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PA Bankers Association » Quarter 4, 2019 1BANKKORK$QUARTER 4 | VOLUME 21.4Comes to PittsburghŏljƉ¤ƉB)Ɖb)ƉzzƉFXXƉU))zƉ¤jƉ jbb))%ƉFBƉzƉbU)~SECOND-ANNUAL b)¢Ɖ:)b)~FjbƉƉbU)~Ɖ%)`¤)`)~:Fb:ƉX)%)~ƉƉ Congratulations to the PA Bankers H.Y.P.E. Award WinnersCONGRATULATIONS, FALL GROUP MEETING & RECOGNITION RECEPTION HONOREES!CgrulisPHOTO CREDIT: ELAN MIZRAHIFALL GROUP MEETING & RECOGNITION RECEPTION HONOREES!

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A UNIQUE HEALTH CARE ALTERNATIVEfor Pennsylvania-Based Financial Institutions and &ǽPMEXI2IQFIVWSJXLI5&'EROIVW&WWSGMEXMSRWHAT IS THE BANK HEALTH CARE CONSORTIUM OF PA (BHCCPA)?8LI'-((5&MWEYRMUYILIEPXLGEVIEPXIVREXMZIJSV5IRRW]PZERMEFEWIHǻRERGMEPMRWXMXYXMSRWERH&ǽPMEXI2IQFIVWof the PA Bankers Association. Since its launch in July 2007, the PA Bankers Services Corporation, L.R. Webber ERH8LI'IRIGSR,VSYTLEZIGSPPEFSVEXIHXSTVSZMHIIZIV]GSRWSVXMYQQIQFIV[MXLPIZIVEKIERHFIRIǻXWSJIGSRSQMIWSJWGEPITPERHIWMKRǼI\MFMPMX]ERHWMKRMǻGERXGSWXGSRXVSPWXVEXIKMIWXSXLIMVKVSYTLIEPXLTPERPA BANKERS SERVICES CORPORATION;E]RI;LMTTPI:MGI5VIWMHIRX'YWMRIWW)IZIPSTQIRX(717) 255-6925[[LMTTPI%TEFEROIVGSQLEARN MORE ABOUT THE PROGRAML.R. WEBBER'VEH;IFFIV2EVOIXMRK2EREKIV(814) 317-4186F[IFFIV%PV[IFFIVGSQTHE BENECON GROUP(PEYHME'YVGLWXIEHSenior Sales Director(717) 723-4624GFYVGLWXIEH%FIRIGSRGSQPA BANKERS SERVICES CORPORATION;E]RI;LMTTPI:MGI5VIWMHIRX'YWMRIWW)IZIPSTQIRX(717) 255-6925[[LMTTPI%TEFEROIVGSQLEARN MORE ABOUT THE PROGRAML.R. WEBBER'VEH;IFFIV2EVOIXMRK2EREKIV(814) 317-4186F[IFFIV%PV[IFFIVGSQTHE BENECON GROUP(PEYHME'YVGLWXIEHSenior Sales Director(717) 723-4624GFYVGLWXIEH%FIRIGSRGSQ

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PA Bankers Association » Quarter 4, 2019 320BRINGING TIMELY NEWS AND INFORMATION TO THE MEMBERSHIP OF THE PA BANKERSthisISSUEIN EVERY ISSUEFEATURES6 Chairman’s Insights8 From the CEO to the CEO10 Ten on Page 10 12 Community Corner25 Government Relations30 A Look Ahead34 From Your Peers38 Vendor Articles18 BankWork$ Comes to Pittsburgh19 Coming Soon: PA Bankers' New Website20 Next Generation Bankers' Academy22 Fall Group Meeting & Recognition Reception Honorees12 PA Bankers Association » Quarter 4, 2019 1BANKKORK$BBBBBBBBBBAAAAAAAAAANNNNNNNNNNKKKKKKKKKKKKKKKKKKKKKKKKKKKOOOOOOOOOOORRRRRRRRRRKKKKKKKKKK$$$$$$$$$$$$$QUARTER 4 | VOLUME 21.4Comes to PittsburghŏljƉ¤ƉB)Ɖb)ƉzzƉFXXƉU))zƉ¤jƉ jbb))%ƉFBƉzƉbU)~SECOND-ANNUAL b)¢Ɖ:)b)~FjbƉƉbU)~Ɖ%)`¤)`)~:Fb:ƉX)%)~ƉƉ Congratulations to the PA Bankers H.Y.P.E. Award WinnersCONGRATULATIONS, FALL GROUP MEETING & RECOGNITION RECEPTION HONOREES!CgrulisPHOTO CREDIT: ELAN MIZRAHIFALL GROUP MEETING & RECOGNITION RECEPTION HONOREES!BANKWORK$ COMES TO PITTSBURGHon the cover22

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4 » PA Bankers Association pabanker.comC/A COMPLIANCE PRODUCTS BY TOOL TYPECalculatorsCheat SheetsChecklistsFormsPolicy ToolsProceduresSummariesRisk AssessmentsTrainingPast EventsCOMPLIANCEAUDITBSARISK ASSESSMENTACCOUNTINGINFORMATION TECHNOLOGYSTAFF TRAININGHUMAN RESOURCESADVERTISING / MARKETINGDEPOSIT OPERATIONSLOAN OPERATIONSCOST CENTERSREVENUE CENTERSALL-INCLUSIVE PRODUCTS

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PA Bankers Association » Quarter 4, 2019 5zƉ°ĹĩåųŸƉSTAFF DIRECTORYGeneral Phone/Switchboard (717) 255-6900zųåŸĜÚåĹƋƉ»ƉĘĜåüƉ)ƻåÎƚƋĜƴåƉjþÎåų J. Duncan Campbell III dcampbell@pabanker.com | (717) 255-6916)ƻƋåųĹ°ĬƉ~åĬ°ƋĜŅĹŸAmy L. Doyle, External Relations Administrative Assistant adoyle@pabanker.com | (717) 255-6937Erin L. Kanter, Director, Advocacy & Government Relations ekanter@pabanker.com | (717) 255-6910Daniel J. Reisteter, Vice President, Government Relations dreisteter@pabanker.com | (717) 255-69338åÚåų°ĬƉ:ŅƴåųĹĵåĹƋƉ~åĬ°ƋĜŅĹŸƉ»Ɖ:åĹåų°ĬƉŅƚĹŸåĬLisa R. Brandt, Legal Assistant lbrandt@pabanker.com | (717) 255-6936Louise A. Rynd, Esq., General Counsel lrynd@pabanker.com | (717) 255-69358ĜĹ°ĹÎåƉ»ƉjŞåų°ƋĜŅĹŸJill A. Ametrano, Registrar and Records Coordinator jillametrano@pabanker.com | (717) 255-6927Michelle L. Bosch, Receptionist and Administrative Assistant mbosch@pabanker.com | (717) 255-6900Connie A. Ferraro, Director, Information Technology cferraro@pabanker.com | (717) 255-6921Sara E. Hocker, Director of Marketing & Communications shocker@pabanker.com | (717) 255-6912Annette M. Moshgat, Director, Finance amoshgat@pabanker.com | (717) 255-6938Michelle L. Staton, Senior Vice President, Finance & Operations mstaton@pabanker.com | (717) 255-6923`åĵÅåųƉ~åĬ°ƋĜŅĹŸØƉzųŅü域ĜŅĹ°ĬƉ%åƴåĬŅŞĵåĹƋƉ»ƉzƉ°ĹĩåųŸƉåųƴĜÎåŸƉŅųŞŅų°ƋĜŅĹJacqueline A. Catalano, Vice President, Professional Development jcatalano@pabanker.com | (717) 255-69398MǺERM&(LEQFIVW Director, PA Bankers Services Corporation tchambers@pabanker.com | (717) 255-6928Karen J. McDermott, Director, Member Relations kmcdermott@pabanker.com | (717) 255-6914Linda A. Scott, Member Relations Administrative Assistant lscott@pabanker.com | (717) 255-6903Cynthia L. Wallett, Senior Vice President, Member Relations and Professional Development, and Managing Director, PA Bankers Services Corporation cwallett@pabanker.com | (717) 255-6913Wayne R. Whipple, Vice President, Business Development wwhipple@pabanker.com | (717) 255-6925Marilyn M. Wisniewski, Director, Residential Schools & Meeting Operations mwisniewski@pabanker.com | (717) 255-6934ĵ°č°DŽĜĹåSTAFF Managing Sara E. Hocker Editor Editorial J. Duncan Campbell III Advisors Jacqueline A. Catalano   8MǺERM&(LEQFIVW Daniel J. Reisteter Louise A. Rynd Michelle L. Staton Cynthia L. Wallett Wayne R. WhipplezƉ°ĹĩåųŸƉåųƴĜÎåŸƉŅųŞŅų°ƋĜŅĹƉŅ°ųÚƉŅüƉ%ĜųåÎƋŅųŸƉ°ĹÚƉjþÎåųŸ President Steven G. Fisher Secretary David P. Ruddock Treasurer J. Duncan Campbell III 4ǽGIVW Maureen H. Bellman John D. Blecher Gerard A. Champi Trudy K. Everhart Richard L. Greslick Karl F. Krebs David E. Raven Jennifer A. Poulsen M. Theresa Schwartzer   /IǺVI]&XSTOSÚÚų域ƉŅųųåŸŞŅĹÚåĹÎåƉƋŅ× paBanker Magazine c/o Pennsylvania Bankers Association 3897 N. Front St., Harrisburg, PA 17110 Tel. (717) 255-6912 E-mail: shocker@pabanker.compaBanker Magazine is published four times a year by the PA Bankers Services Corporation (Services Corporation), a subsidiary of the Pennsylvania Bankers Association (PA Bankers). The Association serves Pennsylvania banks and ǻRERGMEPMRWXMXYXMSRW[MXLIHYGEXMSREPTVSKVEQWmember services and represents members on the state and federal level. Since 1895, PA Bankers GSRXMRYSYWP][SVOIHXSFIXLITVIQMIVǻRERGMEPWIVZMGIWSVKERM^EMSRWYTTSVXMRKEHMZIVWMǻIHmembership through volunteer participation, a ORS[PIHKIEFPIWXEǺWXEXISJXLIEVXXIGLRSPSK]and a commitment to excellence.paBanker Magazine MWXLISǽGMEPTYFPMGEXMSRSJPA Bankers. Subscriptions are free to all member institutions and PA Bankers volunteers. Additional copies are available to members at a rate of $40 per year. Non-member subscriptions are available for $60 per year.)ÚĜƋŅųĜ°ĬThe opinions expressed in articles by authors SXLIVXLER&WWSGMEXMSRWXEǺERHSǽGIVWEVIthe responsibility of the authors only and not necessarily those of the PA Bankers, the Services Corporation or its members. All articles, unless otherwise notied, have been written by paBanker 2EKE^MRIWXEǺ6YIWXMSRWERHGSQQIRXWWLSYPHbe addressed to the Managing Editor. PA Bankers members may reproduce any non-commercial part of this publication with verbal permission from the editor. All others must receive written permission from the editor prior to reproduction of any part of this publication. Copyright ©2003 PA Bankers Services Corporation. All Rights Reserved.zŅŸƋĵ°ŸƋåųØƉŸåĹÚƉ°ĬĬƉ°ÚÚų域ƉÎĘ°ĹčåŸƉƋŅ×paBanker Magazine 3897 N. Front St., Harrisburg, PA 17110zųĜĹƋåÚƉÅƼ× HAAS Printing CoŞŅĹŸŅųåÚƉÅƼ×

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6 » PA Bankers Association pabanker.comhe fourth quarter is business planning season. Irrespective of your process and the elements in your plan, you will have to “land the plane” with a 2020 budget amid enumerable external headwinds, tailwinds and crosswinds. Good luck, and I know you will navigate the path forward beautifully. I thought I would share just a few words of encouragement as we all work through this mission-critical annual process.• You give back to your communities. I would encourage you to make your investment of dollars, leadership and time, coupled with the number of organizations you touch, “come TƚŸĜĹ域ƉzĬ°ĹĹĜĹčƉå°ŸŅĹ×ƉLanding the 2020 Budget PlaneţƉ`FB)XƉz~F)President & CEO, First Commonwealth Financial Corporation alive” for your terrific employees, directors of your bank and other stakeholders within the context of your business plan.• You care about “doing the right thing” for your customers. Highlight some examples for those that are closest to your organization within your plan.• You and your institutions matter a great deal to your employees as well as our neighbors and businesses within our communities. Day after day, you and your institutions make a tremendous difference with entrepreneurs, small- and mid-size businesses, first-time home buyers and the everyday customer as you listen and help them navigate their financial future. This is important stuff! Again, consider highlighting the breadth of your impact (number and dollar of loans, for example) and specific customer success stories within your plan. • It is vitally important that your banks perform well. Community banks offer an important alternative to a range of capable competitors. Without you, our communities would look quite different. • Be transparent and honest about what you do well and where you need to improve. Such candor will propel you and your leadership teams meaningfully forward. Oftentimes over a relatively short period of time, your weaknesses can become strengths, even your digital banking evolution, as you just get a little better every single quarter.Both myself and our terrific association, PA Bankers, are pulling for you. We would be particularly proud to see PA banks objectively become the best performing banks in the country. Choicest blessings to you and your families this holiday season.ÎĘ°Ĝųĵ°ĹűŸINSIGHTS

