paBanker Magazine Spring 2023 : simplebooklet.com

2 » PA Bankers Association pabankers.com                    CMYCMMYCYCMYKSnodgrass 2022 Full Page Ad - We look past the numbers - R* - PRINT.pdf 10 10/26/22 5:03 PM

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PA Bankers Association » Spring 2023 5PA Bankers STAFF DIRECTORYGeneral Number (717) 255-6900PA Bankers Association Registrar and Records Coordinator jillametrano@pabankers.com | (717) 255-6927 Legal Assistant lbrandt@pabankers.com | (717) 255-6936President & Chief Executive Ocer dcampbell@pabankers.com | (717) 255-6916 Vice President, Professional Development jcatalano@pabankers.com | (717) 255-6939Administrative Assistant, Communications and Government Aairs adoyle@pabankers.com | (717) 255-6937 Director, Information Technology cferraro@pabankers.com | (717) 255-6921 Administrative Assistant, Member Engagement & Development mhenry@pabankers.com | (717) 255-6900 Director of Marketing and Communications shocker@pabankers.com | (717) 255-6912Vice President, Advocacy and Government Aairs ekanter@pabankers.com | (717) 255-6910 Sr. Director, Membership kmcdermott@pabankers.com | (717) 255-6914 Director, Finance amoshgat@pabankers.com | (717) 255-6938General Counsel lrynd@pabankers.com | (717) 255-6935 Chief Operating Ocer mstaton@pabankers.com | (717) 255-6923 Professional Development Assistant mwisniewski@pabankers.com | (717) 255-6934 PA Bankers Services Corporation Director, PA Bankers Services Corporation tchambers@pabankers.com | (717) 255-6928 Administrative Assistant, PA Bankers Services Corporation lscott@pabankers.com | (717) 255-6903 President, PA Bankers Services Corporation cwallett@pabankers.com | (717) 255-6913 Vice President, Business Development wwhipple@pabankers.com | (717) 255-6925magazineSTAFF  Sara E. Hocker     J. Duncan Campbell III   Jacqueline A. Catalano Tiani A. Chambers Erin L. Kanter Louise A. Rynd Michelle L. Staton Cynthia L. Wallett PA Bankers Services Corporation Board of Directors and Ocers   M. Theresa Fosko, SPHR  Tracy E. Watkins, SPHR Treasurer J. Duncan Campbell III  Ginger G. Kunkel John H. Montgomery John C. Gill Thomas C. Graver, Jr., CPA Eugene J. Draganosky Brendan J. McGill Joseph R. Toth Karl F. Krebs Philip L. Freeman, Jr. Scott E. Fritz Timothy M. Finnerty, Esq, CPA Address Correspondence to: paBanker Magazine c/o Pennsylvania Bankers Association 3897 N. Front St., Harrisburg, PA 17110 Tel. (717) 255-6912 Email: adoyle@pabankers.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 nancial institutions with educational programs, member services and represents members on the state and federal level. Since 1895, PA Bankers continuously worked to be the premier nancial services organization supporting a diversied membership through volunteer participation, a knowledgeable sta, state of the art technology and a commitment to excellence.paBanker Magazine is the ocial publication of PA Bankers.EditorialThe opinions expressed in articles by authors other than Association sta and ocers are 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 Magazine sta. Questions and comments should 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.Printed by: HAAS Printing CoSponsored by:

