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Banking and Financial Services

Banking and Financial Services

Steady Course

President and CEO Michael Tucker

President and CEO Michael Tucker

Like most all bank presidents in the 413, Michael Tucker would concede that a great many of the region’s communities are heavily populated with financial institutions, or “overbanked,” to use the term most would put into play.

He’s inclined to include Greenfield on that list, and gestures out the window of his office to make his point. “They used to call the other end of the street Bank Row,” he said, referring to a stretch of Federal Street now occupied by what once were stately bank offices, many of them redeveloped for other uses. “They really should call this Bank Row now.”

Tucker, president and CEO of Greenfield Cooperative Bank (GCB) and Northampton Cooperative Bank (the two institutions merged in 2015, and the former name was kept) was referencing the number of competitors who call a different stretch of Federal Street home, and it’s a large number.

But, unlike most of the other bank leaders who bemoan the overbanked nature of this region, Tucker sees the landscape through a slightly different lens.

“Some bankers would say we’re overbanked; I would say we have choices,” he explained. “It forces you to be more competitive, and it gives people choices. It doesn’t hurt to have competition — otherwise, you get complacent.”

So perhaps all that competition should get some of the credit for what has been a consistent pattern of growth for the bank, especially since Tucker took the helm at GCB in 2003. Since then, the bank has seen assets rise from roughly $175 million to more than $630 million, its branch count soar from three to 10, and its commercial-lending portfolio take a quantum leap.

Overall, the bank’s strategy has been to gradually expand its footprint in Franklin and Hampshire counties, growing mostly via the organic route (although the merger with Northampton Coop certainly accelerated that process), and achieve more of the size that is needed to thrive in today’s banking landscape.

The plan also calls for seizing opportunities when and where they arise, which brings us to the institution’s latest expansion effort — a branch in South Hadley at the Woodlawn Shopping Plaza that will bear a Northampton Cooperative sign over the door and open next January.

Formerly a Bank of America branch — that institution has been closing a good number of facilities in recent years — the new location gives Greenfield Coop presence in another Hampshire County community, but one that enables it to serve residents of several nearby Hampden County cities, especially Chicopee and Holyoke.

The plan for the foreseeable future is summed up neatly in the bank’s annual report, issued just a few weeks ago.

“Our primary strategy remains to look for prudent and measured organic growth right here in Western Massachusetts,” Tucker wrote in the report, noting that many of those aforementioned competitors have ventured into Central Mass., Connecticut, or both. “We need to remain a lean organization, especially in light of the growth of mobile and electronic banking in today’s world. Our branch strategy recognizes the new world order with the continued growth of the internet.”

Michael Tucker says the GCB branch is just one of many banks located on Federal Street

Michael Tucker says the GCB branch is just one of many banks located on Federal Street, a proliferation that provides competition, which he believes makes his bank better.

For this issue and its focus on banking and financial services, BusinessWest asked Tucker to elaborate on all those points and essentially draft a quick blueprint of the bank’s plans for the future. In a nutshell, it simply calls for more of what of what the bank has been achieving under his leadership — smart growth.

Points of Interest

Tucker said he ventured into banking, if that’s the word for it, while he was in law school at Western New England University.

He took a teller’s job at the institution known then as Springfield Institution for Savings (SIS), while attending night classes, not knowing this would be his employer for some time to come.

He remembers his first boss, John Collins, telling him that his law degree could be put to good use in the banking industry.

“He said, ‘I have a lot MBAs who could use some help, because we have this new thing called compliance,’” he recalled, referring specifically to the Truth in Lending Simplification Act of 1981. “That was my first foray into banking law.”

He took the title ‘counsel and compliance officer,’ and later worked his way up to senior vice president and general counsel. When Peoples Heritage acquired SIS, Tucker, like many others, was soon out of work, but he eventually landed at what is now bankESB for several years before being recruited to lead GCB.

When he arrived in Greenfield, he took over one of the smallest banks in the region with a simple goal — “I told the board I was going to keep this place mutual and hopefully leave it a better bank than I found it” — and set about a course of steady if unspectacular growth, which was by design, as he explained with a little humor.

“Our growth is roughly 4% to 6% a year,” he noted. “If we were a stock bank, they would have thrown me out the door. Because we’re a mutual bank, we can take our time. Where I see banks get in trouble is when they try to grow too fast and lose sight of their basic principles.”

GCB hasn’t done that, and its strategic goal — and operating philosophy — are summed up by its web domain name, www.bestlocalbank.com, and a comment from the annual report. “As I’ve often said before, we’ll probably never be the biggest bank,” Tucker wrote. “But we always strive to be the best bank in Western Massachusetts.”

During Tucker’s tenure, the bank has, as noted, expanded to 10 branches. There are two in Amherst (although they will soon be consolidated; more on that later), one in Florence, another in Northampton, two in Greenfield, as well as a commercial and residential and loan-services facility, and single locations in Northfield, Shelburne Falls, Sunderland, and Turners Falls.

Meanwhile, it has also greatly expanded its commercial-lending team and its commercial portfolio, which, like that at many banks in the region, is dominated by commercial real-estate loans, but also reflects the diversity of the local economy, especially in the bank’s hometown.

Indeed, this is an intriguing time for Greenfield, said Tucker, noting that the community once dominated economically by manufacturing has varied its economy, making great strides in technology and hospitality.

“Our growth is roughly 4% to 6% a year. If we were a stock bank, they would have thrown me out the door. Because we’re a mutual bank, we can take our time. Where I see banks get in trouble is when they try to grow too fast and lose sight of their basic principles.”

“There is a lot of energy in the town,” he said. “We have the new courthouse and the new parking garage; they opened the Olver [Transit Center], and there have been many other new developments.”

Still, this region, and especially Franklin County, where many communities are struggling to maintain population and especially young people, would be considered a low- or no-growth area, he acknowledged, meaning growth is a challenge for any financial institution.

This is why many area banks, as he noted in his annual-report comments, have ventured into Connecticut, Central Mass., or both, and why others have grown through acquisition or merger.

GCB has done some of that with its merger with Northampton Coop, a move that Tucker described as “logical” for both institutions because of that overbanked nature of this sector, and the lack of population growth in Franklin County.

“That’s why we looked at Hampshire County and why I talked to Northampton [Coop],” he explained. “It would have been silly for us to build another branch down in Hampshire County and fight 10 other banks for the money when we can partner with another bank.

“That worked out well for everyone because we didn’t have to lay anyone off,” he went on, adding that he spends one day a week in Northampton at that division of the institution. “It was a smooth transition. We were both very small — and we’re still one of the smaller banks — but we now have more size, and that helps. It was a good merger.”

By All Accounts

As he talked about his bank’s branch strategy, Tucker reached for his cell phone and held it aloft.

“This is our fastest-growing branch,” he said, noting that internet banking is becoming an ever-stronger force in this sector.

But brick-and-mortar branches are obviously still needed, he went on, adding that they probably don’t need to be as large as they once were, and they are far less transaction-oriented than they once were.

But they serve an important purpose in that they give a bank a presence and enable it to better serve customers in a particular region or community.

Which brings us to the new South Hadley branch.

The most logical expansion point for the bank moving forward is probably Hampden County, said Tucker, adding that the South Hadley branch provides an opportunity to make some strides in that direction.

Tucker found the branch while on one of his many drives around the area looking for opportunities.

“We keep our eyes open, and I drive around the area a lot and take a look at the communities,” he explained. “South Hadley was a community that I thought had some upside, and I was surprised when I read that Bank of America was closing that branch because they had a fair amount of deposits in that office.

“With this branch, we can serve some customers that we have already in Springfield and Chicopee,” he went on. “But it also gets us to reach a base in South Hadley that BOA is telling, ‘if you want to bank with us, you have to drive over here.’”

BOA’s departure will ultimately lead to GCB’s arrival, specifically its Northampton Coop division, said Tucker, adding that, while moving into South Hadley, the bank will continue to look for other growth opportunities as well as ways to become the ‘leaner organization’ he mentioned in the annual report.

Toward that end, the bank will consolidate its two branches in Amherst into one, a nod to the fact that specific branches are simply handling fewer transactions these days.

“When I was a teller in Forest Park [for SIS], we had seven or eight tellers plus a manager and an assistant manager,” he noted, turning the clock back four decades or so. “People were lined up out the door — we didn’t have deposit — and everyone came in to cash their Social Security checks on the first of the month.”