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PA Bankers Association » Quarter 4, 2019 7Unlike other accounting or consulting firms that “work in banking,” S.R. Snodgrass works only in banking, every day, every week of every month, for more than 70 years. In fact, no other accounting and consulting firm has greater knowledge of the needs, challenges and opportunities of today’s community banks than S.R. Snodgrass. If you think our unique blend of unrivaled banking expertise and personalized service could benefit your bank, please allow us to introduce ourselves. We’d be delighted to meet you.www.srsnodgrass.com/banking833-404-0344No other accounting or consulting firm oersmore knowledge of community banks’ challengesand opportunities than S.R. Snodgrass.NOOTHERFIRM

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8 » PA Bankers Association pabanker.coms the calendar year closes, I’d like to take some time to reflect on some of the successes of our members and the association in 2019. The association had another wonderful year, full of many accomplishments and “firsts.” We continued our effort to support our strategic plan by strengthening our workforce development, advocacy and next-generation banker initiatives.WORKFORCE DEVELOPMENT We assisted in the expansion of the BankWork$ program to another major city in the commonwealth, Pittsburgh. The first BankWork$ Pittsburgh class graduated in late November, and you can read more about the Pittsburgh program on page 18. We look forward to welcoming more classes in the future.NEXT-GENERATION BANKERSWe celebrated the immense accomplishments of three of our members in two different next-generation banker competitions:• American Bankers Association’s Lights, Camera, Save! Video Competition: We acknowledged ĘåƉåŸƋƉĜŸƉ¤åƋƉƋŅƉŅĵåƉƉ the Central Dauphin High School/ Centric Bank team, which won third place in the national competition, and the Line Mountain Jr./Sr. High School/C&N team, which was a top five finisher. • CSBS Community Bank Case Study Competition: We celebrated Kish Bank and Juniata College as they brought home the national championship for the CSBS Community Bank Case Study Competition for their case study on the impact of regulatory reform on community banks. Additionally, this was a record year for Pennsylvania as 15 teams, represented by 15 banks and 11 colleges/universities, participated in the competition.We are beyond proud of the accomplishments of all three banks, and we thank all participating financial institutions for their support of these competitions.Additionally, this year we launched the PA Bankers H.Y.P.E. Awards program, which highlights young professionals who are influential in their financial institutions, the banking industry and their communities. We acknowledged seven winners for the inaugural year of the program, and you can learn more about those winners on pages 34-35. We look forward to honoring individuals for this program each year.The future of our industry is bright, and we look forward to seeing the impact that the next generation of bankers has on our industry in years to come.ADVOCACY As you may recall, at this time last year, our board voted to elevate advocacy within the association. We have made tremendous strides to encourage advocacy among our members, giving you the tools you need to strengthen your voice and make an impact. This year alone, we have created an Advocacy Committee, which is populated with representatives from other PA Bankers committees; incorporated advocacy into several of our professional development events; and worked to increase our advocacy network through the annual Washington Visit, ABA Washington Summit, PA Bankers Day at the State Capitol and policy engagement with legislators. We thank you for your continued support of this important initiative. üųŅĵƉƋĘåƉCEO to the CEO%bbƉ`z)XXPresident & CEO, PA Bankers AssociationA

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PA Bankers Association » Quarter 4, 2019 9While 2019 was a successful year for the association, we are already hard at work to reach our goals and continue our support of our strategic plan in 2020.HERE IS WHAT YOU CAN LOOK FORWARD TO IN 2020:• New Website Launch: We are excited to introduce our new website in early 2020: www.pabankers.com. The website will have a new look and more tools for our members to utilize. Read more about the new website on page 19.• New App Launch: The association will also be launching a new mobile app early next year. This app will connect us with our members like never before. To learn more about the app, visit our 10 on 10 on page 10.• PA Bankers’ 125th Anniversary: We are looking forward to celebrating the 125th anniversary of our association and our first annual convention, held on Dec. 18, 1895. Get ready for a year of celebration, service and gratitude. We will update you in the next edition with more information.On behalf of the entire association, thank you for your support and dedication to our association and industry over the last year. Together, we are making a difference, and I cannot wait to see what we do in 2020!y:sary t year u in themation.ation, d and Contact Dave Colonna Phone 203.653.4100 x121David.Colonna@BoxwoodMeans.com®EXPERIENCE SMALL-BALANCE CRE PROPERTY VALUATION AS IT CAN BELESS COSTLYFASTON-TIMETRUSTWORTHYFIXED FEESCOMPLIANTVETERAN APPRAISERSNATIONWIDECLIENT FOCUSEDtrackablethoroughACCURATERESPONSIVETECH-INTENSIVEAUTOMATEDFLEXIBLEEFFICIENTscalableHANDS-ONDATA-RICHBe Convinced—Place Your Next Order with Boxwood MeansBOXWOODMEANS.COM/LENDERSFieldSmart EvaluationsFieldSmart Restricted AppraisalsCOLLABORATIVE

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10 » PA Bankers Association pabanker.com10 Ways the New App Will Keep You ŅĹĹåÎƋåÚƉƵĜƋĘƉzƉ°ĹĩåųŸ ƋåĹONŞ°čåTENPA Bankers’ new app will keep you connected to PA Bankerslike never before. See how you can utilize the app below:The app will be available for download in the app store for Android and Apple users. We will send an update to all members when the app becomes available for download.1COMING SOON! ow you can utilizeyRegister for events at your fingertips.2Update your personal/business information on the go.3Have all event details in one place (i.e., handouts, evaluations, speaker bios, etc.).4Access the updated PA Bankers calendar at all times.5Connect directly to the association’s social channels and stay up-to-date on association news.6Browse for products and services for your institution.Read paBanker magazine on the go.78 Access resources designed for PA Bankers' members. Receive "Instant Alerts" to stay informed.9Advocate for the industry from any location.10

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SOMEONE IS MAKING MONEY ON TITLE INSURANCE. IT SHOULD BE YOU.It’s like owning your own title insurance company, only better. PA Bankers Services Corporation – along with Investors Title Insurance Company – will help you become part of a multi-bank owned title insurance agency and share in the profits every time title insurance is written. To learn more, simply give us a call at (717) 255-6925 and we’ll show you how your bank can earn non-interest income from title insurance.

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12 » PA Bankers Association pabanker.comFNCB Bank Provides $7,000 Grant to Township Baseball for the Purchase of a New ScoreboardÎŅĵĵƚĹĜƋƼCORNERNCB Bank recently supported its community with a $7,000 grant used to purchase a scoreboard for Township Baseball Little League in Jenkins Township. The new scoreboard replaces one that stood for many years at the field located at 2 May St. The scoreboard donation represents part of FNCB's larger Community Caring initiative. Through outreach programs, donations and an employee volunteer network, FNCB is committed to helping the communities they serve.FSusquehanna Community BankDonates to Loyalsock Volunteer Fire Department No. 1Penn Community Bank Donates $20,000 to Support Bucks County Economic Self-Sufficiency Programusquehanna Community Bank donated $300 to the Loyalsock Volunteer Fire Company. Station 18, located at 715 Northway Road in Williamsport, has been serving the community of Loyalsock since 1925. Senn Community Bank recently continued its 20-year effort to combat generational poverty with a donation of $20,000 to the Bucks County Opportunity Council. The funds supported the organization’s Economic Self-Sufficiency Program, which offers participants the education, job training, life skills and coaching that they need to break the cycle of poverty.Launched in 1997, the Economic Self Sufficiency Program has graduated more than 300 people in Bucks County, 9 out of 10 of whom are women and 7 out of 10 of whom have children. To complete the program, which takes an average of three years, graduates must meet 10 self-sufficiency benchmarks, including having safe housing, reliable transportation, health insurance for every family member, Pfull employment and no reliance on welfare subsidies.Each year, Penn Community Bank distributes up to 5 percent of its net income through the Penn Community Bank Foundation to local organizations that focus on its four priorities: supporting food security; advocating for safe, affordable housing; facilitating economic self-sufficiency; and offering financial literacy education that empowers people of all ages to take charge of their finances.

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PA Bankers Association » Quarter 4, 2019 13QNB Bank Raises Money for Local LibraryNB Bank teamed up once again this year with the Lehigh Valley IronPigs to help raise money for local libraries through the “Batting for Books” campaign. For the past nine years, the Bank has pledged to donate $25 for each double hit by the IronPigs in their home stadium at Coca-Cola Park in Allentown. This season, the team hit 130 doubles for a total Bank contribution of $3,250. This year’s proud recipient was the Allentown Public Library. Since the program’s MRGITXMSRMR63'LEWHSREXIH$33,950 to local libraries.Q

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14 » PA Bankers Association pabanker.comÎŅĵĵƚĹĜƋƼCORNERDo you have hometown happenings that you'd like to share?Send your bank's community news to Sara Hocker, PA Bankers' director of marketing & communications (shocker@pabanker.com), for a chance to be featured in paBanker magazine or on PA Bankers' social media channels and website.Mars Bank Step Forward CampaignRaises Awareness Funds for Firefighter Scholarshipsor the fourth year, Mars Bank sponsored the Step Forward Campaign, which honors first responders, active military and veterans. Police, fire, emergency personnel and military “Step Forward” when others are backing away or turning to run. Through this campaign, Mars Bank honors their bravery and shares their stories with the community. FUND FOR FIREFIGHTERS Each year the Step Forward Campaign supports first responder and veteran groups. For 2019, one fundraising drive supported the Butler County Community College (BC3) Education Foundation’s Butler County Volunteer FFirefighter Fund. The Volunteer Firefighter funds are available to assist all Butler County Volunteer Firefighters with the cost of the Fire Training courses, the Firefighter Certification and EMT classes. Firefighters who wish to take the firefighter training courses can apply to have their tuition paid by the Foundation’s Firefighter Fund.The bank promoted BC3’s training program for firefighters and collected donations for the scholarship fund through Oct. 31, 2019.

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PA Bankers Association » Quarter 4, 2019 15New Tripoli Bank Dontates $100,000 to Northwestern Lehigh Education FoundationOrrstown Bank Teams up with Make-A-Wish® Philadelphia, Delaware and Susquehanna Valley to Help Grant Wish to Local Childew Tripoli Bank donated $100,000 to the Northwestern Lehigh Education Foundation as a part of the Educational Improvement Tax Credit program of Pennsylvania. This donation will be used to support educational programs that might not otherwise receive funding, giving students in the Northwestern Lehigh School District the tools and skills they need to thrive in an increasingly digital-focused world. The funds provided by this donation will be utilized to modernize the broadcasting equipment for broadcasting education programs in the high school and middle schools, as well as continuing to add SMART board technology to classrooms throughout the district.t a special event held in October at the Harrisburg Regional Offices of Orrstown Bank, the bank, in partnership with Make-A-Wish® Philadelphia, Delaware and Susquehanna Valley, granted the wish of a local child living with a neuromuscular disorder in Central Pennsylvania. According to the bank, “as part of our 100th anniversary celebrations, we are excited to make another wish come true for an extraordinary young man named Nikunj. Nikunj defines what it means to persevere, be strong and courageous, kind and considerate, and to know how to enjoy life no matter what obstacles are placed in front of you. We are NAhonored and proud to partner with Make-A-Wish® to grant Nikunj his wish, which is sending him and his family off to a fun-filled experience at Walt Disney World in Florida.” Orrstown Bank contributed $7,500 to Make-A-Wish® in order to fund the initiative.