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6 » PA Bankers Association pabankers.coms Duncan outlines in his column for this issue of paBanker Magazine, the changes we are witnessing in Congress, the Pennsylvania General Assembly and across our nation bring with them both opportunities and challenges for our industry and economy. These changes mean now more than ever, our industry needs your engagement on behalf of our customers, shareholders, employees and communities.As the industry which is the life blood of the American capitalist system, we should take pride in the essential role we play in sustaining the economic vitality of our nation and in many ways, the globe. For more than 100 years the United States has been the generator of capital for the world. American entrepreneurship, ingenuity and hard work have created the greatest improvement in the standard of living over the history of humankind. Bankers have played a key role as the distribution channel of capital to finance the industrial revolution and, most recently, the information revolution. We should all take pride in the key role banking has played AEngagement Now More Than EverMARK RITTERExecutive Vice President & Chief Administrative OfficerThe Northumberland National Bankin building the American economy and the richest society on earth.There are some elected and appointed leaders of our government who do not believe in the vital role banking plays in our economy. They believe banks should be replaced by governmental agencies that are not subject to the efficiencies of the marketplace. Other governmental officials support onerous regulations that would simply increase costs without improving citizens’ access to capital and banking products and services. One official has gone so far as to term overdraft fees and credit card late fees as “junk” fees. We all know these fees were created as risk management tools and not as revenue sources. These sorts of views and perspective do not support the best interests of our customers and communities.There are some proposals by federal and state officials which will support economic growth and greater access to bank products and services. These include at the federal level the Secure and Fair Enforcement Banking (SAFE) Act, which would permit banks to provide services to companies in the cannabis industry in those states where it is legal to participate in these enterprises. On the state level, during the last session, PA Bankers advocated for legislation in the General Assembly of Pennsylvania which would clarify the ability to deduct goodwill under the bank shares tax. Both of these initiatives would support economic growth and capital formation.In order to make certain that laws and regulations support a dynamic and growing national economy, it is vital that each of us is engaged at the federal and state level. The threats to our economy and industry are real, and we can’t afford to be complacent with our members of Congress, the General Assembly and regulators. If you are not already involved in PA Bankers’ and ABA engagement programs, I strongly encourage you to become a contact banker where you engage with your local members of Congress and the General Assembly on issues of importance to banks. I cannot overstate the impact letter writing campaigns have on the actions taken by our representatives in government. You should also participate in visits to our legislators including PA Bankers Day at the Capitol in Harrisburg and the ABA chairman’sINSIGHTS

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PA Bankers Association » Spring 2023 7visits with both members of Congress and regulators. Last, I strongly encourage you to annually contribute to PaBPAC, our association’s political action committee. Having political action committee funds available to provide PA Bankers’ government relations leaders with the ability to participate in political events is vital to our efforts to elect pro-business candidates.The theme of our upcoming convention in Boca Raton, Florida in June will be “Celebrate America”. We have much to be thankful for in our nation, including our open, free capitalist economy. Nowhere in the world is it easier to redeploy capital, invest and innovate. The freedoms we enjoy allow us to engage with our governmental leaders and advocate in an effort to enact laws and regulations that we believe are best for our state and nation. We should take pride in the American system and at the same time take advantage of those freedoms to do what is best for our customers, shareholders, employees and communities.I look forward to seeing many of you in Florida this June as we take three days to celebrate the greatest nation the world has ever seen. We have had a challenging few years and some of our citizens have been focused on our problems with little time spent on making the most of the many blessings we enjoy as a nation. In June we will take some time to focus on the many positive institutions that make up our nation and the benefits they bring to our citizens and, in many ways, the world. The American banking system is widely regarded as the most dynamic and successful system on the globe. This success is a result of our economic freedom and the skilled people who are the greatest assets in our industry. All of us need to be engaged in order to maintain and grow this industry that has served our nation and economy so well for the past 246 years.See you in Florida in June.The community bank compliance partner.That’s Review Alliance.Explore how R/A can help - Talk with our teamat info@bankersalliance.org or (833) 683-0701.Holding Company of Compliance Allianceand Review AllianceWhich special projects does your team needto tackle to have allyour 2023 submissions ready for exams?Scan the QR codefor R/A’s capabilies.CMYCMMYCYCMYK20222023