Elaborating, he said the branches in Amherst that saw 10,000 transactions a month several years ago were down to 5,000 maybe five years ago, and are now seeing roughly 3,000 a month, thanks to ever-advancing technology.

This phenomenon will eventually lead to fewer branches, and, more immediately, smaller facilities.

“The industry is moving in that direction,” he said while again holding his phone aloft and explaining it is now a branch itself in most all respects. “But I don’t think branches will be obsolete; they will be smaller and leaner.”

As for future expansion geographically, Tucker said GCB will continue to look for potential landing spots. “We’ll continue to look south and possibly east to Worcester County,” he told BusinessWest. “A lot depends on what happens; with some of the branches we’ve opened, I didn’t anticipate doing it at that time, as in Turners Falls, but the opportunity arose.”

Bottom Line

In his annual-report statement, Tucker noted that, over the past 114 years, GCB has had three basic operating slogans.

It’s gone from ‘Traditional, Progressive, Locally Focused,’ to ‘In the Community, for the Community,’ to the current ‘Come on Over to the Coop.’

The words are different, but they say the same thing, essentially — that this isn’t the biggest bank on a block crowded with other banks, but it strives to be best, and it’s generally successful in that mission.

This is the strategy that has worked since Teddy Roosevelt was in the White House, and there isn’t any sentiment to change it, said Tucker, because it works, not only for the community, but for the institution as well.

George O’Brien can be reached at [email protected]m

Banking and Financial Services

The Scammers Are Out There

By Jean Deliso

Jean Deliso

Jean Deliso

Have you ever been scammed by someone or received a phone call attempting to pressure you to provide personal information or send money?

If you can say yes, have you thought about what your parents or grandparents might do in similar situations?

Senior citizens are frequent victims of these criminal activities. To help protect older family members and to safeguard yourself, everyone should be better informed about these schemes and how to help prevent becoming a victim.

Scam artists are everywhere, and they are here in Western Mass. Within the past 18 months, I personally had two different clients who were defrauded by a scam tactic that preyed on their love of their grandchildren and their innocence and confusion.

One was contacted and told their grandchild had been in an accident, he had seriously hurt someone, and he was going to spend many years in jail unless money was sent. In the other situation, it was claimed that a grandchild was in a friend’s car, which was stopped by the police, and they found drugs. The scammer stated that the grandchild was not guilty, but he would be charged unless the grandparent sent cash immediately to get him assistance in court.

Both victims were told not to tell anyone, otherwise the assistance would stop. And in both situations, the grandparents went to the bank or withdrew money from their investment accounts, converted it to cash, placed it an envelope, and sent it to these unknown addresses.

These situations are happening more often, and thus there is a pressing need to educate our senior citizens to be aware of these types of scams.

There is nothing more special than the love of a grandchild. These imposters are targeting and exploiting this love and affection.

There have been other articles written on this subject, but not everyone reads them. It is important to educate your parents or grandparents that these scams exist and that, if they ever receive a call where they are instructed to be silent, they should contact a trusted family member or the proper authorities immediately.

Not all children are comfortable talking to their parents or grandparents about these situations, but I highly recommend you do.

I’ve seen too many of these scams recently amongst my clients. As a certified financial planner, it’s my responsibility to help my clients manage their assets and finances and to help safeguard against risks to their financial well-being. If a suspicious phone call or request is unusual or confusing, it’s important for the recipient to question it and alert their loved ones.

Please speak to your parents and grandparents about these threats. If they receive such a call, have them talk to other family members or the police before providing any information to the caller. They should never send cash to someone they don’t know or if they don’t fully understand why it’s being requested. Have them call the grandchild on their personal phone number, and, most importantly, tell them never to send cash to anyone they don’t know.

Jean Deliso, CFP is a principal with Deliso Financial and Insurance Services; (413) 785-1100.

Banking and Financial Services

Landmark Decision

Tom Senecal, left, and Andrew Crystal

Tom Senecal, left, and Andrew Crystal, vice president of O’Connell Development, look over blueprints for the new banking center now taking shape at the site of the Yankee Pedlar.

Tom Senecal says PeoplesBank first looked at the historic Yankee Pedlar property as the potential site a future branch roughly three years ago.

‘Looking’ didn’t advance to anything further, though, said Senecal, the bank’s president, because at the time, the efforts to ‘save the Pedlar,’ as the campaign concerning the beloved restaurant and gathering spot came to be called, was ongoing, and hopes to keep that landmark in its long-time role were still somewhat high.

Fast-forward a year or so, after many restauranteurs had looked at the Pedlar and essentially passed on it, deeming it too large and too expensive to maintain as a restaurant — and hopes for keeping the property a restaurant had all but dissolved — the bank was back for another look.

“We thought we could do something special for the city.”

And what it saw was opportunity — and in a number of forms, said Senecal.

First, there was an opportunity to save the most historically significant piece of the property, the home to John Hildreth, “overseer of the making up department of the Farr Alpaca Company,” according to Mass. Historical Commission documents concerning the property and, later, a lawyer, judge, president of Crystal Spring Aqueduct, and “president-clerk” of the institution that would become PeoplesBank.” (Note: Officials at PeoplesBank cannot confirm that Hildreth was president, but they also can’t confirm that he wasn’t).

But there was also an opportunity for the bank to consolidate and modernize two of its branches in Holyoke — one on South Street in the Elmwood neighborhood, and the other at the corner of Hampden and Pleasant Streets in the Highland neighborhood, and create a new state-of-the-art facility.

“As we’ve been remodeling all our other branches, we thought there was no better way to do this in Holyoke than put all this together in one centralized location between those two branches in an historic building that we certainly have the ability and the desire to retain and keep as an historic building,” he explained. “We thought we could do something special for the city.”

The Hildreth House, constructed in 1885

The Yankee Pedlar

The Yankee Pedlar

Specifically, that something special is preserving the Hildreth House itself — the hip-roof Queen Ann dwelling built in 1885 that was later added on to several times — for use as a community center, while also building a new state-of-the-art, 4,700-square-foot banking center.

Also to be preserved are many pieces of memorabilia from the Pedlar, including a stained glass window originally from the Kenilworth Castle, a historic Holyoke mansion torn down in 1959, wainscoting, and even ‘Chauncy the Butler,’ the wooden figure that greeted visitors to the Pedlar.

The next chapter in the history of the property will begin the Tuesday after Labor Day weekend, said Senecal, with the opening of a property that will blend the old with the new, the nostalgic with the environmentally friendly.

“We’re doing this in the long-term best interests of the community; quite frankly, no one would spend the kind of money we’re spending on refurbishing this and doing this — no one.”

It’s a project Senecal said is in keeping with the bank’s large and visible presence in the community, and also in keeping with its desire to be on the cutting edge of both of emerging banking technology and ‘green’ architecture and building practices.

He chose to categorize the undertaking, which comes with a pricetag he opted not to disclose, as an investment, one he described this way:

“We’re doing this in the long-term best interests of the community; quite frankly, no one would spend the kind of money we’re spending on refurbishing this and doing this — no one,” he said. “We’re going to be here for a long time. Holyoke is our mainstay, it’s our headquarters. It’s our community.

“We’re a mutual bank, and we want to do the right thing for the community,” he went on. “This bank is going to be here for a long time.”

Building Interest

Senecal told BusinessWest that that the bank has long had a pressing need to modernize those branches in the Elmwood and Highland neighborhoods, both nearly a half-century old in his estimation.

And it was with the goal of finding a replacement for the latter that he said he personally drove the length of Northampton Street to scout potential options.

“I went all the way from Hampden Street to Beech Street looking for various properties that might work,” he explained, adding that the Pedlar property was among those considered. He said he was aware that other businesses were looking at the property, located at the well-traveled corner of Northampton St. (Route 5) and Beech Street, but this was at a time when hopes to keep the Pedlar a restaurant were fading but still alive.

As those hopes eventually dissipated, the bank eventually came forward to acquire the property and announce plans for the consolidation of both branches in that area into the new location that, as noted, would blend new construction with renovation of the Hildreth House — it’s ground floor, anyway, into a community center.

The 4,700-square-foot banking center will feature state-of-the-art banking technology, such as video tellers and cash dispensers, but also include memorabilia from the Yankee Pedlar.

The 4,700-square-foot banking center will feature state-of-the-art banking technology, such as video tellers and cash dispensers, but also include memorabilia from the Yankee Pedlar.