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16 » PA Bankers Association pabanker.comÎŅĵĵƚĹĜƋƼCORNERWayne Bank Joins Karen Corrigan’s Preschool and Child Care Home to Support Wayne County Libraryayne Bank recently joined with Karen Corrigan’s Preschool and Child Care Home to support the Wayne County Public Library. Operated by Karen Corrigan and Shannon Chakiris, the Preschool held its annual Backyard Carnival fundraiser to celebrate the end of its summer camp program. School-age children worked for days sorting out prizes and setting up for the Carnival and were then joined by former students of the program to help with games, face painting and other fun activities for the younger children in the group. Carnival prizes were donated by the families of current and past students, as well as local businesses and community supporters. The children and their families also collected coins as part of the fundraiser.Combined with a contribution from Wayne Bank, the Preschool was able to present the Wayne County Public Library with a $450 donation this year. Karen Corrigan’s Preschool and Child Care Home is a Star 2 site in the Pennsylvania Keystone STARS Program and has been in operation for 31 years. W Univest Financial Donates $25,000 to Ronald McDonald House Charities nivest Financial recently presented Ronald McDonald House Charities (RMHC®) of the Philadelphia Region Inc. with a check for $25,000. The donation represents the amount Univest has committed to RMHC®’s “Room in Our Hearts” campaign over the next five years.The fundraising campaign supports their current expansion at the Chestnut Street House. Due to high demand and limited space, they have had to turn away more than 5,000 families in need. The renovations, which began in 2017, will more than double its lodging at this facility and provide a comfortable space for families with seriously ill children.U

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PA Bankers Association » Quarter 4, 2019 17NEW TO PA BankersAffiliate Members:• ATM Solutions, Inc.• BKD CPAs & Advisors• Blue Orange Digital• Drinker Biddle & Reath LLP• Lesavoy Butz & Seitz LLC• YHB | CPAs & ConsultantsSelect Vendors:• The Benecon Group, Inc. Financial Institution:• Coatesville Savings Bank• Hatboro Federal SavingsWelcome

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18 » PA Bankers Association pabanker.comorking in communities of need and with students who typically would not be considered qualified candidates for banking/financial services positions, BankWork$ offers opportunities to succeed in well-paying jobs that can lead to a lasting career in the banking industry. Each eight-week class is designed to train entry-level bank tellers, customer service representatives and personal banker candidates and ultimately provide and connect those candidates to local banks and financial institutions.We have seen astounding success with the program in Philadelphia, and we have made it our mission to bring the program to other areas of the commonwealth, beginning with Pittsburgh. We are happy to announce that the first Pittsburgh BankWork$ class began on Sept. 30, and 19 students graduated from the program on Nov. 22. Since Bankwork$ came to Pennsylvania in 2017, 154 students have graduated from the program, and 78% of those graduates have been placed into a job within the banking industry. Thank you to all members who have supported and continue to support the program in Pennsylvania. If you are interested in learning more about how you can become involved in the program, contact Michelle Staton, mstaton@pabanker.com. PA Bankers is proud to continue its support of the BankWork$ program.bUj~Uâ COMES TO PITTSBURGHWPHOTO CREDIT: ROBIN DENOMA

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We are excited to announce that we will be unveiling a brand-new website in the new year. Get ready for a fresh look and a streamlined and cohesive experience – all on ONE website.New features will include searchable directories, member-only content, new navigation and advanced technological capabilities.We will share more details as the launch date approaches.ComingSn:PA BANKERS’ b)Ɖ)F)Something’S been miSSing…ȅIƶVISJJMGMEPP]EHHMRKERƸs” to pabanker.com.www.pabankers.comFĹƌųŅÛƚÎĜĹčƉƶƶƶţޱűĹĩåųţÎŅĵ

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20 » PA Bankers Association pabanker.comn mid-August, PA Bankers joined the Pennsylvania Association of Community Bankers and the Pennsylvania Department of Banking and Securities in holding the second-annual Next Generation Bankers Academy. The academy provides college students with an up-close look at various careers within XLIǻRERGMEPWIVZMGIWMRHYWXV]ERHERopportunity to network with senior FEROQEREKIQIRXSǽGMEPWThis year’s program took place in Lancaster, where students received in-person, hands-on training at Ephrata National Bank, Bank of Bird-in-Hand and Fulton Bank to learn about topics such as marketing, agricultural lending, the de novo process, community and customer engagement, mobile banking, retail banking, trust and investments, human resources and more.Additionally, the students learned about how to prepare for a role in the banking industry and what happens behind-the-scenes at a community bank from the perspectives of next-generation bankers, C-suite executives and regulators. These additional topics were covered by the following banks and organizations: C&N, Orrstown Bank, Mid Penn Bank, Riverview Bank, The 0EJEǻER,VSYT''8/'8+PIIX[SSHBank, Univest Financial Corporation, The Victory Bank, Mosteller & Associates, Federal Reserve Bank of Philadelphia and Pennsylvania Department of Banking and Securities.We enjoyed getting to know the future leaders of Pennsylvania’s economy, and we thank all members who participated and made this program so successful. ƉƉƉbåƻƋƉ:åĹåų°ƋĜŅĹ Bankers AcademyI

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PA Bankers Association » Quarter 3, 2019 21

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22 » PA Bankers Association pabanker.com8XXƉ:~jzƉ`))Fb:Ɖ»Ɖ~)j:bFFjbƉ~))zFjbƉBjbj~))úAt our annual Fall Group Meetings & Recognition Receptions, PA Bankers honored multiple members and individuals in the banking industry for their support of the association, the industry and their communities. HONOREES INCLUDED::~jzƉŎ % University of Pittsburgh at Johnstown/1ST SUMMIT BANK% University of Pittsburgh at Johnstown/Somerset Trust Company ÎĘŅŅĬŸƉBŅĹŅųŸƉƋƚÚåĹƋŸ% Amber Hancharick – Northwest Bank (Honors – Advanced School of Banking)% Benjamin Danley – AmeriServ Financial Bank (Top Honors – School of Commercial Lending)% Brandon Foley – Dollar Bank, A Federal Savings Bank (Honors – Advanced School of Banking)% Christina Avenali – Northwest Bank (Dr. Philip O. Benham, Jr. Leadership Award – Advanced School of Banking)% Katie Card – Northwest Bank (Honors – Advanced School of Banking)% Kristin Koch – Northwest Bank (Honors – School of Banking) % Laura Austin – Washington Financial Bank (Honors – School of Commercial Lending)ĉLjě¤å°ųƉĬƚÅ% Barbara R. Calizzi, Apollo Trust Company – 43% Carol Vigliotti-Dixon, First Commonwealth Bank - 41% Carolyn Bash, Apollo Trust Company – 40% Cindy Barber, First Commonwealth Bank – 40% Kathleen Collins, First Commonwealth Bank – 41% Mikey Boyer, First Commonwealth Bank – 46% Sharon Twaddle, First Commonwealth Bank – 45% Susan Kushnereit, NexTier Bank – 40% Suzanne Johnson, First Commonwealth Bank – 42% Terry Jones, Apollo Trust Company – 40% Vicki Fox, First Commonwealth Bank – 41 ĂLjě¤å°ųƉĬƚÅ% Suzanne Parks, First Commonwealth Bank – 50:~jzƉƖ % Cabrini University/Hyperion Bank% Immaculata University/First Resource Bank% Kutztown University/New Tripoli Bank (2nd Place in Pennsylvania)% 2YLPIRFIVK(SPPIKI63''ERO% Temple University/Penn Community Bank% Ursinis College/The Victory Bank Ę°ųƋåųƉĹĹĜƴåųŸ°ųĜåŸ% Asian Bank – 20th:~jzƉƐ ĉLjě¤å°ųƉĬƚÅ% Donna Keefer, First Keystone Community Bank – 41% Gregory Gula, The Honesdale National Bank – 40% Kevin Krieger, First Keystone Community Bank – 40% Lori A. Roth, Community Bank – 40% Mary Ann Siegel, First Keystone Community Bank – 40% Marian Puzycki, Fidelity Bank - 40% Richard Simmers, The Honesdale National Bank – 40% Steve Stranburg, Community Bank – 40% Vincent O’Bell, Wayne Bank – 40 ĂLjě¤å°ųƉĬƚÅ% John P. Burlein, The Honesdale National Bank – 50 CgrulisCgrulis

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PA Bankers Association » Quarter 4, 2019 23 PA Bankers Association » Quarter 4, 2019 23

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24 » PA Bankers Association pabanker.comĉLjě¤å°ųƉĬƚÅ% Andree V. Dennis, ACNB Bank – 44% Barbara L. Cookerly, ACNB Bank – 40% Cindy Wetzel, Mid Penn Bank - 40% Deborah A. Geib, Fulton Financial Corporation – 40% E. Phillip Wenger, Fulton Financial Corporation – 40% John E. Kashner, ACNB Bank - 46% Linda A. Sanders, ACNB Bank – 40% Lois Phillips, ACNB Bank – 40% Michael Rittase, ACNB Bank – 41% Michelle Paulnock, ACNB Bank – 42% Susan M. Wisniewski, Fulton Financial Corporation – 40% Tina McCurdy, Kish Bank – 40% Trudie Centini, Fulton Financial Corporation - 40:~jzƉƅ % Juniata College/Kish Bank (1st Place in Pennsylvania and National Champions) ÎĘŅŅĬŸƉBŅĹŅųŸƉƋƚÚåĹƋŸ% Jocelyn Sauter – 1ST SUMMIT BANK (Top Honors – School of Banking) ĉLjě¤å°ųƉĬƚÅ% Barb Doutt, First Commonwealth Bank – 41% Bob Peak, First Commonwealth Bank – 45% Bruce A. Mabon, AmeriServ Financial Bank – 46% Cathy Ellis, First Commonwealth Bank – 43% Christine Fisher, First Commonwealth Bank – 43% Christine Rohde, 1ST SUMMIT BANK – 40% Deborah Madison, First Commonwealth Bank – 42% Denny Jones, First Commonwealth Bank – 44% Ellen Buterbaugh, First Commonwealth Bank – 40% Gayle Volpe, First Commonwealth Bank – 40% Jim Boyle, First Commonwealth Bank – 45% Joanette Corle, Hometown Bank of PA – 40% John Heise, First Commonwealth Bank – 45% Kathleen Burkett, 1ST SUMMIT BANK – 40% Kathleen Kriedler, First Commonwealth Bank – 42% Lori Cable, First Commonwealth Bank – 42% Mark Lopushansky, First Commonwealth Bank – 42% Pamela Batzel, First Commonwealth Bank – 41% Rick Steer, First Commonwealth Bank – 42% Sara Felton, Hometown Bank of PA – 42% Sherry Carney, First Commonwealth Bank – 40% Shirley Musselman, First Commonwealth Bank – 45% Susan Stiteler, First Commonwealth Bank – 49% Terry Lingenfelter, First Commonwealth Bank – 41% Wendy Reynolds, First Commonwealth Bank – 44 ĂLjě¤å°ųƉĬƚÅ% Diane Kaspick, First Commonwealth Bank – 50% Gary Platt, First Commonwealth Bank – 52 Ę°ųƋåųƉĹĹĜƴåųŸ°ųĜåŸ% 1ST SUMMIT BANK – 95thjb:~XFjbƉjƉXXƉBjbj~))ţĘ°ĹĩƉƼŅƚƉüŅųƉ°ĬĬƉƋĘ°ƋƉƼŅƚƉÚŅƉüŅųƉƼŅƚųƉĜĹŸƋĜƋƚƋĜŅĹØƉ ÎŅĵĵƚĹĜƋƼƉ°ĹÚƉƋĘåƉÅ°ĹĩĜĹčƉĜĹÚƚŸƋųƼţ:~jzƉĉ % Bloomsburg University/Mid Penn Bank% Mansfield University of Pennsylvania/C&N ÎĘŅŅĬŸƉBŅĹŅųŸƉƋƚÚåĹƋŸ% Kyle Mumper – Woodlands Bank (Honors – School of Banking) ĉLjě¤å°ųƉĬƚÅ% Courtney Cole, C&N – 41% Debra Martin, First Commonwealth Bank - 42% Diane Egly, C&N – 41% Diane L. Elliott, Fulton Bank – 40% Halle Niklaus, C&N – 42% Joan Grenell, C&N - 40% Joan Russell, First Commonwealth Bank – 45% Nola Gross, C&N – 44% Pamela Young, First Commonwealth Bank – 42% Sandra Hughes, First Commonwealth Bank – 41 :~jzƉĂ % York College/Fulton Bank% York College/York Traditions Bank (3rd Place in Pennsylvania) ÎĘŅŅĬŸƉBŅĹŅųŸƉƋƚÚåĹƋŸ% Garen Jenco – Kish Bank (Honors – School of Banking)% Michael Jaeger – Orrstown Bank (Honors – Advanced School of Banking)

