a nationwide phenomenon and one that bears watching in the coming months.

The same can be said for the residential market, which has slowed dramatically in recent months — a 28-year low nationwide, in fact — as a result of rising interest rates and low inventory.

 

Bottom Line

Garrity said he’s spent his first few months at Florence engaging with his team at the bank, looking for opportunities to engage in the community, and “learning the bank,” as he put it.

“I’m asking a lot of questions and listening for the answers,” he noted, adding that what he’s heard so far is that this institution is well-positioned to take advantage of the opportunities that will present themselves in the months and years to come.

“We have a great team, and we have a really good bank in a very good position,” he said. “And we’ll plenty of opportunity to continue to do great things here and great things for our customers, so I’m excited; 150 years is a great accomplishment for this organization — and for this community that has supported us. We have more than 50,000 customers that support this bank in the communities we serve, and we want to continue to serve them for another 150 years.”