“At the time, I was looking at something to replace the Highland location,” said Senecal. “But as I got closer to the South Street location, it made all the sense in the world to consolidate both branches, because the Pedlar was far more centralized than I thought when I set out.”

Beyond geography, the Pedlar site offered a chance, as he said earlier, to modernize banking at the institution’s Holyoke branches, and do so seamlessly.

“If you look at our branches in West Springfield, Westfield, East Longmeadow, and Sixteen Acres, those branches were built 10-15 years ago — they’re pretty modern and up-to-date,” he explained. “Our brand in Holyoke is extremely dated compared to those. So in order to get existing branches up to our current brand, you’d have to gut the branch, and if you gut the branch, you can’t operate the branch. This provides us an opportunity to close on a Saturday and open on a Tuesday, with no customer traffic impact.”

The bank’s plans were initially greeted with some resistance by those behind the ‘save the Pedlar’ initiative, but it waned as it became clear that the bank would not demolish the Hildreth House, the historically significant portion of the property.

“This project provides a statement of who we are in the Holyoke community.”

As Senecal explained, the property is not on the National Register of Historic Places (it is on the state’s list) essentially because of those aforementioned additions, including the so-called Opera House, a banquet room, and the enclosure of a wrap-around porch to expand the restaurant, undertaken in the ’80s.

While the interior of the Hildreth House was gutted to make way for the community room — to be used by area nonprofits free of charge — and other portions of the property were razed or moved, visitors to the new branch will certainly get a taste of, and feel for, the Pedlar when they head inside, said Senecal.

“The final product will incorporate a lot of the significant historic memorabilia from the Pedlar,” he explained, adding quickly that, originally, there were hopes and expectations that more of these items could be on display. However, due to size constraints and functionality issues, the collection won’t be as large as anticipated.

“Chauncy the Butler will be in the lobby, and in the Hildreth House will contain other historic memorabilia,” he went on. “The ‘hunter’ stained glass painting, which used to be in the main restaurant portion of the Yankee Pedlar, has been refurbished, and that will hang in the main branch, and the wainscoting from the entrance to the original Pedlar will be in a similar area in the community room, and some of the pictures will hang in the corridor between the branch and the community room.”

Also, a few historic gas lanterns, more than a century old, that were mounted on and around the Yankee Pedlar have been refurbished, he said. They’ve been converted to electric and will be positioned on a patio constructed outside the Hildreth House.

Beyond the historic and nostalgic, however, the new facility will also feature state-of-the-art banking technology, including video-banking machines and cash dispensers, as well as cutting-edge ‘green’ building practices. Indeed, the bank will look to have the project, being undertaken by O’Connell Construction (the general contractor and construction manager) and Western Builders, become LEED (Leadership in Energy and Environmental Design) certified.

“This project provides a statement of who we are in the Holyoke community,” said Senecal, summing up the initiative and its many characteristics.

The Bottom Line

Returning to the scouting trip be took down Northampton Street a few years ago, Senecal said there were very few properties that both suitable for what he wanted to do and for sale at the time.

One that fit both categories was an old BayBank Valley branch that he looked at and thought about. But another party beat him to the punch.

“I’m kind of glad they did,” he said, noting, in retrospect, that the site probably was not big enough for what he had planned. And if he had pursued that property, he probably could not have gone ahead with the Pedlar project.

One that, as he said, provided a chance to do something special — for the bank and especially the city.

George O’Brien can be reached at [email protected]

Banking and Financial Services

Adding It Up

It’s no secret that too many Americans make poor borrowing decisions, fail to save for retirement, even lack basic budgeting skills. That financial-literacy deficit begins early, say local bank and credit-union officials, which is why area institutions offer programs and classes to help people — both teenagers and adults — forge better strategies for making their money work for them, not drag them down.

So much, Lena Buteau says, comes down to tiny decisions that add up.

Take that morning coffee. If someone spends $2.69 at Dunkin’ Donuts every morning, that comes out to well over $900 a year. Spend $7 or $8 on lunch five times a week instead of packing a lunch at home, and you’re looking at around $2,000 a year.

“When you think you can’t afford something, look at your daily expenses,” said Buteau, vice president of Retail Administration at Monson Savings Bank, while explaining the importance of MSB’s financial-literacy programs, many of which target students, but which are needed by many adults, too.

For instance, people of all ages often struggle to understand the long-term impact of buying on credit, she noted, using the example of someone who buys a $650 laptop at Best Buy but takes a $150-off deal to put it on a store credit card at 25% interest, then pays only the minimum every month. At that rate, that laptop would be paid off in seven years — eventually costing more than double its original price tag.

“When you explain this, the kids are shocked at the numbers,” she said. “It really touches home.”

Because so many habits and philosophies are forged early, Buteau said, “we go in and teach students about saving, lending, credit scams, how to keep your money safe, and much more.”

And it’s not just schools, she added. “We want to go to church groups, Boy and Girl Scout troops, anybody that will give us an hour of time for a financial-literacy class.”

“No disrespect to the schools, but they’re not preparing kids for real life — how your credit score affects your insurance and buying a car, how to handle a checkbook.”

Michael Ostrowski, president and CEO of Arrha Credit Union, said his institution has an internal focus on financial literacy.

“No disrespect to the schools, but they’re not preparing kids for real life — how your credit score affects your insurance and buying a car, how to handle a checkbook. People don’t go into banks anymore; they do stuff online, and you can get ripped off if you don’t know what you’re doing.”

For that reason, Arrha has worked with high schools in the past on financial-literacy programs and is currently planning another program for local students.

“When we were kids, we had home-ec class, and they used to explain how to do a checkbook. They don’t do that anymore, and I don’t know why,” Ostrowski said, before offering one possible reason. “With all the regulations schools are under, for MCAS and other things, they’ve bailed on programs like this, but they’re absolutely critical for kids’ development and future life.”

Jon Reske, vice president of Marketing at UMassFive College Federal Credit Union, pointed out that financial literacy, and education in general, has long been part of the credit-union culture.

“Why? Because, unfortunately, your parents and my parents probably never taught us anything about personal finance, especially if things weren’t going well in the household,” he told BusinessWest. We take the opposite approach — we say your kid should be involved in understanding how the budget works in your house.

Jon Reske says even good budgeters can be tripped up by a bad loan — with long-term consequences.

Jon Reske says even good budgeters can be tripped up by a bad loan — with long-term consequences.

“We also do workshops on a regular basis — everything from homebuying 101 to how to create a budget to understanding credit,” he added, noting that the latter is especially critical, as the average American, between the ages of 21 and 65, will borrow about $1.5 million, and bad decisions can compound quickly and have a long-term impact. “You can be the greatest budgeter in the world and be smart about your pennies, but if you make bad borrowing decisions, you can be overwhelmed by debt.”

Monson Savings also conducts workshops for adults, such as first-time homebuyers, and offers a Credit Builders loan program, which is an effective way to, as the name suggests, build credit without going into unmanageable debt. The customer borrows a certain amount from the bank, which is deposited into a savings account and cannot be accessed until the loan is repaid. Not only does the borrower build positive credit through on-time payments, but at the end, the balance, plus interest, is available for a down payment on a car or home, a cushion for emergencies — anything, really.

In short, area institutions understand the deficits that exist when it comes to financial literacy and how that impacts the decision-making process — and how bad decisions can turn into years of heartache. And they’re doing something about it.

A Matter of Confidence

A new national survey by Junior Achievement USA and Citizens Bank shows that more than 30% of teens do not believe they will be financially independent of their parents by the age of 30. Sixty percent believe they will own a home by that age, 44% believe they will begin saving for retirement, and 43% think they will have paid off their student loans.

“With a strong economy, you would think teens would be more optimistic. It just demonstrates the importance of working with young people to help them better understand financial concepts and gain confidence in their ability to manage their financial futures.”

“These survey findings show a disconcerting lack of confidence among teens when it comes to achieving financial goals,” said Jack Kosakowski, president and CEO of Junior Achievement USA. “With a strong economy, you would think teens would be more optimistic. It just demonstrates the importance of working with young people to help them better understand financial concepts and gain confidence in their ability to manage their financial futures.”

Financial literacy has long been a cornerstone of Junior Achievement, but there’s no shortage of educational programs available at credit unions and banks.

“Money is very emotional. It’s one of the hardest things to talk about, even with your spouse,” Reske said. “And it’s hard to be objective. That’s why it’s nice when people come to our workshops and say, ‘I’m not emotional now; I’m looking at the objective side of it. I wish I’d taken this before getting that loan.’”