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PA Bankers Association » Quarter 4, 2019 25čŅƴåųĹĵåĹƋRELATIONSDELAWARE | NEW JERSEY | OHIO | PENNSYLVANIA | WEST VIRGINIA | BURNSWHITE.COM• Commercial, class action and complex litigation• Bankruptcy and creditors’ rights claims• Loan facilities• Business transactions and real estate dealsLegal Solutions for Pennsylvania Bankers %åĹĜĵƉ%°Ƽ for PaBPAC Staten Nov. 1, bankers throughout Pennsylvania participated in the annual PaBPAC State Denim Day. Together, ǻZIFEROWEPSRK[MXL5&'EROIVWWXEǺVEMWIHJSV5E'5&(State. This year, the following banks participated in the PaBPAC State Denim Day: C&N, CNB Bank, Kish Bank, PS Bank and The Dime Bank. Thank you to all participating banks!O

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26 » PA Bankers Association pabanker.comčŅƴåųĹĵåĹƋRELATIONShe American Bankers Association (ABA) recently introduced a new grassroots platform, Secure American Opportunity (www.SecureAmericanOpportunity.com) to facilitate individual engagement on the issues that QEXXIVXSXLIǻRERGMEPWIVZMGIMRHYWXV]ERHXLIIGSRSQ]as a whole. This new platform is part of ABA’s overall commitment to increase its political footprint, complementing its mission of serving as the united voice of America’s banks of all sizes and their employees. ABA has a strong history of engaging bankers in grassroots and grasstops advocacy, in partnership with state bankers associations like PA Bankers, and this new grassroots TPEXJSVQMWEVIRI[IHERHI\TERHIHIǺSVXF]&'&XSIRKEKIeveryone – from bankers and employees to customers and GSRWYQIVWƳMRXLIMWWYIWXLEXEǺIGXSYVIGSRSQ]Secure American Opportunity, a project of ABA, is based on the premise that a strong financial industry helps to make a strong economy, and everyone has an interest and plays a role in keeping our economy strong. With the Secure American Opportunity website, ABA seeks to amplify the voices of America’s bankers and also engage customers and consumers who have interest in the policies affecting our economy. It’s an action-focused website geared toward helping individuals to quickly understand the issues and take action. The website is complementary to ABA.com, providing a specific, tailored online presence for grassroots and grasstops engagement.AMONG THE FEATURES OF THE SITE INCLUDE:• Tools to help you make your voice heard – whether it be writing letters to Congress, commenting on regulatory proposals, or sharing stories of what banks are doing for communities and customers across the nation;• Short, easy-to-understand summaries of the policy issues affecting banks and our economy, designed to quickly educate on the issues and motivate to take action;• Tools and resources to help bankers encourage their peers and employees to participate in grassroots activity;• Stories and highlights of what ABA, banks and state associations are doing;• And, during election years, election information to help users find their polling location and know when elections occur.HOW CAN YOU GET INVOLVED?• Check out www.SecureAmericanOpportunity.com to learn about the issues affecting the banking industry and our economy• Respond to calls-to-action that you receive from Secure American Opportunity and PA Bankers Association• Share the website or an email with your peers and employees• Ask your IT department to add SecureAmericanOpportunity.com to your safe senders list, so that you can easily access the website and receive emailsAs bankers, you know just how critical your voice can be in having a say on the policies and procedures that government creates. Secure American Opportunity is a chance to do just that. TĵåųĜΰĹƉ°ĹĩåųŸƉŸŸŅÎĜ°ƋĜŅĹ Introduces New Grassroots Platform jƉB)ƉBj~×Ɖ AMERICAN BANKERS ASSOCIATION

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PA Bankers Association » Quarter 4, 2019 27HELPING BANKS STAY COMPLIANT & AHEAD OF THE CURVE BY PROVIDING RESPONSIVE, FORWARD-THINKING & INNOVATIVE SOLUTIONS• Internal Audit• Model Validation• Staff Augmentation• BSA & AML Consulting• Regulatory Compliance• SOX & FDICIA Consulting• Enterprise Risk Management• Information Technology AuditsOLUTIONSPrinceton, NJ - 609.689.9700 | Philadelphia, PA - 215.854.4059 Mercadien.comSalvatore Zerilli, CPA, CAMS Managing Director & Chair, Financial Institutions Servicesszerilli@mercadien.comFINANCIAL INSTITUTIONS SERVICES GROUP WHICH CAME FIRSTIS ALL A MATTER OF PERSPECTIVE.No matter which side of the argument, Pillar+Aught knows how to consider all perspectives to best protect and advance your interests. Keen insight, extreme responsiveness, and deep expertise explain how Pillar+Aught has raised the bar. Learn how we can impact your business and how we've transformed the legal services experience.pillaraught.com

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28 » PA Bankers Association pabanker.comčŅƴåųĹĵåĹƋRELATIONSŞÚ°ƋåŸƉŅĹƉzƉ°ĹĩåųŸűƉƋ°ƋåƉXåčĜŸĬ°ƋĜƴåƉzųĜŅųĜƋĜ埻 Sales Tax Treatment of Canned Software Utilized in Conducting Bank Transactions On Nov. 27, 2019, the governor signed House Bill 17, Printer's No. 2900 into law as Act 90 of 2019. This act contains compromise amendments to provide an exclusion from sales and use tax for the sale at retail or use by a financial institution of canned computer software directly utilized in conducting the business of banking. Also included in this legislation is a requirement that financial institutions match their records no more than quarterly against machine-readable reports the Pa. Department of Revenue will provide containing delinquent state tax obligors' identifying information.» Elder Financial Abuse Prevention PA Bankers will continue to advocate for enactment of amendments to the Older Adult Protective Services Act that will provide financial institutions with additional means to address situations where elder financial abuse appears to be occurring. This includes providing financial institutions with the authority to suspend a transaction for a period of time in order to provide a local Area Agency on Aging the time needed to undertake an investigation and increased information-sharing between an agency and a financial institution on the status of an investigation. Senator Bob Mensch (R-Berks, Bucks, Montgomery) reintroduced the legislation in the Senate as Senate Bill 819 on Aug. 7, and the bill was voted out of the Senate Aging and Youth Committee on Sept. 23. The House version of the legislation was reintroduced as House Bill 1930 by Representative Tim Hennessey (R-Chester, Montgomery) on Oct. 15.» Data Breach Legislation PA Bankers opposes legislation to amend the Breach of Personal Information Act that would provide a private right of action to individuals when a security breach has occurred. A number of data breach and privacy bills have been introduced thus far in the current legislative session.

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PA Bankers Association » Quarter 4, 2019 29» Directed Trusteeship & Trust Termination Proposals PA Bankers is working with representatives of the Joint State Government Commission’s (JSGC) Decedents’ Estates Advisory Committee (DEAC), which developed directed trusteeship legislation that differs from the Uniform Laws Commission’s version. Directed trusteeship allows certain activities to be assigned to a person other than the trustee(s) and relieves the trustee(s) of liability for the actions of the trust director. Most states have bare-bones authority, so specific legislation would provide better authority. PA Bankers is also seeking enactment of non-judicial trust termination provisions.» Unclaimed Property Administration The association is seeking changes to PA’s Unclaimed Property Law to clarify treatment of tax deferred accounts and modernize the statute. Our requested amendments would clarify that: 1 IRAs will not be presumed abandoned before their mandatory distribution date; 2) Securities and other securities entitlements are not abandoned unless mail to their owners is returned undelivered; 3) The rule peculiar to PA and its financial institutions, which allows parties to claim escheated property from the institution which then must seek reimbursement from Treasury, would be repealed; and 4) Securities distributions paid into an active account are not presumed abandoned. The association is also seeking an exemption from the law for rewards programs. PA Bankers met in June with staff of the PA Treasury Department. Before any further discussions are held, the Treasurer’s staff has requested PA Bankers provide for its consideration a statutory holder due diligence standard, such as a requirement that holders search the Social Security Administration’s Death Master File (DMF). PA Bankers Unclaimed Property Working Group will be meeting to further discuss this issue. » The Banking Fund The Banking Fund is comprised of monies received from fees, assessments, charges and penalties collected or recovered from persons, firms, corporations or associations under the supervision of the PA Department of Banking and Securities. It provides for the administration of the Department and regulation of the financial services industry. The Institution Resolution Restricted Account is to be used at the discretion of the Secretary of Banking and Securities in the event of a seizure or liquidation of a financial institution, association or credit union. Via the Governor's Budget Document published on Feb. 5, 2019, PA Bankers learned that a transfer of $21 million from the Banking Fund had been made to the General Fund citing the authority granted by the legislature in Act 44 of 2017. We learned from the DoBS on Nov. 13, 2019, that per language in Act 20 of 2019 another $21 million is slated for transfer from the Banking Fund to augment the operations of the Pa. Department of Environmental Protection or the Pa. Department of Conservation and Natural Resources. Our Government Relations Policy Committee is directing our response on this issue. » PA Bankers Files Comment Letter on PA Office of Attorney General Anti-Trust Proposal On Sept. 30, 2019, PA Bankers submitted its comment letter on the PA Attorney General's proposed regulation that interprets the PA Unfair Trade Protection and Consumer Protection Law's "catch-all" clause within the definition of the term "unfair methods of competition and unfair or deceptive acts or practices" to include (1) unfair market trade practices; (2) unfair conduct; and (3) deceptive conduct. Our letter explains why each of these terms is inconsistent with the law and their insertion via regulation is not in the interest of good public policy. We also pointed out the limitations on the PA Attorney General's authority over financial institutions.

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30 » PA Bankers Association pabanker.com° °Ęå°ÚlookMAY13-16PA BANKERS 2020 CONVENTION Fairmont Southampton, Southampton, Bermuda:åĹåų°ĬƉƉŸŸŅÎĜ°ƋĜŅĹ ŅĵŞĬĜ°ĹÎåØƉ~åčƚĬ°ƋŅųƼƉ»Ɖ~ĜŸĩƉ`°Ĺ°čåĵåĹƋ MARCH24-26As you plan your training and development for 2019-2020, we hope you'll consider learning with us. Here's a sneak peek at some of the opportunities to learn with PA Bankers this coming year. Visit www.pabanker.com for more information and pricing details about each event.Please note: all dates and locations are subject to change.SCHOOL OF COMPLIANCEPA Bankers Training RoomHarrisburg, Pa.

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PA Bankers Association » Quarter 4, 2019 31° °Ęå°ÚlookbåƋƵŅųĩŸ MARCH11-12WOMEN IN BANKING CONFERENCEHershey Lodge & Convention Center • Hershey, Pa.XåĹÚĜĹčƉ»ƉųåÚĜƋMAY 12-13 MAY 19-20TRAINING THE CREDIT ANALYST SEMINARPA Bankers Training Room, Harrisburg, Pa.SCHOOL OF CONSUMER LENDINGPA Bankers Training Room, Harrisburg, Pa.APRIL22AGRICULTURAL BANKERS CONFERENCENittany Lion Inn, State College, Pa.JUNE 14-18SCHOOL OF COMMERCIAL LENDINGThe Penn Stater Conference Center, State College, Pa.