While money issues can seem overwhelming at times, he added, financial-literacy tools are much more accessible than they were 10 years ago if people know where to look. He also outlined a number of concepts people attending UMassFive’s workshops might learn. For example:

• If you’re able to pay bills weekly, as they arrive, do it. It reduces the risk of missing a deadline and winding up with a late fee, which is easy to do when you pay the whole pile of bills once a month.

• Start building an emergency fund. According to a U.S. News & World Report study, two-thirds of Americans would struggle — and often do — to come up with $1,000 for an emergency, like an urgent car repair or medical procedure.

“So what happens? You put it on a credit card, and now you’re paying 21% interest, and soon $1,000 turns into $1,200,” Reske noted. “And an emergency fund can keep you from missing a rent payment or not getting something fixed on your car, which could lead to a bigger repair in three to six months.”

• Check out your credit report on an annual basis, if only to make sure everything is correct. “If the activity on your credit report is inaccurate, you’re getting an inaccurate score, and most rates you get are based on your score.”

• Put every credit card on a minimum automatic payment so you don’t miss any payments — and then pay more principal when the bill arrives in the mail. Also, it’s not a bad idea to dedicate one credit card to online purchases only, to more easily identify instances of identity theft.

• Finally, it’s never too early to start saving for retirement. According to Forbes, 33% of adults have zero saved for retirement.

“Social Security will pay a portion of your expenses, but not all,” Reske said. “Time is more valuable than money because of compounding interest. If you start planning at 50 or 55, you just don’t have enough time; you’ve wasted 20 years. And if you have a 401(k) at work with an employer match and you’re not on it, you’re being foolish.”

Budget Battles

UMassFive also conducts a workshop for high-school seniors in which they choose a career, get a salary, and then go from station to station filling out a budget in different categories, from housing, transportation, and food to luxury items and student loans — and trying to stay within that budget.

“Kids say, ‘I never knew how expensive things are,’” Reske said. “People wonder why a 40-year-old can’t come up with $1,000 for an emergency; it’s because they weren’t taught that the key is to get in front of problems as early as possible” with smart budgeting followed by spending discipline.

Monson Savings runs a similar program in local schools. “One thing I build in there is student debt. If you want to spend $30,000 a year on college and go for a $30,000-per-year job, you’re not going to be able to pay that back,” Buteau said, stressing the importance of making smart decisions about college — if college is even the best option.

In fact, she said, many kids today are so focused on college — because it’s what their schools push — that they may not be aware of careers in the trades that offer robust salaries and no long-term debt.

One thing is for sure: whether in high school, college, early adulthood, or beyond, there’s no bad time to learn more effective strategies for handling money, budgets, and credit — in other words, to become more literate.

“If you’re sick, you go to the doctor,” Buteau said. “If your car is broken down, you go to a mechanic. If your pipes are broken, you call a plumber. But if you have trouble budgeting or financing, no one thinks to go to the bank for advice or a class. And it’s free.”

And when it comes to finances, there’s nothing wrong with free.

Joseph Bednar can be reached at [email protected]

Banking and Financial Services

Financial Environment

PeoplesBank recently issued its annual Corporate Green Report in conjunction with Earth Day 2019. Through its green values and actions to support environmental sustainability, PeoplesBank believes it can help make the region a healthier place to live, work, and raise a family. The bank puts these values to work throughout the year through its charitable donations, volunteerism, support of green-energy projects, and construction of LEED-certified offices.

“As a mutual bank, we are focused on our values of innovation, community support, environmental sustainability, and employee engagement,” said Tom Senecal, president and CEO of PeoplesBank. “Environmental sustainability is really the meeting place of all those other values. It is a way we can be innovative, support the community, and engage our associates in a way that is meaningful.”

Added Philippe Michaud, a loan service associate at PeoplesBank and co-chair of its environmental committee, “a business’ responsibility is to try and influence its communities toward being more sustainable. The environment is a core belief that is built into the fabric of our organization. That goes a long way toward what we do in the community.”

Community banks, like PeoplesBank, are not generally known for building green offices, but PeoplesBank has a LEED Gold-certified office in Northampton, a LEED Gold-certified office in West Springfield, and a LEED Silver-certified office in Springfield. The LEED-certified office in Springfield, the first of its kind in the city, won a Green Seal from the city of Springfield.

The bank’s newest branch in Holyoke will also seek LEED certification once construction has finished. Pursuing that objective means the new branch will be constructed and operated as a green building. Some of the highlights include:

• Reuse of a portion of the existing Yankee Pedlar building (the historic Hildreth House);

• Reduction rainwater runoff on the site and use of landscaping that requires no irrigation;

• Use of low-flow water fixtures and high-efficiency HVAC; and

• Use of building materials that have low or zero volatile organic compounds and are sourced locally where possible.

In addition, the exterior wall is highly efficient and allows for the flow of air vapor in two directions, meaning the wall will ‘breathe’ throughout the year, leading to a cleaner indoor environment.

Three PeoplesBank offices (Northampton, West Springfield, and 330 Whitney Ave. in Holyoke) have electric-vehicle-charging stations. The bank is also launching a “Choose to Reuse” campaign designed to eliminate the use of disposable paper products internally.

“As a mutual bank, we are focused on our values of innovation, community support, environmental sustainability, and employee engagement. Environmental sustainability is really the meeting place of all those other values. It is a way we can be innovative, support the community, and engage our associates in a way that is meaningful.”

During the past year, PeoplesBank was recognized by Independent Banker magazine for its environmental sustainability efforts and, for the fifth year in a row, the bank was voted “Best Green Local Business” by Daily Hampshire Gazette readers. The bank is also a past recipient of the Sustainable Business of the Year Award and Associated Industries of Massachusetts’ Sustainability Award.

Over the course of the last year, PeoplesBank provided more than $58,000 in support for green initiatives in Western Mass., including:

• A mobile farmers’ market that travels to underserved and food-desert areas of Springfield and surrounding communities;

• The Community Involved in Sustaining Agriculture Food for All campaign;

• The Center for EcoTechnology’s Eco Fellows and support of over 100 community education events;

• The annual Source to Sea Cleanup of the Connecticut River, which also includes hands-on participation by a team of volunteers from the bank;

• The Mount Holyoke Wetlands Restoration Project, conducted by Restoration Ecology Summer Scholars;

• Scientific environmental education at the Hitchcock Center for the Environment; and

• ValleyBike, the region’s new bike-sharing program.

PeoplesBank is also a longtime leader in sustainable-energy financing, and the bank’s commercial lenders are recognized for their expertise in creating financing packages for green-energy power generation. To date, the bank has financed more than $183 million in wind, solar, and hydroelectric power-generation projects, an increase of $17 million in just one year.

Banking and Financial Services

What’s in a Name? Plenty

Mike Buckmaster

Mike Buckmaster, vice president of Commercial Lending for Community Bank, N.A.

Since entering the market in 2017 through the acquisition of Merchants Bank and its branch in Springfield’s Tower Square, Community Bank, N.A. has been working to build on its foundation in this region. It brings to the highly competitive local banking landscape both considerable size and an operating mindset commensurate with the name on the letterhead.

Mark Tryniski acknowledges that it sounds illogical that a financial-services institution with $12 billion in assets and more than 230 branches could call itself a community bank — let alone call itself Community Bank, N.A.

But Tryniski, president and CEO of the Syracuse, N.Y.-based institution, said ‘Community Bank’ represents more than a name — and one that fits. Indeed, it’s more like an attitude.

“As our name suggests, we’re a community bank — that’s how we’ve always operated,” he explained. “And when you put the name ‘Community’ on your bank, you’d better function as a community bank — and we do.

“There is such a thing as a community-bank model,” he continued. “You push authority down to people in the branches, as opposed to the big-bank model, where you walk in the door looking for a home-equity loan and they put you on the phone with a 1-800 number and someone working in another country. Community banks don’t do that.”

Mark Tryniski

Mark Tryniski

 “When you put the name ‘Community’ on your bank, you’d better function as a community bank — and we do.”

This operating mindset has enabled the institution to grow considerably over the past several years and into a number of different markets, including Springfield, accomplished through the acquisition in 2017 of Merchants Bank, which had previously acquired NUVO Bank, which operated a single branch within the 413 within a large footprint in Tower Square.