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32 » PA Bankers Association pabanker.com° °Ęå°ÚlookJUNE25 APRIL 28-29 DIRECTORS INSTITUTEHershey Country Club Hershey, Pa.TREASURY MANAGEMENT SEMINARPA Bankers Training RoomHarrisburg, Pa.:åĹåų°ĬƉ°ĹĩĜĹčƉų°ĜĹĜĹčFEB. 25JULY 26-31 ADVANCED SCHOOL OF BANKINGThe Penn Stater Conference Center,State College, Pa.ECONOMIC FORECAST AND BUSINESS LEADERSHIP SUMMITSheraton Harrisburg Hershey Hotel, Harrisburg, Pa.JUNE 14-18SCHOOL OF BANKINGThe Penn Stater Conference Center,State College, Pa.FEB.6 CALL REPORTPREPARATION -AN UPDATE SEMINARTBDHarrisburg, Pa:Jan. 22, March 17 and May 5Cranberry Township, Pa.: Jan. 23, March 19 and May 7ECONHarrisburg, Pa.:Session #1: Feb. 19-20 | Session #2: April 1-2Cranberry Township, Pa.: Session #1: Sept. 9-10 | Session #2: Oct. 28-29BRANCH MANAGER BOOTCAMP SUPERVISORY TRAINING SERIES

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Succeed With Condence • www.fosaudit.com • www.herbein.comAddressing Your Bank’s NeedsFOS SERVICES• Internal Audit/Co-sourcing • Asset Liability and Liquidity Management Exams • Bank Secrecy Act & Anti-Money Laundering Exams • Information Technology & Risk Management Exams • Fraud Exams • Compliance Exams • Sarbanes-Oxley Testing • Trust Department Exams • Transactional Asset Allocation Analysis HERBEIN SERVICES• Business Valuations • Litigation Support Services • Asset Based Field Exams • Mergers and Acquisitions • Audit of Financial Statements • Tax CONTACTSJames A. Michalak, CPA, CITPThomas R. Strause, CIA, CFE, CBA, CFSA, CISA, CICADebbi S. Fetter, CFIRS, CISA, CFSA, CRMA, CRCM, CCSA1-888-212-8799A subsidiary of Herbein + Company, Inc.The Stability You Wantshould come with the service you deserve

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34 » PA Bankers Association pabanker.comn September, PA Bankers hosted its fourth annual Emerging Leaders Conference, unveiling the new PA Bankers Highlighting Young Professionals’ Excellence (H.Y.P.E.) Awards program, sponsored by Crowe.The PA Bankers H.Y.P.E. Awards program highlights the accomplishments of six young banking professionals (aged 40 years or younger) for excellence within their financial institutions, the banking industry and their communities. Individuals from many banks across the commonwealth were nominated for six different award categories in the inaugural program, and winners included:• Achiever: This award celebrates a professional who produces work more effectively than their peers, is considered a subject-matter expert, and knows how to attain results by their own accord and through others. Winner: There was a tie for this award between John Lombardo, Business Intelligence Analyst, Northwest Bank; and Louis Palumbo, CISA, CISM, CISSP, Senior Vice President, Chief Information Officer, NexTier Bank.• Change Agent: This award recognizes a professional who is likely to initiate new ways of doing things and is a proponent of taking risks to further the organization. Winner: Heather Sargent, Public Relations and Communications Coordinator, First Citizens Community Bank• Community Ambassador: This award is given to a professional who is interwoven and involved in their community through nonprofit and philanthropic initiatives. Winner: Nicole M. Boytin, Vice President, Commercial Lending, Penn Community Bank I)ĵåųčĜĹčƉXå°ÚåųŸƉbåƋƵŅųĩƉUpdateto the PA Bankers H.Y.P.E. Award WinnersHEATHER SARGENT NICOLE BOYTINJOHN LOMBARDOLOU PALUMBOüųŅĵƉƼŅƚųPEERSCgrulisJONATHAN LITTLEWOOD TERESA STERNERSTEFANIE TODDTO ALL WINNERS!Cgrulis

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PA Bankers Association » Quarter 4, 2019 35Congratulations to K. Bernard Tynes, director of marketing strategy & data analytics, Penn Community Bank, and chair of the PA Bankers Emerging Leaders Committee, who has been named among Philadelphia’s Most Influential African Americans by The Philadelphia Tribune, the oldest continuously published African American newspaper in the United States.Bernard was recognized as one of 10 African Americans under the age of 40 to watch by the Tribune, and he was honored at the Tribune’s annual awards ceremony and event on Sept. 19 at the Philadelphia Convention Center.In his roles at Penn Community Bank, Bernard has championed innovation throughout various departments. He spearheaded the development and launch of Workplace Connections, a free bank-at-work program serving area employers and their employees, and was integral in launching multiple financial products built to meet the needs of young people. Now, as leader of the marketing team, Bernard has undertaken a company-wide data initiative and focused all lines of business on developing strategies based on data analytics.Congratulations, Bernard, and thank you for all that you do to support our industry and our association!K. BERNARD TYNES Chair of the )ĵåųčĜĹčƉXå°ÚåųŸƉŅĵĵĜƋƋåå Recognized Among 10 Young African American Leaders to Watch in PhiladelphiaC• Developer: This award recognizes a professional who has a natural knack for building talent and wants to see others succeed and grow to their fullest potential. Winner: Stefanie Todd, Vice President, Loan Operations Manager, Mars Bank• Strategic Thinker: This award celebrates a professional who is a forward thinker, shows business acumen, and has a good understanding of the market and industry in which their organization operates. Winner: Jonathan Littlewood, Vice President, Commercial Services Officer, First Keystone Community Bank• Team Player: This award recognizes a professional who is collaborative and a good communicator. The winner consistently seeks others’ input and opinions and uses it to shape their ideas and generate consensus. Winner: Teresa Sterner, Sales and Marketing Coordinator, First Keystone Community Bank Along with the awards program, the Emerging Leaders Conference focused on several hot topics, including advocacy, professionalism, executive presence, power connecting and marketing, and featured presentations from Chris Bender, vice president, Public Affairs Council; Jonna Martin, president, AdvanceMe Associates; and Dave DeFazio, partner, StrategyCorps.The conference was supported by the generosity of two sponsors, FHLBank Pittsburgh and The Bonadio Group, while the PA Bankers H.Y.P.E. Awards program was sponsored by Crowe.

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36 » PA Bankers Association pabanker.comüųŅĵƉƼŅƚųPEERSFåĵŸƉŅüƉFĹƋåųåŸƋ×News from the PA Bankers IT Committeehis is truly an exciting time to be in banking for technology professionals with expertise in any kind of technology! People expect a different banking and financial experience than they have in the past. Retail and social media organizations, such as Amazon and Facebook, and fintech companies are delivering that experience.The concept of digital banking has fast become a reality and is an area that T. Michael Price, president and CEO of First Commonwealth Financial Corporation and chair of the PA Bankers Association, is bringing to the forefront for the association. For anyone with expertise in designing and developing user interfaces, big data analytics, process automation, artificial intelligence, technology integration or cyber security, just to name a few, the banking industry provides many new and dynamic challenges.Along with these digital banking solutions, we must ensure we are delivering a safe experience to the public. Cybersecurity needs to be an integral part of developing and integrating every component of these technologies. Processes must be redefined, not only to support the digital banking needs of the public, but to improve detection of fraudulent activity. It is not doubtful that behavioral modeling and predictive analytics will continue to become mainstream tools to identify anomalous activity and, ultimately, prevent fraud related to cybercrime. As we strategically market digital banking capabilities to the public, we must also provide education on how they can protect themselves from cybercrime, including social engineering. A robust cybersecurity employee training program is essential to run parallel with the digital banking training of our systems and internal processes.Many of these foundational elements were discussed at the association’s 2019 Digital Banking Conference (formerly the Technology Conference) held in Harrisburg, Pa. in November. Ben Cox, vice president for Fusion 92, shared the candid expectations of Gen Y & Z and how their definition of financial wellness significantly differs from the Baby Boomer generation. Additionally, a panel of bankers shared information about timely digital banking topics, including John Gill, chief operating officer of Somerset Trust Company, who discussed National Fintech Day; Brook McGinnis, SVP and senior product group manager – digital banking & payments of First Commonwealth Bank, who shared digital banking challenges that small-to-midsized banks are having and tools that First Commonwealth developed to compete; and Zach Lloyd, SVP and IT business services director of Fulton Financial Corporation, who provided insights to the changing technology and services to customers. One of our key challenges is the seamless and secure integration of fintech offerings with our traditional core systems. Christopher McClinton, chief marketing officer of Finxact, gave an update on their new generation core system development and offering, and Ron Plesco, principal at KPMG, provided a global view of faster payments and evolving payment trends. Ron also gave an update on emerging threats in cybersecurity. Contracting with these technology companies can be an onerous task, particularly with the core providers. Niel Devasir, senior director of Cornerstone, discussed how to build contract negotiation roadmap.Prior to the conference, on Nov. 12, about two-thirds of the conference attendees participated in a digital banking forum to share their feedback on the PA Bankers Digital Strategy Statement template. Several breakout sessions were created, and the group addressed 12 critical components of the digital banking ecosystem. Topics ranged from customer experience, to process automation, to cybersecurity. Thank you to all the banks who participated in this forum and for providing a wealth of information for the association to develop the template.As exciting as it is to be in the early, and rapidly accelerating, evolution of digital banking, it is a challenging task for banks of all sizes, particularly for small and midsized community banks. We are fortunate that the association recognizes this and is working with banks and other business and organizations to provide the resources needed to ensure our relevance well into the future. jƉB)ƉBj~: MICHAEL MCGRAWSENIOR VICE PRESIDENT, INFORMATION TECHNOLOGY, MARS BANK CHAIR, PA BANKERS IT COMMITTEET

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PA Bankers Association » Quarter 4, 2019 37he PA Bankers Champions Program’s goal is to connect resources and people so that each member institution can maximize the value of its membership and the association can deepen member engagement to achieve greater sustainability. Each member bank is encouraged to identify one or more individuals in their institution to both disseminate information to all levels of the organization from the association and act as a spokesperson for the institution to the association to ensure regular two-way communication between the two entities. SUMMARY OF RECENT PA BANKERS CHAMPIONS MEETINGSPrior to each Fall Group Meeting & Recognition Reception, PA Bankers Champions met to discuss how the association can best support our member banks. The association shared its strategic initiatives to enhance industry image, identify the next-generation banker and deepen member engagement through financial literacy resources, workforce development programs and member activity tracking. Association staff also discussed new professional development opportunities that were developed as a result of the spring PA Bankers Champions meetings. Lastly, there was discussion around how the association can best communicate with the PA Bankers Champions moving forward. TupdatepŅĵåĹƉĜĹƉ°ĹĩĜĹčƉbåƋƵŅųĩƉUpdaterior to Group 1's Fall Group Meeting & Recognition Reception, women had the opportunity to have an interactive lunch & learn session with Dr. Jocelyn Horner, co-president and Pittsburgh executive director for Strong Women, Strong Girls. During the session, Dr. Horner explored how women throughout U.S. history have navigated the unique challenges of female leadership to advance and achieve change in the social, political and business worlds. In particular, she shared the life stories of a diverse group of American women leaders - both well-known and unsung. Through the legacies of these real-life role models, she uncovered traits and mindsets that have united female trailblazers in their efforts to change the world. She also discussed how these iconic female leaders addressed and overcame obstacles and opposition to their leadership, looking deeper into the innate characteristics and learned skills that led to their success. Thank you to all who attended! P

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38 » PA Bankers Association pabanker.coms customer expectations, technology, and competition continue to evolve, banks and other financial services organizations are searching for new ways to deliver products and services more cost-effectively – and with the same or higher levels of customer service.MAJOR DRIVERS OF CHANGE IN BANKING TODAYThe pace of change in the financial services industry is continuing to accelerate. The forces driving these changes are many and diverse, but it can be helpful to think of them in four major categories:1. Changing customer expectations. As consumers become accustomed to having 24/7 account access and simplified retail and business interactions, customer habits and behaviors are shifting away from traditional methods of using their banks’ services and venues. This shift has been accompanied by customers’ increasing comfort levels with self-service online information searches, financial transactions and problem resolution.2. New technology. New technologies – such as mobile payments, mobile check capture, mobile account notifications, and electronic signatures and receipts – are creating opportunities for enhanced customer experiences. Beyond customer-facing solutions, technology is making equally rapid advances in areas such as workflow automation, document automation, blockchain ledgers, solution integration and advanced artificial intelligence.3. Talent, training and staffing challenges. Changes in bank employees’ career expectations and personal preferences are affecting how banks attract and retain talent. As baby boomers retire, the new generations of employees entering the workforce have different employment expectations, might lack an understanding of traditional banking, are not interested in outdated operating practices, and are looking for career mobility.4. Competitive pressures. Innovation and economic pressures are increasing – both from within the industry (with service and reputation advances by large banks) and from nonbank sources such as payment processors, financial technology businesses and giant retail organizations.Regulatory pressures are another obvious source of concern, but of the four nonregulatory areas where banks are feeling the biggest impact, many bankers seem to find technology the most challenging. When participants in a recent Crowe webinar were asked to rank the categories of change they found most challenging, new technology was the number one response (Exhibit 1). Source: Online survey of Crowe webinar participants, Aug. 16, 2018. Note: Numbers might not equal 100 percent due to rounding.It should be noted, however, that talent-related challenges are a close second. This suggests that many bank executives recognize the importance of attracting and retaining high-performing managers and employees. In fact, it could be said that many of the most pressing operational challenges in today’s financial services organizations stem from an interaction of people and technology.FRONTLINE CHALLENGES: BRANCHES AND CALL CENTERSThe effects of technology and changing customer expectations are particularly apparent in customer-facing functional areas such as branch operations and call centers. Today’s customers expect 24/7 access and mobility and are accustomed to and comfortable with many self-service functions. As a result, the functions of bank branches and call centers are changing or are being rendered unnecessary.AƴåĹÚŅųARTICLESAchieving Operational Excellence: BŅƵƉƚÎÎ域üƚĬƉ°ĹĩŸƉųåƉÚÚų域ĜĹčƉŅÚ°ƼűŸƉĘ°ĬĬåĹčåŸ

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PA Bankers Association » Quarter 4, 2019 39These changes can be challenging, but they also represent an opportunity to achieve cost savings and service improvements if handled correctly. Today’s industry leaders are experimenting with a variety of new approaches, including new branch staffing models, increasing use of paperless account opening and services, branch consolidations and closures, and a reduction in branch size and hours.Among the various branch staffing models now being considered and employed, the introduction of the universal banker position is possibly one of the more significant recent developments. Four out of 10 bank executives surveyed during the Crowe webinar said their institutions had pursued such an approach (Exhibit 2). Source: Online survey of Crowe webinar participants, Aug. 16, 2018Not coincidentally, about the same number of executives said their banks were working to enhance the customer relationship and selling skills of branch personnel, even as they pursued reductions in branch staffing levels. This shift marks the move toward the universal banker model, a model that moves branch staff from transaction processing (or order taking) to building relationships, providing help and advisory services, and initiating and supporting the introduction of new products and services.As branches consolidate, the role of call centers becomes increasingly important. In addition to extended call center operating hours, one broad, general trend that can be observed these days is a greater empowerment of call center personnel to handle additional services requests. These trends manifest themselves in a variety of tactics, including extended call center hours and capabilities and a shift in call center job roles and the skill sets associated with those positions. Supporting technology also is advancing with tools such as tiered customer service queues, text messaging or chat capabilities, interactive teller machines, and enhanced support for digital banking services.BEHIND THE SCENES: DEPOSIT OPERATIONS AND COMPLIANCE CHALLENGESTechnological advances are not confined to frontline functions. Automation also is playing a major role in changing the way back-office functions such as deposit operations, loan processing and compliance are handled.Many leading banks are taking advantage of new core system technology to launch major redesigns of their deposit operational processes, automating many workflow and reporting functions. Other successful tactics include increased use of automated reporting tools, greater reliance on call center operations and an overall simplification of the front-to-back office interaction.Wider use of automation also is proving to be useful in improving the efficiency of Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance functions, where cost is always a major concern. In addition to automated workflow queues, many leading banks are also applying advances in artificial intelligence and machine learning to help reduce the number of “false positives,” which always are a major cost driver in these functional areas.CREDIT OPERATIONS: LENDING AND COLLECTIONSRevising credit operations always is a sensitive issue in banking, since any changes directly will affect the bank’s main revenue drivers. Nevertheless, the combination of competitive pressures and technological advances is having an impact in the lending, portfolio management and collections functional areas of today’s banks.Industry leaders are applying a variety of tools to help make these functions both cost-effective and customer-responsive. Some of the most frequently applied lending tools include advanced commercial loan origination systems, enhanced integration with the core systems and automated loan portfolio management, along with increased use of paperless loan origination and electronic signatures.The overall lending organization also is being restructured in some organizations, with increased specialization toward customer and channel segments and overall process streamlining. These changes are supported by related technology advances, such as a greater reliance on automated decision-making, application taking, and loan closing and funding.Many banks also are re-evaluating and updating their collections processes and systems, focusing on both technology and talent to achieve greater effectiveness. Among the tactics some leading institutions are

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40 » PA Bankers Association pabanker.comProperty Achieving Operational Excellence: How Successful Banks Are Addressing Today’s Challenges continued from page 39implementing are more-sophisticated account segment tiering and triage strategies, increased use of predictive decision models and a general acceleration of the collection cycle so that follow-ups occur in a matter of a few days, rather than several weeks.SPECIALTY SERVICES: WEALTH MANAGEMENT AND CASH MANAGEMENTWealth management and commercial treasury management services represent a growing source of revenue and new customer accounts in many banking organizations. Here again, a combination of technology and talent is proving to be of value in many institutions.Some important advances in wealth management services that successful banks are implementing include tiered service levels, more-advanced decision models, increased reliance on self-service portals and automated financial management tools, which can dramatically lower customer costs. Banks that still provide trust services can use new trust accounting systems to streamline workflows. Comparable technological advances are being seen on the commercial cash management and treasury services arena. In addition to technology improvements, some banks are working to reorganize and clarify their cash and treasury management services by increasing resources and better aligning their commercial, retail and small business units to focus on targeted business customer segments.PUTTING TECHNOLOGY TO WORKIn addition to technology solutions that apply to specific functional areas, successful banking organizations also are re-evaluating their overall approaches to information technology in general and their core banking systems, considering outsourcing network infrastructure and administration, and looking at enterprise risk and data systems.Technology enhancements are allowing organizations to simplify processes, automate documents, enable customer self-service, automate processes and integrate systems.Looking beyond specific tools and tactics, banks also are engineering broader structural and cultural changes in their organizations. Banks are better aligning management oversight with streamlined processes that are more clearly understood and designed by customer-focused activity management (CFAM) and business process re-engineering (BPR).The long-term objective of such efforts is to transform the organization from one that is based on departmental hierarchy, specialized functions, and rigid processes and controls, to one that adopts a more process-oriented, team-driven model where the hierarchy is flattened and processes are simplified and driven by employee empowerment. Banks that are successful in these efforts expect to achieve greater efficiency, better employee job satisfaction, and improved customer service and retention in today’s increasingly competitive banking environment.jƉB)ƉBj~×ƉTHOMAS W. GROTTKE, MANAGING DIRECTOR, TIMOTHY J. REIMINK, MANAGING DIRECTOR, CROWEƴåĹÚŅųARTICLESVisit www.crowe.com/disclosure for more information about Crowe LLP, its subsidiaries, and Crowe Global. © 2019 Crowe LLP.Smart decisions. Lasting value.crowe.comDC-250600

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PA Bankers Association » Quarter 4, 2019 41ith unemployment at its lowest point since 1969, the competition for top talent is as fierce as it has been in years.While many experienced banking professionals know well that the industry offers challenges, rewards and opportunities, many millennials and Gen Z’ers remain reluctant to pursue a career in banking. The high-performing banks of the future will be those that can translate those benefits to attract, develop, reward and retain top talent. There are two places your bank can start this process. Banks already provide strong salaries, bonus opportunities, healthcare coverage and retirement plans. The challenge the industry now faces is how to make the banking industry more attractive to today’s generation of younger recruits. What a bank should consider includes flexible work hours, the ability to work remotely and cross-training. If the bank can demonstrate a track record and policy of promoting from within, the job opportunity will be even more attractive to a potential hire. Another recruiting tool we have often used successfully, particularly for younger recruits, is a deferred compensation program aimed to help pay down student loans, with vesting provisions that encourage continued employment at the bank. But once you acquire top talent, how do you develop them as future leaders? First, an ongoing coaching and mentoring program is critical. Pat Summitt, the legendary University of Tennessee women’s basketball coach who won more games than any other NCAA Division I women’s coach, recruited talented players. Once they joined the team, she delivered an individualized plan to improve each player’s weaker areas. She also provided regular feedback and monitoring. This method of coaching and mentoring led to 1,098 career victories and Hall of Fame success as a coach and leader. So, how can Summitt’s approach help your bank? When developing the bank’s future senior management, the board and the CEO should ensure they agree on both the long-term strategic plan and the necessary skills to execute that plan. They should then identify the internal candidates best suited to develop the skills and provide them with opportunities for growth. It is important the bank develop a culture of honest assessment of strengths and weaknesses and provide ongoing mentoring and feedback. Even with top talent, it is unlikely that Summitt would have achieved the success she did had she provided her players with feedback only once a year. In addition to an ongoing assessment and coaching program, the bank should discuss a career path for potential leaders, and the company should provide the necessary training and cross training, when feasible, to allow promising employees to learn each facet of the bank’s operations. Thorough training programs can be very attractive in recruitment and are invaluable to the development of a leader. Once the bank has invested in developing up-and-coming leaders, rewarding them appropriately and incenting them to remain with your bank are critical. No doubt, your competitors will recognize the strong leaders you are developing and actively recruit your talent, requiring your bank to maintain not just competitive salaries, but methods of keeping your compensation programs unique and desirable. An example is a nonqualified deferred compensation plan that pays in-service distributions at the end of certain periods, such as three- or five-year time frames. This type of plan typically would include performance-based compensation tied to specified goals. Additional amounts can be credited to the deferred compensation account and distributed at the end of a longer period (such as 10 years), providing even more incentive to stay with the bank. If the individual terminates before the applicable distribution period(s), undistributed funds could be allocated to hire a talented replacement or credited back to the bank’s income. We have found these flexible deferred compensation arrangements, when combined with the other tools, to be helpful in recruiting, developing and keeping top talent. An active career development program bolstered with proper financial incentives can help ensure your bank has the right leaders for the future. WPat Summitt’s Model on °ĬåĹƋƉ%åƴåĬŅŞĵåĹƋORIGINALLY PUBLISHED BY BANK DIRECTORjƉB)ƉBj~×ƉDAVID SHOEMAKER, MANAGING CONSULTANT, NFP EXECUTIVE BENEFITS BETH TAYLOR, SENIOR PLAN DESIGN ANALYST, EXECUTIVE BENEFIT SOLUTIONS, LLC

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42 » PA Bankers Association pabanker.comƴåĹÚŅųARTICLESveryone knows that third-party relationships introduce risk. But what about second parties, fourth parties and beyond?Let’s take a quick look at first, second, third, fourth and fifth parties to understand who they are and the potential risks they pose.FIRST PARTY This is your institution, and it’s where it all begins. Risk comes in many forms: operational, transaction, financial, credit, strategic, compliance, reputation, concentration and cyber, among others. Every decision your institution makes has the potential to introduce risk from big picture moves like a change in strategy or a new business line to smaller details like new disclosures.First-party risk is best handled with enterprise risk management (ERM). ERM is the unified systems, processes, culture and approach your institution uses to manage risk. It ensures that risk management isn’t a solo activity but one that links your institution’s mission, vision and values with strategy and decision making to ensure that the amount and types of risk your institution takes on is commensurate with its risk appetite. It makes sure risks are identified, measured, monitored and mitigated.SECOND PARTY These are your customers or members. While much of risk management is dedicated to protecting customers and their data, it’s important to remember that customers can pose risks too.For example, Bank Secrecy Act/Anti-Money Laundering (BSA/AML) rules are designed to weed out customers that use the financial system for nefarious purposes. FinCEN’s new customer due diligence (CDD) rules requiring the establishment of beneficial ownership for business relationships were developed for the same reasons. While most customers are just going about their business, those who use the banking system for criminal activities create extra work and compliance risk.There’s the risk that customers won’t pay back loans or might sue the institution. Customers also introduce security risks, particularly when it comes to online and mobile banking. Customers may not have the latest security safeguards on devices, making it easier for hackers to gain access to the bank’s systems or impersonate customers.It’s important to recognize these risks and put safeguards in place to properly manage and mitigate them.THIRD PARTY When your institution outsources an activity to some other provider, that institution is a third-party provider. This includes everyone from your landscaper to your technology service provider.Whether you handle an activity or you outsource it to a third-party vendor, your institution is responsible for the outcome just the same. That means it’s essential to identify critical vendors or high-risk vendors. These are vendors involved in critical activities that could have a major impact on operations such as payments or IT.Regulators provide detailed guidance on monitoring these relationships, including understanding how the vendor relationship fits into the institution’s overall strategic plan, vendor due diligence, contract negotiation, ongoing monitoring and termination. Financial institutions are expected to know what vendors are doing, how they are doing it and what steps they are taking to remain compliant with all laws, regulations, policies and procedures. That makes vendor management an essential element of any ERM system.FOURTH PARTY Your institution outsources functions and your vendors probably do too. A fourth-party is someone your vendor outsources to. Fourth-party EFirst, Second, Third, Fourth And Fifth Parties: BŅƵƉŅƉ`å°ŸƚųåƉĘåƉĜåųŸƉjüƉ~ĜŸĩƉ