Since putting its name over the door on Main Street, Community Bank, N.A. has downsized that space considerably, while simultaneously working to establish itself and broaden its horizons within this market.

It has done so by essentially living up to the name over the door, said both Tryniski and Mike Buckmaster, vice president of Commercial Lending. They both said the institution possesses the formula that’s required to succeed today — a community-bank feel, but a large size that is necessary in a changing, quite challenging financial-services marketplace today.

“I think that, over a period of time, the market has accepted the fact, to a degree, that this is a consolidating industry,” said Buckmaster, who has logged more than 30 years in the banking industry, locally and in the U.K., and has carried business cards bearing the logos of NUVO and Merchants Bank, among others. “The differentiating factor tends to be the commercial banker, and if the commercial banker can continue to deliver in terms of service and business development, there tends to be a good degree of customer loyalty toward the banker, even through various acquisitions.”

That lengthy explanation helps explain why the Springfield facility has been able to enjoy steady growth in its portfolio even as the name on the wall of Tower Square has changed several times this decade.

Tryniski agreed, but said the combination of size and small-bank attitude is becoming ever more important as the consolidation movement continues without any signs of slowing down.

“I’ve been around the banking industry for a little more than 30 years, and there’s been a dramatic change in the banking landscape, mostly centered around consolidation,” he explained. “When I started, in the ’80s, there were 16,000 or 18,000 banks; now, there are roughly 6,000 banks.

“And I think the trend toward consolidation will continue because of efficiencies that can be garnered by scale and technology,” he went on. “The bigger you get, the more you can justify investments in technology to give you more efficiency. It’s hard for the smaller banks — you have to really be efficient and disciplined.”

Overall, Community Bank will look to get bigger still, and is looking at opportunities to expand within the Western Mass. and Connecticut markets, said Tryniski, but “haven’t found what the right opportunity is yet,” as he put it. Elaborating, he said growth for this institution will continue to come as it has historically, through a mix of organic growth and acquisition, with more of the latter than the former, especially in areas with slow or no growth but more than enough competition, and Western Mass. certainly fits that category.

In such markets, growth can come only by taking market share from other institutions, he went on, adding that this is generally difficult to do. Community Bank has had a good amount of success doing just that, however, because of that aforementioned enviable combination of large size and smaller-bank feel.

Community Bank, N.A.

Mark Tryniski says Community Bank, N.A. will look for opportunities to expand locally beyond its location in Tower Square.

For this issue and its focus on banking and financial services, BusinessWest talked at length with Tryniski and Buckmaster about how Community Bank, N.A. has firmly established its presence in the local market and how it intends to secure additional market share and perhaps expand its footprint in the 413.

By All Accounts

Since acquiring Merchants, and therefore all its branches, Tryniski has visited Springfield on several occasions as part of his efforts to fully understand the broad geographic area served by the institution — one that stretches from the Northern Kingdom in Vermont to the Southwest corner of New York to the Lehigh Valley in Pennsylvania — and meet both team members and customers.

“We spend a lot of time on the road,” he said of the management team at the bank, adding that, when he does visit Springfield, or any other community served by the bank, he makes a point of learning as much about the region as he can.

In the City of Homes, he’s become familiar with some of the players within the business community, has found a few restaurants he likes, and is both impressed with and encouraged by the high level of energy he’s seeing in the central business district.

He said there are a great many similarities between Springfield and Syracuse, and in some ways, that has helped him understand the dynamics of not only the communities themselves, but the banking environment here.

“They’re remarkably similar, actually,” he said. “They have the same population, they have an industrial history, they have a stable-but-not-growing population, there’s a lot of education, the downtowns look very similar … they’re very much alike. Springfield feels to me like Syracuse.”

From a banking perspective, that means a community that, as he said, is experiencing comparatively little growth, population-wise and new-business-wise, and has a crowded field of competitors for financial-services products — banks and non-banks alike.

In this environment, operating with that community-bank model — but with roughly $3 billion in assets behind the institution — is what amounts to a competitive advantage — a large competitive advantage, said Tryniski.

“We tell our branch managers that we want them to be the president of the bank in their town,” he explained. “And we give them the authority to do that; we give them lending authority and authority around charitable contributions, fee waivers, fee adjustments, things like that. We try to vest as much authority in our branch managers locally as we can, and let them make decisions about their customers and their market.

“We probably have more of a community-bank business model than most community banks,” he went on, “because most don’t operate like that.”

However, in this market, there are still a large number of community banks — more than in many other markets — and this simple math requires that small-bank mindset. Meanwhile, the field of competitors continues to change and grow, thanks to technology, which has brought many non-bank players into the mix, said Tryniski.

“We compete now with all sorts of non-bank competitors on the lending side — for everything,” he told BusinessWest. “Whether it’s personal loans, business loans, car loans … it doesn’t matter what kind of loan you’re making, you’re competing against a multitude of other, non-banking enterprises. And the same is true on the deposit side as well.”

Buckmaster agreed, noting that, on the commercial-lending side, with all that competition, as well as all that consolidation, having a local address is not the same thing as having people who know the local market and have worked within it for years, if not decades.

“All that competition puts the emphasis very much on the banker and being able to provide the service and support growth going forward as clients need,” he said, adding that Community Bank is large and stable, and thus able to provide commercial-banking products of all sizes, including dollar amounts beyond the scope of many of the smaller community banks that populate the region.

The sweet spot for the bank, though, is loans between $1 million and $3.5 million, he said, adding that the bank is able and willing to continue writing loans for small-business owners, something the very large banks seem less interested in doing so.

This flexibility has enabled the institution now known as Community Bank, N.A. to continue to serve the customers added to its portfolio when it was NUVO, he went on, adding that loans have been written for businesses across virtually all sectors and for a number of commercial real-estate acquisitions as well.

“We’ve have some customers who were initially small back eight or nine years ago who have grown into significant customers that require a significant increase in loan support going forward,” he told BusinessWest. “We’ve seen some good growth in commercial and industrial customers over that period of time, and in addition, we’ve also seen significant new dollars in different types of commercial-investment real estate, whether it be locally in Western Mass. or further afield.”

Worthy of Interest

Returning to some of those numbers mentioned earlier — the 230 branches and current status as the 125th-largest bank in the country — Tryniski said they certainly make Community Bank, N.A. sound big. And it is.

“But we’re a lot close to the smallest bank in the country than we are to the biggest, even though the numbers say we’re one of the biggest,” he noted, adding that, in today’s banking climate, it’s not how big a bank looks on paper that matters, but how big it acts in the markets it serves.

And with that as the benchmark, this institution does indeed live up to the words on its stationary and over those 230-odd doors.

George O’Brien can be reached at [email protected]

Banking and Financial Services

Merging Banks

Matthew Sosik

Matthew Sosik

Matthew Sosik, president and CEO of bankHometown, and Robert Morton, President and CEO of Millbury Savings Bank, recently announced that the banks have signed an agreement to merge operations under the bankHometown name.

The combined bank will have approximately $1 billion in assets and 15 branch offices located throughout Central Mass. and Northeastern Connecticut.

“We’re excited to welcome Millbury Savings Bank’s customers, employees, and communities to the bankHometown family,” Sosik said. “This merger will expand our presence into the Worcester and Millbury markets and will add a team of talented bankers to bankHometown.”

Morton agreed. “Merging with bankHometown allows us to provide our customers with increased lending capacity, an extended branch and ATM network, and an expanded offering of products and services,” he said. “At the same time, and even more importantly, our customers will see the same familiar faces every day.”

There will be no staff reductions or branch closures resulting from the merger. The impact to customers is expected to be minimal as both banks share the same core processor.

“Banks under our Hometown Financial Group umbrella benefit from access to highly skilled executives and support teams.”

After the closing, Morton will lead the combined bank as its president and CEO. In addition, Morton and five members of the Millbury Savings Bank board of trustees will join the bankHometown board of directors.

bankHometown is a wholly owned subsidiary of Hometown Financial Group. Morton and one other Millbury Savings Bank board member will join the Hometown Financial Group board of directors. bankHometown will remain headquartered in Oxford. As part of the Hometown Financial Group family of banks, which includes bankESB, bankHometown, and Pilgrim Bank, the combined bank will benefit from the shared resources of a larger institution while operating independently in its own market area.

“We have a proven track record of success with our operating model,” Sosik said. “Banks under our Hometown Financial Group umbrella benefit from access to highly skilled executives and support teams. This allows the bankers at each of our subsidiary banks to focus their efforts on growing market share and providing best-in-class banking products, services, and solutions to customers.”