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PA Bankers Association » Quarter 4, 2019 43jƉB)ƉBj~×ƉMICHAEL BERMAN, NCONTRACTSvendors go by a lot of names. Some companies call them providers. Others call them strategic partners. They can provide bill pay, mobile banking, core processing, legal or other services.Your institution isn’t just responsible for what your vendor does. It’s also responsible for the activities of its third-party vendors (aka fourth-party vendors). The more critical third-party vendors your vendor has, the greater the costs and risks of vendor management.There are ways to limit fourth-party vendor risk. When considering vendors, ask them about outsourcing and have them disclose their vendors so you can consider the potential cost of managing these relationships when comparing prices and risk. Due diligence on these vendors is a must. That includes everything from financials and test results to cyber security and business continuity planning.Unless a contract specifically prohibits it, a vendor can transfer its rights and responsibilities to another vendor. Your contracts should require an assignment clause that provides notice and consent before a vendor outsources—giving you the ability to control fourth-party risk.The good news is that fourth party risk got a little simpler with the Statement on Standards for Attestation Engagements 18 (SSAE 18) that came out last year. The SSAE 18 contains a vendor management element that requires a vendor to define the scope and responsibilities of each third-party vendor it uses and addresses performance reviews, audits and monitoring. Third-party vendors that can provide SSAE 18 make fourth party risk management simpler.FIFTH PARTY This is where things can get extra convoluted. When your vendor’s vendor outsources, this is a fifth-party. (It doesn’t necessarily even stop here as that vendor can outsource to yet another vendor creating a sixth, seventh, eighth-party and beyond.)Once again, your institution is responsible for the actions these vendors take on your behalf. It’s important to know about any critical third-party vendors your vendors’ vendors are using to understand potential risks and to have strategies for mitigating them. The SSAE 18 is your ally in understanding these relationships. The alternative is following the chain of critical vendors, making vendor management onerous.Now that you understand all the parties involved, make sure you have systems in place to manage the risks they present. With so many parties to track, don’t use a casual approach to management. It’s too risky.ĜĹÚåƻƉŅüƉADVERTISERSAPPROVAL PAYMENT SOLUTIONS ........................................................................................................................................17APPI ENERGY .........................................................................................................................................................................................13BOXWOOD MEANS .............................................................................................................................................................................9BURNS WHITE ..................................................................................................................................................................................... 25COMPLIANCE ALLIANCE ................................................................................................................................................................4CORNERSTONE ...................................................................................................................................................................................50CROWE......................................................................................................................................................................................................40BANK HEALTH CARE CONSORTIUM OF PA ................................................................................................................. IFCHERBEIN .................................................................................................................................................................................................. 33MERCADIEN ...........................................................................................................................................................................................27NFP..............................................................................................................................................................................................................BCPILLAR + AUGHT ................................................................................................................................................................................. 27S.R. SNODGRASS ..................................................................................................................................................................................7THE BAKER GROUP .......................................................................................................................................................................IBCTITLE INSURANCE .............................................................................................................................................................................11

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44 » PA Bankers Association pabanker.comPOSSIBLE CECL DELAY FOR SMALLER BANKS HAS IMPACT ON M&A Small Reporting Companies (public companies with a market cap of less than $250 million or less than a $700 million market cap and less than $100 million in annual revenue) and Non-Reporting Companies have been given a “gift” by the Financial Accounting Standards Board (FASB). If as expected, the FASB amends the Current Expected Credit Losses (CECL) implementation rules to delay their effectiveness until 2023 or earlier if you are no longer an SRC, it is time to move as a buyer and/or seller in the banking sector.From a buyer’s perspective, there is no question that the CECL rule delay would and will have a profound positive impact on the near-term financial benefits of acquisitions. Based on disclosures in Form 8-Ks filed by First Defiance Financial Corp. and Sandy Springs Bancorp, Inc. in connection with their respective acquisitions and the meaningful discussions of the “double dip” in recording loan allowances, it can be deduced that the CECL rule implications may have the effect of roughly doubling (or more) the merger’s expected “earn back” period. The “earn back” period has become the new litmus test for buyers and investors when evaluating the potential impact of an acquisition on a buyer’s common stock. This test provides perspective to potential earnings accretion of a transaction relative to the transaction price paid. While accounting mechanics are important, they are beyond the scope of this article. What is very relevant, however, is the “gift,” how long it lasts and its implications for bank M&A. From a SRC buyer’s M&A perspective, the immediate impact of CECL can be avoided until the earlier of if a transaction is closed before the Buyer is no longer a small reporting company or until 2023.If I am an SRC buyer, those M&A seeds we have in our pocket need to be planted, watered, fertilized, cultivated and harvested before the CECL window closes. From an SRC buyer’s perspective we must execute our M&A strategy now with relentless focus.If I am a company who may be considering selling within the next 5 years (whether an SRC or non-reporting company) for whatever reason - aging board of directors, retiring management, changing business environment, or to take advantage of maximized operating performance or actual shareholder value, we should consider what impact the rule delay may have on future versus current valuations, transaction pricing and the M&A environment. Translation: buyers will be more likely to buy at fair valuations without the short-term CECL impact upon the merger’s effectiveness (normal metrics or parameters of ƴåĹÚŅųARTICLESBeating the CECL Clock in °ĹĩƉ`åųčåųŸƉ°ĹÚƉÎŧƚĜŸĜƋĜŅĹŸ

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PA Bankers Association » Quarter 4, 2019 45value applying) rather than later when CECL’s “double dipping” impact is effective. Let’s not forget that valuation and its metrics still have a meaningful role in mergers and acquisitions (despite what pundits might think).OTHER CONSIDERATIONS There are other considerations that suggest buyers and sellers should act now rather than wait for CECL’s implementation, including its damaging impact on book values resulting from increased loan loss reserves. While the efficient market theory would argue that an accounting change should not impact valuations, there is nevertheless a risk that sellers could realize lower buyout offers post implementation due to lower reported book values despite earnings implications.There are scenarios wherein CECL would make acquisitions less accretive to buyers. For example, let’s assume the negative impact on book values depresses valuations for the sector. Let’s further assume economic growth diminishes by the time CECL is implemented for SRCs, which leads to increased demand for M&A to spur EPS growth. The uneven movements in the currency for M&A relative to M&A pricing in this very plausible scenario suggests buyers should implement their strategies now.Furthermore, CECL will muddy the water when it comes to valuations. Periods with robust loan growth will be less profitable due to the immediate recognition of credit losses, while times with stable to declining loan growth will become more profitable as income on loans continues to be recognized while credit losses have already been realized. Accordingly, traditional valuation models would penalize bank stocks in good times and reward them in bad. The considerable noise and uncertainty that CECL will undoubtedly create provides additional support to our thesis that buyers and sellers should act now.CONCLUSION Ultimately, the CECL rule will not change the inevitable course of industry consolidation. Those fundamentals are in place and trending as expected for the long-term. However, it may change the factors affecting business decision making, i.e., the timing of sellers, how and when to maximize value and to whom and when you may offer the most potential value different, than it otherwise would without current implementation of the CECL rule.Eventually the pricing impact of accounting rule changes will be absorbed, as always – remember the great anxiety over the loss of pooling method accounting and the full implementation of purchase method accounting in mergers and acquisitions. But for a short period of time, from now until 2023, the CECL rule delay does not treat all buyers equally, it favors SRCs. But like the advertisements say, “for a limited time only,” in this case the rule delay is a delay. It is not a repeal! That is a discussion for another day.When the CECL rule is effective, it may have the impact of lowering prices, because buyers by their nature are conservative and will wait until the market absorbs the rules implementation impact on a buyer’s stock price and generally in mergers and acquisitions pricing.Nevertheless, the certainty of the financial impacts of the delay for both SRC buyers and sellers is favored over the uncertainty of the effect of the CECL rules future impact on market pricing and financial statements. One more thought to ponder in the boardroom.jƉB)ƉBj~×ƉNICHOLAS BYBEL, JR. is a PARTNER of BYBEL RUTLEDGE LLP in Lemoyne, Pa., where his practice focuses on business and corporate law, mergers and acquisitions, financial institution regulation, securities offerings and compliance and corporate governance. Mr. Bybel also regularly consults on corporate structuring, strategic planning, capital formation and mergers and acquisitions for financial institutions. ANDREW W. STAPP is an INVESTMENT BANKER working with COMMONWEALTH ADVISORS, INC. and is an experienced as a top banking analyst and advisor to financial institutions in mergers and acquisitions. He has conducted equity research, performed in depth due diligence and prepared comprehensive financial and valuation models for numerous companies and transactions over his successful career.The foregoing is provided solely for informational purposes. Neither this article nor the authors are rendering legal, professional or financial advice or opinions on specific facts or matters. Distribution of this article to any person does not constitute the establishment of an attorneyclient relationship.

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46 » PA Bankers Association pabanker.comƴåĹÚŅųARTICLESDEFINING “NORMAL” CYBERSECURITY SPEND PER FTEChief information security officers (CISOs) have found themselves at a disadvantage when directors or executive peers challenge the cost of their cybersecurity spend, since little-to-no peer information is available. Bankers have often utilized regulatory call report information for peer analysis, measuring their institution’s financial performance compared to competitors. While call reports provide key financial performance indicators, detailed information related to cybersecurity and information technology budgets are not easily attained. A recent report titled “Pursuing Cybersecurity Maturity at Financial Institutions,” released by Deloitte and the FS-ISAC, estimates that responding financial institutions spend between $1,300 and $3,000 per full-time equivalent (FTE) employee for cybersecurity annually with an average of $2,300 being the norm. The report estimated responding financial institutions spend 6 percent to 14 percent of the IT budget on cybersecurity, with an average of 10 percent being the norm. While beneficial, the more interesting item in the report is that these figures decipher to a range of 0.20 percent (20 bps) to 0.90 percent (90 bps) of responding financial institution’s revenue with an average of .30 percent (30 bps) being the norm. ARE COMMUNITY FINANCIAL INSTITUTIONS LAGGING IN CYBERSECURITY?While 97 companies participated in the report, with representation spanning multiple revenue levels and various financial sectors, we can apply these results to the community based financial institution segment. Respondents were delineated by revenue into the following categories:ƽ 1EVKIQSVIXLERȶ'MRVIZIRYI  [MXLȴVIWTSRHIRXW ƽ 2MHWM^IHQSVIXLERȍȉȉ2 Less than $2B in revenue) with 23 respondents; and ƽ QEPPPIWWXLERȍȉȉ2MR revenue) with 36 respondents.Assuming that a community based financial institution should spend between 20 bps to 90 bps of revenues on cybersecurity, we can use available call report information to estimate what the average cybersecurity spend is in this segment of the financial institution universe.According to the June 30, 2019, Uniform Bank Performance Report (UBPR) Peer Group Average Distribution Report (by Percentile Rank) of the 5,352 banks that reported, the following peer averages were available:• Interest Income (as a percentage of average assets) - 4.34 percent• Non-Interest Income (as a percentage of average assets) - 0.60 percent• Assets per Employee ($ million) - 5.25Thus, a typical community based financial institution will have revenues What Does the Average Financial Institution Spend onƉƼÅåųŸåÎƚųĜƋƼũTotal Per FTE Total Per FTE Total Per FTE $50 m2,470$ 9.524 4,940$ 519$ 7,410$ 778$ 22,230$ 2,334$ $100M4,940$ 19.048 9,880$ 519$ 14,820$ 778$ 44,460$ 2,334$ $500M24,700$ 95.238 49,400$ 519$ 74,100$ 778$ 222,300$ 2,334$ $1 B49,400$ 190.476 98,800$ 519$ 148,200$ 778$ 444,600$ 2,334$ Spend 30 bpsSpend 20 bps Spend 90 bpsRevenue 4.94% (1,000)Average AssetsFTE $50 M$1