Following the merger with Millbury Savings Bank, Hometown Financial Group will have approximately $3 billion in consolidated assets and 32 branch offices operating across Massachusetts and Northeastern Connecticut. Following the merger, Sosik will continue in his role as president and CEO of both bankESB and Hometown Financial Group.

The merger agreement has been unanimously approved by the boards of bankHometown and Millbury Savings Bank. The transaction is expected to close in the fourth quarter of 2019, subject to the receipt of required regulatory approvals and other customary closing conditions. Customer deposits will continue to be fully insured through the Federal Deposit Insurance Corp. (FDIC) and the Share Insurance Fund (SIF).

The merger with Millbury Savings Bank will mark the third transaction that will close in 2019 for Hometown Financial Group. On Jan. 31, the company closed on its acquisition of Pilgrim Bancshares Inc. This was followed by the announcement on Feb. 6 of the merger of Abington Bank and Pilgrim Bank. The closing of that transaction is expected in the second quarter of 2019 and will result in the formation of a $600 million bank with six branches operating in the Eastern Mass. region.

Banking and Financial Services

Understanding Section 199A

By Kristina Drzal-Houghton, CPA, MST

Kristina Drzal Houghton

Kristina Drzal Houghton

At the close of every year, most individuals and business owners begin to think about taxes. Currently, many are anxious to find out what their liability will look like considering the law change known as the Tax Cuts and Jobs Act (TCJA).

One major provision is a new tax deduction for passthrough entities (S-corporations, partnerships, and sole proprietorships) under Sec. 199A. The deduction generally provides owners, shareholders, or partners a 20% deduction on their personal tax returns on their qualified business income (QBI). Various limitations apply based on the type of business operated and the amount of income the business has.

While the calculation of the deduction amount is beyond the scope of this discussion, a summary follows of the limitations that apply to specified service trades or businesses (SSTBs) and other benefits which may be available.

The Internal Revenue Code has historically treated professional service businesses more harshly than any other type of business, and this continues with the Sec. 199A deduction. For example, before the TCJA, professional service corporations were taxed at a flat 35% tax rate rather than the graduated tax rates applicable to other C-corporations. Under the new rules, the same corporations will benefit from a flat 21% tax. Pass-through entities did not fare as well; the 20% deduction does not apply to certain enumerated SSTBs if the taxpayer’s taxable income is above certain threshold amounts.

The threshold amounts are $315,000 for taxpayers filing jointly and $157,500 for all other taxpayers, with a deduction-phaseout range, or limitation phase-in range, of $100,000 and $50,000, respectively, above these amounts.

SSTBs are broken into two distinct categories:

1.Trades or businesses performing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of that trade or business is the reputation or skill of one or more of its employees (specifically excluded are engineering and architecture); or

2. Any trade or business that involves the performance of services that consist of investing and investment management, trading, or dealing in securities, partnership interests, or commodities.

QBI also does not include compensation, even compensation paid to the shareholders of an S-corporation, or any guaranteed payments paid to a partner for services rendered with respect to the trade or business, or any payment to a partner for services rendered with respect to the trade or business. As a result, if your practice is a partnership that pays out all of its income in guaranteed payments, you may want to switch to a model that instead specially allocates that income to the partners, as a special allocation of income is eligible for the 20% deduction, while the guaranteed payments are not.

This could allow individual partners whose income falls below the above thresholds to benefit from the QBI deduction even if the activity is otherwise an SSTB.

What happens if a trade or business has multiple lines of businesses, where one of the lines is an SSTB? The regulations include a de minimis rule for this situation. If a taxpayer has $25 million or less in gross receipts for the tax year from SSTB activities, it will not be considered an SSTB if less than 10% of the receipts are generated by the SSTB activity. If the taxpayer has more than $25 million in gross receipts, it will not be an SSTB if less than 5% of those receipts are generated by the SSTB activity.

The regulations do provide a couple of anti-abuse provisions to prevent taxpayers from incorrectly trying to take advantage of the tax law. The first relates to a common question I am often asked at networking functions where an employee now desires to be treated as an independent contractor to take advantage of this new tax deduction. The regulations provide that former employees are presumed to still be employees even if subsequently treated as an independent contractor. The IRS provides several tests and factors to consider if a worker is an independent contractor or employee which should be considered by an employer before changing a worker’s classification.

The second anti-abuse provision has to do with related party businesses. Here the IRS has stated that, if a business that otherwise wouldn’t be considered an SSTB has 50% or more common ownership with an SSTB (including related parties) and is providing substantially all its property or services to the related SSTB, it will be considered an SSTB. ‘Substantially all’ is defined to be 80% or more of its total property or services to the related SSTB. This is designed to prevent taxpayers from shifting income to non-SSTB businesses by adjusting the purchase price on related party sales to take advantage of the tax break.

There are several other provisions of the TCJA that benefit all businesses regardless of form. These provisions are all effective Jan. 1, 2018 unless otherwise indicated and include:

• The maximum amount allowed to be expensed under Code Section 179 is increased to $1 million, and the phaseout threshold is increased to $2.5 million. These amounts are indexed for inflation after 2018.

• The definition of qualified real property under Code Section 179 is expanded to include certain depreciable personal property used in the lodging industry, as well as certain improvements to nonresidential real property after the date such property was placed in service, such as roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems.

• For property acquired and placed in service after Sept. 27, 2017 and before Jan. 1, 2023, the first-year deduction is increased to 100%.

• After 2022, the deduction percentage phases down by 20% per year until it sunsets after 2026.

• Most states, including Massachusetts, have decided to decouple from the new bonus-depreciation rules.

• No deduction is allowed for entertainment, amusement, or recreation; membership dues for a club organized for business, pleasure, recreation, or other social purposes; or a facility used in connection with any of the above.

• Costs for entertainment expenses such as tickets to sporting events, taking clients to play golf, and similar activities are no longer deductible.

• Meals provided for the convenience of the employer, through an eating facility or other de minimis food and beverage, are no longer 100% deductible, but now fall into the 50% category. They become non-deductible after 2025.

• Qualified transportation fringe benefits provided to employees continue to be excluded from the employees’ income but are no longer deductible by the business.

• Between Jan. 1, 2018 and Dec. 31, 2019, the TCJA allows a credit of 12.5% of the amount of wages paid to qualifying employees during any period during which such employees are out on family and medical leave, provided that the rate of payment is 50% of the wages normally paid to an employee. The credit increases by 0.25% (but not above 25%) for each percentage point by which the wages exceed 50%.

• Wage expense is reduced when the credit is taken as an alternative.

On Jan. 18, the IRS released guidance on many Sec. 199A issues when it issued final regulations. The IRS noted that the final regulations had been modified somewhat from the proposed regulations issued last August as a result of comments it received and testimony at a public hearing it held. The final regulations apply to tax years ending after their publication in the Federal Register; however, taxpayers may rely on the proposed regulations for tax years ending in 2018.

The combination of the proposed regulation and final regulations has altered some of the planning techniques originally thought to increase the tax benefits available to SSTBs under the provisions of Sec. 199A. If your business previously adopted planning techniques before the August and January regulations, you should revisit the projected benefits with your tax adviser.

Kristina Drzal-Houghton, CPA, MST is a partner at Holyoke-based Meyers Brothers Kalicka and director of the firm’s Taxation Division; (413) 535-8510.

Banking and Financial Services

Developments of Interest

Richard Kump, president and CEO of UMassFive.

Richard Kump, president and CEO of UMassFive.

As the name suggests, the UMassFive College Credit Union was launched to serve employees at UMass Amherst. But it quickly expanded its mission to the other schools in that region, and then beyond employees of those institutions. Today, the process of expansion and evolution continues, and touches many realms, from new branches to new technology to new member sponsors. In short, those humble beginnings have been left well behind.

Richard Kump has spent his entire career in financial services working for credit unions. That includes a lengthy stint at St. Mary’s Bank in Manchester, N.H.

This line on a résumé leads to a story he likes to tell and has told quite often.

“St. Mary’s was chartered in 1909; it was the first credit union in the country, but they didn’t call them credit unions then,” Kump explained. “It was built out of the French Canadian Catholic parish in the west side of Manchester serving the mill workers. They’ve held onto that ‘bank’ moniker without actually being one. It’s a bit of an identity crisis.

“The one bank in town was owned by the mill owners,” he went on. “They had practiced discrimination; if you were a French Canadian mill worker, you couldn’t get a mortgage from them, because they wanted you on their housing plan, which put you right next to the factory in terrible conditions. And that’s why the credit union was created — so those mill workers could pool their nickels and dimes and lend to each other so they could buy homes.”

While Kump likes relating the story of St. Mary’s, he quickly moved on to one he likes telling even more — the one concerning the institution he now leads as president and CEO — UMassFive College Credit Union, or UMassFive, as it’s known. And it’s a compelling story.

Founded in 1967 to serve employees at UMass Amherst, as the name suggests, it has moved well beyond its somewhat humble beginnings. In all kinds of ways.

Starting with the membership. Indeed, while the credit union still serves UMass employees, and those of the other institutions that make up the Five Colleges — Amherst, Hampshire, Smith, and Mount Holyoke colleges — it also serves their current students and alumni. Membership also extends to UMass Medical School in Worcester, where there is a non-traditional branch, and, most recently, Greenfield Community College.

And UMassFive has extended its reach far beyond what might be called academia, through both acquisition and the addition of several new ‘sponsors,’ as they’re called, including CISA (Community Involved in Sustaining Agriculture), River Valley Co-op, several area communities, and Mercy Medical Center in Springfield, where there is another non-traditional branch.

There are five branches in all, serving more than 43,000 members, said Kump, who became CEO last July. Meanwhile, assets, which totaled roughly $135 million when he arrived in 2000 to serve UMassFive as chief operating officer, are now approaching a half-billion; the institution expects to crash through that barrier this year.

Beyond these various forms of growth, a pattern mirrored by many credit unions over the past 20 years or so, UMassFive has changed in other ways, especially with regard to technology, said Kump, who likes to believe his institution is on the proverbial cutting edge in this realm.

As an example, he pointed to the ITM, or interactive teller machine, in the lobby of the main office just off Route 9 in Hadley. The ITMs, which are becoming increasingly prominent in other markets and are just starting to make their mark in this one, essentially replace ATMs. Customers can use one to talk to a real person (hence the name), conduct a wide range of transactions, and get answers to questions.

“This was a time when many financial institutions were burying their heads in the sand and trying to ride out the recession. Instead, we got very aggressive. We took advantage of those times, and it put us on a very firm setting.”

Beyond the ITMs, the UMassFive lobby is distinct because there are no tellers, at least in the traditional sense, said Kump, adding that each location now has banking specialists who take on what he called the ‘universal agent model.’

These individuals can assist customers with a broad range of banking needs, he went on, adding that this requires additional training and higher compensation than traditional tellers, but these are steps UMassFive is taking to better serve customers in these changing, more technology-driven times.

“What we’ve focused on is a marriage of high touch with high tech,” he explained. “We want to be able to provide the convenience of doing everything at your fingertips; at the same time, a lot of folks need help getting that done, so we want to make sure we have the staff who can help someone who is not tech-savvy.”

Meanwhile, another form of growth has been expansion into commercial products and services and development of a unique and now quite strong niche — the financing of residential solar-energy projects (much more on that later).

And while the present tense is intriguing, when it comes to the UMassFive story, there are some new chapters soon to be written, including a new branch in Greenfield, slated to open later this year, and perhaps some additional acquisitions at a time when they are continuing to dominate the landscape with regard to both banks and credit unions.

For this issue and its focus on banking and financial services, BusinessWest talked at length with Kump about how UMassFive continues to build upon its strong foundation and grow its footprint, in every sense of that term.

Dollars and Sense

When Kump arrived at UMassFive in late 2000 after a stint at Cathedral Credit Union in Manchester, the institution was operating out of cramped quarters in a building next to the Hangar restaurant on University Drive in Amherst.

How cramped?

“My office was a supply closet — literally,” he recalled. “Because the roofs were pitched, to get to my desk I had to bend over to go around to the back of my desk.”

The inconvenience was rather easy to tolerate, he went on, because the institution was building its new home in Hadley at the time, and thus those crawls were to be a temporary nuisance.

The new facility would be the first of many positive developments in this century, one that has proven to be a good one for credit unions — at least those with the size, determination, and imagination to cope with many forms of change, from a host of new regulations to rapidly advancing technology.

As he quickly rehashed his own tenure at UMassFive, as well as that of his predecessor, Kathy Hutchinson, who served the institution for more than four decades, Kump said UMassFive, and all credit unions, for that matter, greatly benefited from both the Great Recession of a decade ago and the ongoing consolidation of the banking industry.

The ITMs installed by UMassFive allow customers to see, and interact with, an employee of the credit union.

The ITMs installed by UMassFive allow customers to see, and interact with, an employee of the credit union.

Elaborating, he noted that, as the recession was escalating and the stock market was collapsing, individuals were looking for a safe place to park their money. And many found one in the local credit union.

“During the early part of the recession, we saw unparalleled growth; we had three consecutive years of double-digit asset growth, including one year with more than 20% growth,” he recalled. “There was a lot of money coming out of the market, and it needed go somewhere safe. Meawhile, there was a lot of national bank disenfranchisement — there were ‘close-your-bank-account’ days and people protesting in front of Bank of America.

“This was a time when many financial institutions were burying their heads in the sand and trying to ride out the recession,” he went on. “Instead, we got very aggressive. We took advantage of those times, and it put us on a very firm setting.”

While this was going on, UMassFive, which has what’s known as a multi-sponsor charter (instead of a single sponsor or employer), as opposed to the more common community charter, was also taking on new sponsors, such as CISA and River Valley Co-op, that have brought many new members — and opportunities — to the institution.

“Some of the sponsors we’ve taken on recently have really been formative to our plans,” he explained. “We’ve found more members through our relationship with CISA than we have through the University of Massachusetts over the last couple of years. That’s because people who can’t join the credit union any other way join CISA, and then they’re eligible for UMassFive.”

While growing membership, the credit union has also recently been expanding its portfolio of products and services, especially on the commercial side of the ledger, specializing in loans for equipment and commercial real estate. The move was a synergistic one, said Kump, noting that many members own businesses or commercial real estate, specifically multi-family housing, and it has created many new opportunities to grow the institution.

“It was symbiotic — we felt we could help our members who had those commercial needs with a level of service we felt could compete very favorably, especially with some of the larger regional and national financial institutions,” he explained. “And at the same time, it develops a wonderful asset for the credit union.”

By All Accounts

Echoing business owners and managers across virtually all sectors, Kump said the pace of change is too great, and the number of potential disruptors on the horizon way too high, for institutions like his to write a traditional five-year plan.

Three years is about the outside for any strategic plan these days, he went on, adding that the latest such document crafted by those at UMassFive doesn’t contain any real secrets — simply ongoing expansion of current initiatives and a focus on continued, sustainable growth, because in the financial-services sector today, size — for banks and credit unions alike — really does matter because of the economies of scale it provides.

The Greenfield branch, a traditional facility, like the one the institution operates in downtown Northampton, will be perhaps the most visible — and costly —avenue of growth, he said, adding that expansion into that Franklin County community is a natural progression for UMassFive and a vehicle for better serving customers such as those at GCC and those in or related to the agriculture sector sponsored by CISA.

“This move has been in the planning stages for some time,” he said, adding that, in recent years, the credit union has been focused on other infrastructure initiatives, such as renovation of both the main office and the Northampton branch. “Now, it’s a matter of looking outward a little bit more.”

This new branch will be like the others the institution operates, he said, referring to the leading of edge of technology.

“We don’t build cookie-cutter branches; we’ve gone through branch metamorphosis the past few years,” he said, referring not only to the ITMs — which are now in drive-throughs as well as branch lobbies — but the personnel staffing these branches.

“We eliminated all tellers more than two years ago, because fewer and fewer of the transactions are coming to the branches,” he explained. “People are using mobile, they’re using online banking … they don’t have a need to come to the branch. But when they do come to the branch, it’s for something important.”

Which brings him back to that ‘universal agent,’ a phrase he uses, although he admits he’d like some better terminology.

“We’ve created a position where the individual has the knowledge that a branch manager would have in years past,” he explained. “They can help someone regardless of what they’re looking for.

“To make all this work, our hiring practices are much different,” he went on. “More of our hires have no banking experience than have banking experience, and what we’ve found works very well for us is that we hire people who are outgoing and care — they just want to help someone else.”

With the changes in technology and hiring strategy has also come a deeper commitment to training, a necessity if the machines and the people are going to properly serve the members, he continued.