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PA Bankers Association » Quarter 3, 2019 47that are roughly 4.94 percent (4.34 percent + 0.64 percent) of average assets and have one employee for every $5.25 million in assets. Applying the ratios across a various range of asset size, the $2,300 per FTE estimate from the Deloitte report appears to be at the 90 bps range for the average performing community based financial institution. The Deloitte report noted small respondents budgeted a lesser percentage of their revenue (20 bps) on cyber than did midsize (50 bps) or large companies (40 bps). While small respondents’ average spend of $2,100 per FTE matched that of midsize respondents, this cybersecurity spend was much lower than the $2,700 cited by their large respondents. When it comes to building a successful cybersecurity program, however, the report noted that advanced respondents did NOT necessarily spend more on cybersecurity than less advanced respondents. The biggest takeaway from the report is HOW a cybersecurity program is planned, implemented, and managed is more effective than the percentage of revenue allocated to cybersecurity.KEY CHARACTERISTICS OF A SUCCESSFUL CYBERSECURITY PROGRAMDeloitte’s study also identified the three (3) key characteristics of financial institutions that have built successful and effective cybersecurity programs, including:Involvement - Effective cybersecurity programs commonly have secured strong executive and board involvement. Involved executive management monitors cybersecurity risk in the same perspective as financial risk, lending risk, compliance risk and other company risks. One of the major report findings is that a lack of management support and inadequate funding was a leading challenge among respondents. Going beyond setting the overall security strategy, the report found engaged management reviewed threats and cybersecurity risks, monitored the cybersecurity program, and assessed their organization’s vulnerability to a third party’s public breach. Better awareness of threats and cyber risk, along with the implications of a cyber incident to the institution, accelerates management engagement and focus the management team on the institution’s current challenges while maintaining appropriate funding.Alignment - Cybersecurity is an enterprise issue that goes beyond information technology. Effective cybersecurity programs recognize that cyber threats are one of the most critical risk exposures facing the financial industry. Cybersecurity is not merely a technology issue. While the cybersecurity program may have originated in the IT function, effective programs raise the profile of cybersecurity at the institution, allowing decision-making to be independent of other traditional IT considerations. Effective cybersecurity programs recognize the need to completely segregate the cybersecurity function from IT function. Strategy - Cybersecurity is aligned more closely with the overall business strategy in institutions with an effective cybersecurity program. With modern banking, all business functions have multiple dependencies on internal and external technology to perform daily operations. Leveraging technology is often how financial institutions compete and differentiate themselves from other institutions across the street or across the nation; however, new technologies may expose the institution to new threats and additional vulnerabilities. Business growth and expansion was the second-largest challenge identified by respondents. Management of effective cybersecurity programs requires an awareness of the business growth implications, expansion and the alignment of cybersecurity with the overall business strategy.Stay Informed - CISOs will be continually challenged to justify increased funding for cybersecurity. Using studies such as the reports by Deloitte and FS-ISAC and current industry peer information, CISOs can be better prepared to answer the question of not only, “How much funding do others financial institutions allocate on cybersecurity?” but also, “How are other financial institutions facing the challenge a developing and maintain an effective cybersecurity program with limited funding?”jƉB)ƉBj~: SHANE DANIEL is a SENIOR INFORMATION SECURITY CONSULTANT for SBS CYBERSECURITY, a premier cybersecurity consulting and audit firm dedicated to making a positive impact on the banking and financial services industry. Shane maintains his CISA, CPA, CIA, CGEIT and CRISC certifications. He has 27 years of experience in Network Security, IT Auditing, Consulting and ISP development.

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48 » PA Bankers Association pabanker.comABA INSURANCE SERVICESBond, D&O, Cyber Insurance, and Employment Practices LiabilityPatricia Williams, (216) 220-1280pwilliams@abais.comAPPROVAL PAYMENT SOLUTIONS, INC.Merchant Processing, Search Engine Optimization, Website Design and Social Media ManagementMegan Noe, (888) 311-7248 ext. 5011mnoe@apsolutions.netTHE BAKER GROUP Asset/Liability Management Software and ServicesCharles Amis, (405) 415-7231Charlie@gobaker.com34 banks received credits in surplus of over $8.9 million in 2018 with an average net funding increase in single digits.Wayne Whipple, (717) 255-6925wwhipple@pabanker.comCOMPLIANCE ALLIANCE Quality Compliance Services That Complement and Assist Internal Compliance PersonnelWayne Whipple, (717) 255-6925wwhipple@pabanker.comBITSManaged Service Provider for Voice and Data CommunicationChristian Ericson, (973) 474-1828Christian.ericson@bitsnetwork.comACCUME PARTNERSOutsourced Internal Auditing and Risk Management ServicesNicole Lloyd, (717) 903-3142nlloyd@accumepartners.comAPPI ENERGYElectricity and Natural Gas Procurement Services, Utilities Management PlatformJane Seagraves Sidebottom(800) 520-6685jseagraves@appienergy.com@RISK TECHNOLOGIES, INC.Automated CAT Tool & Digital Forensic Investigation, Network Consensus CybersecurityAllen Mitchell, (215) 485-7315 armitchell@atrisktech.comCOMMONWEALTH CHARITABLEMANAGEMENTCristine Clayton, (570) 278-3800cclayton@commonwealthcharitable.org*As of 4/12/19ANDERSON GROUPIntegrated Marketing and Communications and Business IntelligenceRay Melcher, (610) 678-1506rmelcher@thinkanderson.com BANK HEALTH CARE CONSORTIUM OF PACORNERSTONE ADVISORSCore, Debit EFT, Card Program, Loan Origination, Bill Pay, Mobile Banking & ATM Contract NegotiationJennifer Wagner, (480) 425-5204JWagner@crnrstone.comPA Bankers Services Corporation Select Vendors Provide zƉ°ĹĩåųŸƉ`åĵÅåųŸ Savings, Service and Quality

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PA Bankers Association » Quarter 4, 2019 49* Vendor selections and recommendations are made in accordance with PA Bankers Services Corporation’s stated mission. It is believed that the promoted products and services merit strong consideration by PA Bankers member banks. PA Bankers Services Corporation due diligence and selection criteria should not be construed as a guarantee, as the ultimate appropriateness may vary from bank to bank. In addition, member banks are encouraged to conduct their own due diligence reviews of recommended vendors. Remuneration received by PA Bankers Services Corporation is utilized in-part to support the PA Bankers Association through contracted agreements, corporate sponsorships and overhead coverage. This financial support expands resources and strengthens the services and programs of the PA Bankers Association.ONE POINTOutsourced Internal Purchasing, OfficeSupplies, Inventory Control and IPAddress Marketing/SalesPat McMahon, (570) 207-5107pmcmahon@opoffice.com Black 80%PWCAMPBELLPlanning, Design Coordination,and Construction ManagementErin Campbell, (800) 253-7430Erin.campbell@pwcampbell.com GLOBALVISION SYSTEMS, INC.Anti-Money LaunderingCatherine Lew(818) 998-7851 x128clew@gv-systems.comINVESTORS TITLE INSURANCE COMPANYMulti-Bank Owned Title Insurance ProgramKaren Brittain Barnett, (419) 577-5900kbarnett@invtitle.comTHE KAFAFIAN GROUPPerformance MeasurementRobert E. Kafafian(973) 299-0300 x106rkafafian@kafafiangroup.comL.R. WEBBERMultiple Medical, Drug, Dental & Vision Options and EB SolutionsBrad Webber, (814) 695-8066bwebber@lrwebber.comEVERFIFinancial EducationTechnology PlatformMatt McDonald, (415) 672-7586mmcdonald@everfi.com*As of 4/12/19NFP BOLI, Executive Compensation and Long-Term CareDavid Shoemaker, CPA/PFS, CFP® (901) 754-4924david.shoemaker@nfp.comDELUXE CORPORATIONCheck ProgramTodd Wroblewski, (724) 625-5599todd.wroblewski@deluxe.comDEALERTRACK COLLATERAL MANAGEMENT SERVICES, INC.Electronic Lien and Title ProgramWayne Whipple, (717) 255-6925wwhipple@pabanker.comNCONTRACTSMark Schwartz, (615) 210-3775, mark.schwartz@ncontracts.comKEYSTATE CAPTIVE MANAGEMENTBrian AmendManaging Director & VP Sales, Eastern Region(302) 425-5158bamend@key-state.comTHE FULCRUM GROUP INTERNATIONAL, INC. Reviewing, Re-negotiating and Bidding Check Printing RelationshipTed Amon, (770) 736-5787 ted@thefulcrumgroupintl.comCRA PARTNERSReceive High-Yielding CRA CreditSue Shaffer, (901) 529-4787sue.shaffer@SHCPFoundation.org

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Core SystemsLeverage more than 15,000 pricing data points acquired through numerous system selection negotiations, contract renewals and benchmarking engagements along with our proven methodologies to get the most advantageous contract for an institution—no matter the size. Services include Core Selections and Renewals, and In-house vs. Service Bureau Evaluations.Merger ContractsWe can deliver a merger negotiation strategy and lead our clients through contract evaluations, product selections, and negotiation of final contracts. We understand that speed is of the essence in a merger situation and we ensure all decisions are based on sound functionality, benefit analysis and financial modeling based on the merged institutions' combined volumes.Debit and Credit CardCard processing is an opaque industry; we bring transparency and clarity to the negotiations. Services include: Debit / ATM Processing Renewals, PIN POS Networks, Debit and Credit Selections, and Credit Processing.Digital Banking | Bill PayAn institution’s ebanking platform is the most used channel and it has to fit their needs. We assist in evaluating options and negotiating cost-eective contracts for developing products to help banks remain competitive. We know the vendors, the competitive landscape, and stay ahead of the market trends—enabling our clients to deliver the services and functionality that consumers are demanding.VISA | MastercardCornerstone negotiates with Visa and Mastercard for the highest level of incentives and the lowest fees. Our card branding negotiators assist our clients by soliciting bids and negotiating with the vendor(s) for market ready agreements that properly reward our clients for their relationships.Ancillary Services—Loan | Deposit Origination, Trust, Item ProcessingWe ensure pricing and terms are market competitive for all ancillary solutions, whether our clients choose to partner with their core vendor or a third-party.Data and Voice NegotiationsData and voice circuits are the most expensive line item in an infrastructure budget. Our market knowledge of pricing and peer benchmarking delivers savings to the bottom line and results that outperform the market. We provide objective insight and guidance with no vendor partnerships or reselling agreements.ATM | ITM NegotiationsOur objective advice and methodology for evaluating ATM contracts strategically positions our clients to achieve improved results and reduced expenses. Services include—renegotiating existing service contracts, negotiating purchase price on a fleet of machines, bid solicitation to explore the market oerings, business case strategy and ROI analysis evaluating new technology.Negotiate BETTER ContractsWe Can Help Your BankCornerstone Advisors has the data, experience and knowledge to help clients optimize their vendor contracts. Our multidisciplinary team can assist with all or just select steps — including selecting the right vendor, negotiating the most favorable contract, developing the best implementation strategy, and ensuring optimal performance.©2019 Cornerstone Advisors. CONTINUE THE CONVERSATIONwww.crnrstone.comCornerstone Advisors@CstoneAdvisorsContact Jennifer Wagner602.770.4220 jwagner@crnrstone.com /in/jen-wagner

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Member: FINRA and SIPCOklahoma City, OK | Atlanta, GA | Austin, TX | Indianapolis, IN | Long Island, NY | Salt Lake City, UT | Springfield, ILThe Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.www.GoBaker.com | 800.937.2257Successful financial institution managers know the importance of achieving a high-performance plan. Establishing such a plan requires not only sound data and accurate information, but also an insightful partner; The Baker Group is that partner.Leaders in innovation. The Baker Group remains the industry leader when it comes to innovation. We are truly a one-stop shop that never outsources our customizable reporting services. To find out how The Baker Group can assist your institution in defining and meeting its financial objectives, call your Baker representative or Ryan Hayhurst at 800.937.2257.Investment Portfolio ServicesBalance Sheet ManagementEducationPublic FinanceStrategic PlanningFundingBond Accounting and AnalyticsOur Forty Years of Experience Will Guide Your Institution to the Next LevelHigh-Performing ClientsHave High-Performing Partners

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STRONGER TOGETHERBOLI, Executive Benets, and a Whole Lot MoreNFP is more than just risk assessment, BOLI, and executive and director benets. With the power of Equias Alliance and NFP combined, our oerings are now more robust than ever — and you won’t nd a better client experience anywhere else.PRSRT STDUS POSTAGEPAIDHARRISBURG, PAPERMIT No. 11693897 North Front StreetHarrisburg, PA 17110Let’s discuss the solutions you need to retain and reward key employees.David Shoemaker, CPA/PFS, CFP®david.shoemaker@nfp.comInsurance Products: 1) are not a deposit or other obligation of or guaranteed by, any bank or bank aliate; 2) are not insured by the FDIC or any other federal government agency, or by any bank or bank aliate; and 3) may be subject to investment risk, including possible loss of value. All guarantees are subject to the claims-paying ability of the issuing insurance company. Insurance services provided through NFP Executive Benets, LLC (NFP EB), a subsidiary of NFP Corp. (NFP). Doing business in California as NFP Executive Benets & Insurance Agency, LLC. (License #OH86767). Securities may be oered through Kestra Investment Services, LLC, member FINRA/SIPC. Kestra Investment Services, LLC is not aliated with NFP or NFP EB. Neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certied Public Accounting rms.