“We’ve tripled our professional-development budget over the past three years,” said Kump. “And that’s because we’ve put a big onus on the employee in the branches; they have to know so much. They’re not the specialist anymore.”

Meanwhile, the institution will continue efforts to expand on the commercial side of the ledger and the solar-lending realm as well, he said, adding that UMassFive has already created quite a niche with such transactions.

“In three years, we’ve become the highest-volume residential solar lender in the Commonwealth,” he noted, adding that UMassFive has written more than $45 million in loans covering roughly 1,400 residential, and now commercial, solar projects.

And they’re being written for members across the state, he said, adding that solar installers are recommending the institution to people well outside the 413, many of whom have become members through membership in CISA.

Past Is Prologue

Returning to Manchester, N.H. and the credit union called St. Mary’s Bank, Kump said it was formed 110 years ago to serve the underserved.

“Hopefully, there’s still a lot of that left in that industry,” he said, adding that there’s quite a bit of it at UMassFive.

The institution’s unofficial slogan, put into use by Hutchinson, is “every member, every day.” That’s where its focus is and where it will stay, Kump said, even as it keeps adjusting proactively to new challenges and constant change.

George O’Brien can be reached at [email protected]

Banking and Financial Services

Taking Account

Matt Sosik says branches serve a different role than they used to

Matt Sosik says branches serve a different role than they used to, providing more value but less volume in the age of online and mobile banking.

In this era of rampant mobile banking, opening a physical branch is a different proposition than it used to be, Matt Sosik said. But it’s still an important one.

“At this point in the cycle of our industry, branching has fallen by the wayside a little bit,” said Sosik, president and CEO of bankESB, which recently opened its 11th branch on Sargeant Street in Holyoke — a move that, despite the declining emphasis on bricks and mortar, made a lot of sense.

“We feel we’ve been banking with the people of Holyoke for years and years, so Holyoke is a natural extension of our footprint,” he said, noting that today’s branches are smaller and more efficient than those built in the past, but still must emphasize customer service — something that Tiffany Raines, Holyoke’s branch manager, has said she will emphasize there.

Indeed, online channels do change the dynamics of a branch as a delivery channel, Sosik told BusinessWest, if only because branches simply serve fewer people in person than they used to.

“Customers, as they should, love that technology can improve their banking experience, and we really encourage our customers to use those online and mobile banking products; they’re so robust and provide so much to customers,” he noted. “That said, we’ll never lose our ability to interact with them face to face. We covet that, and when we get our customers in front of us, we certainly take advantage of that and provide guidance to them.”

“Actual in-person branch transaction volume is well off over the past 20 years, so it’s really about building the initial relationships with the customer; that’s what a branch does best in 2019.”

With that in mind, he said, the new Holyoke branch, like any new branch at most banks, is designed to provide value, not volume — a more personalized experience, in other words, for fewer customers each day.

“Actual in-person branch transaction volume is well off over the past 20 years, so it’s really about building the initial relationships with the customer; that’s what a branch does best in 2019,” he went on. “It’s more a source for originating the customer relationship than it is a delivery channel — more for acute problem resolution and consultative conversations.”

Yet, new branches also reflect growth, and bankESB is certainly growing, with $1.3 billion in assets across its 11-branch network in Hampden and Hampshire counties. Meanwhile, its holding company, Hometown Financial Group, also based in Easthampton, boasts $2.1 billion in assets and 24 branches across Western and Central Mass. and Connecticut, with further expansion to come (more on that later).

Banking today, Sosik said, is less about products and “more about how we deliver those products we’ve all become very familiar with.”

Take residential lending, for example. “The mortgage world has lent itself well to the online world, where we can efficiently process a transaction for somebody to buy what is arguably the biggest asset of their life, and we can do that almost entirely online for them — and very efficiently. That’s what technology has done — improved on products we’ve all come to know and love. That’s the difference between 2019 and, say, the 1990s.”

Dena Hall, the bank’s executive vice president and chief Marketing officer, noted that bankESB has the second-highest market share in Hampshire County at almost 22%, and the expansion into Holyoke follows growing name recognition in Hampden County, where it also maintains branches in Agawam and Westfield.

“We’ve seen an increasing level of awareness across the Pioneer Valley, up and down the 91 corridor, which is important to serve customer needs in this region,” she added. “Really, we’re all about meeting customers where they want to meet us. We want them to know we’re a viable option for them.”

Lending Thoughts

To understand the importance of face-to-face relationships in banking, Hall said, look no further than commercial lending, an increasingly important part of bankESB’s business and strategic direction. The institution added three new lenders to its commercial team in 2018, all from larger local banks, in an effort to add more resources to the division and demonstrate the capability to meet the commercial financing needs of businesses in the region. The team now has seven lenders under the direction of Executive Vice President Ryan Leap.

“When you think about how the customer has gotten physically away from us, that’s less so with the commercial business,” Sosik said. “Commercial lending has a lot to do with what we do best — customer service, face-to-face interactions, and building long-term, value-added relationships. For us, it’s a very natural customer-service direction in which to grow.”

The new Holyoke branch

The new Holyoke branch is a physical extension of business that bankESB had been doing in that city for many years.

That growth comes at a time when businesses continue to invest in capital projects, he added.

“We see a lot of things going on in the economy. The economy has such a long and slow build that it’s hard to see it in motion, but take a look back at the past year and years prior, and we’ve definitely seen continuous, slow, steady growth. Thankfully for Western and Central Massachusetts, we see that growth in small and medium-sized businesses coming in and taking advantage of the economy and improvements in commercial real estate.”

At the same time, Hall said, bankESB is building its consumer divisions. “Last year, we hired a new leader for the residential mortgage and consumer loan division with several years of experience in mortgage operations and origination, most recently with Peoples United Bank,” she noted.

In addition, after a year of developing its back-office processing and underwriting area, the bank recently added two new mortgage loan originators and upgraded its online mortgage application so that customers can apply how and when they want, either in person with a loan originator or online.

“With some banks in our market pulling back on their mortgage efforts, we’re excited to make more products and sales people available to the region,” she said.

Sosik agreed. “We continue to build the depth and breadth of the team to handle our growth. That’s generally been our strategic direction when it comes to community lending.”

That’s why developing both sides of the customer-service equation — a more robust online presence and also branches focused on customer service — are equally important, Hall said.

“A lot of customers are doing research online but close the deal in the branch, and we have people ready to serve them,” she told BusinessWest. “Clients want that face-to-face interaction, and we’ve hit a nice balance of being technologically savvy with mobile offerings and very customer-service-oriented, very customer-facing. That’s a perfect fit in this market.”

Mutual Successes

Hall noted that bankESB has received some key accolades of late. In June, it was named one of America’s best-in-state banks by Forbes in a nationwide survey; of the five banks selected in Massachusetts, bankESB ranked second, and was the only bank on that list headquartered in Western Mass.

Understanding the importance of building a bank’s name, its holding company, Hometown Financial Group, continues to grow its franchise and build a separate brand presence in each region. That means three separate banks will operate under the holding-company profile: bankESB, bankHometown, and Pilgrim Bank. The latter acquisition, based in Cohasset, closes this month and adds three branches and $263 million in assets to the Hometown family.

“We have a commitment to mutuality and building those local brands, building market share in each region, then we consolidate and make efficient the back-office and operation side. We think that’s a compelling business structure going forward,” Sosik said.

“Commercial lending has a lot to do with what we do best — customer service, face-to-face interactions, and building long-term, value-added relationships.”

“We’re big believers in our mutual structure,” he continued. “First and foremost, as a mutual company, we’re not owned by stockholders. We choose to be very entrepreneurial, and we run very much like a stock company would from the business side of it. But that mutuality gives us the ability to service customers and the community in ways that stock banks cannot.”

With so many community banks operating in Western Mass., he explained, that mutual structure helps set bankESB apart. “I think that’s a real difference maker for us, showing how much we are committed to mutuality and community banking.”

At the same time, Hall said, the company’s commitment to mutuality and its holding-company structure makes it an attractive partner for other like-minded mutual banks in its current market and beyond.

“We have some exciting transactions in the works, and we hope to be able to announce those transactions within the next 30 to 45 days,” Sosik added. “I think they’re compelling; there will be market interest there. We’re really moving our company forward in a number of ways. We’re excited about that. There’s a lot going on.”

Joseph Bednar can be reached at [email protected]