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8 » PA Bankers Association pabankers.comappy 2023, as this is my first member message of the new year!With this new year comes a new Congress, a new state legislative session with a new Governor and many new legislators. This new year allows us the opportunity to renew our commitment to the same mission that our industry has embraced forever: be the provider of essential financial services and economic relief for the Commonwealth’s citizens, businesses and communities. That mission should resonate with all elected officials, whether Republican, Democrat or Independent; new or old; and it is our objective at the Pennsylvania Bankers Association to ensure that it does.The November elections were a surprise to many. The red wave that had been forecasted never materialized, however there was enough change in the U.S. House of Representatives for Republicans to take leadership of that Chamber. After multiple votes to determine the Speaker of the House—15 to be exact—Rep. Kevin McCarthy (R-Ca.20) prevailed. How unified the House will be on policy issues is yet to be seen. For banking, specifically, we are fortunate to have had Rep. Dan Meuser (R-Pa.9) appointed to the House Financial Services Committee. PA Bankers has worked closely with Rep. Meuser, dating back to his time as Secretary of the PA Department of Revenue in the Corbett Administration. Throughout the pandemic, Rep. Meuser was engaged deeply with us and the banks in his district, providing outreach to the Small Business Administration on our behalf and communicating our concerns on a regular basis. We have already begun working closely with Dan and his staff during this Congress and we greatly appreciate his efforts on behalf of the industry.Related to the U.S. Senate, everyone is aware that we lost a true supporter of our industry in former Sen. Pat Toomey. Sen. Toomey had the experience and background to challenge policy considerations that might adversely affect the banking industry and put forth positive policies that would allow us to better serve our customers. Former Pennsylvania Lieutenant Governor John Fetterman has succeeded Senator Toomey, and he has been appointed to serve on the Senate Banking Committee, so we will have the opportunity in this capacity to emphasize the importance of a strong and effective banking industry. We will make it a point to highlight how critical the banking industry is to deploying capital to local communities and their small businesses. Without this support, these businesses do not succeed; in fact, they don’t exist which means jobs don’t exist and their taxes don’t support the local economy. With all of that in mind, we think we have a pretty strong argument for all policymakers who care about their districts to embrace the desire for a strong banking system.At the state level, Republicans continue their leadership of the PA Senate with Sen. Kim Ward (R-39) being elected the first female President Pro Tempore; Sen. Joe Pittman (R-41) serving as Majority Leader; and Sen. Ryan Aument (R-36) assuming the role of Whip. It is important to note that Sen. Scott Martin (R-13) has been appointed Senate Appropriations Chair. We will look forward to continuing our work with all of these leaders, as well as Leader Jay Costa (D-43) and the Democrat leadership, as we have for many years.The PA House of Representatives has shifted to Democrat-controlled leadership, upon the three special elections which were conducted in February. With these elections, Democrats hold a slight 102-100 majority with one special election scheduled for Primary Day in May. We have worked closely with the Welcome to 2023!from the CEO to the CEODUNCAN CAMPBELLPresident & CEO PA Bankers Association

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PA Bankers Association » Spring 2023 9new Democratic Leadership team, including the recently-elected Speaker of the House, Joanna McClinton (D-191), Majority Leader, Matthew Bradford (D-70) and Appropriations Chair Jordan Harris (D-186), as well as Minority Leader Bryan Cutler (R-100), Appropriations Minority Chair Seth Grove (R-196) and Minority Whip Tim O-Neal (R-48). I’m pleased to say that we have received a positive reception from both parties in both chambers which I believe to be a testament to the politically-neutral work that Pennsylvania’s banking industry does to support Pennsylvanians and Pennsylvania’s economic needs.With a new Governor in Josh Shapiro, we have new leadership at important state agencies such as the Department of Banking & Securities (DoBS) and the Department of Revenue (DoR). Governor Shapiro has announced his appointment for DoBS Secretary as Sarah Hammer, a former U.S. Department of Treasury official and leader of the Stevens Center of Innovation in Finance at the University of Pennsylvania’s Wharton School. We were pleased to provide the Consumer Financial Protection transition team working group with a set of issues important to our membership. We will look forward to working with Acting Secretary Hammer and her staff at the Department.Similarly, we are excited to continue our work with Acting Secretary Pat Browne, the Governor’s appointee to lead the PA DoR, and a former state Senator from Lehigh County. We have worked closely with Senator Browne for many years as Appropriations Chair, and we have appreciated having the opportunity to engage with him on many tax-related issues in that role.What the political and policy environment in both Washington and Harrisburg mean to our banking issues is yet to be fully understood, however one thing is for certain, our agenda remains consistent regardless of political leadership. We will continue to press for commonsense regulation; for tax and regulatory fairness with credit unions, the Farm Credit System, fintechs and digital asset/crypto firms; for economic policy that allows our customers the relief they are searching for during such an impactful inflationary environment, among other things such as fairness of state tax interpretation and economic competitiveness for the Commonwealth.As Mark has pointed out in his article, we need every one of our 70,000 plus bankers to engage in advocacy on behalf of the industry. That engagement can take many forms—complete a call-to-action request; meet with your local legislators in their home districts; join us in Washington or Harrisburg for our Bankers Days; or give of your personal treasure by supporting PaBPAC. While this is not a solicitation for PaBPAC (Federal), your financial support helps us to elect pro-banking, pro-business, bipartisan policymakers. I want to say thank you to the numerous bankers who gave to the 2022 campaign. With your support, we were able to reach a very aggressive goal of $415,000 and exceed it, slightly.So with the 2022 elections behind us, our focus is on working to further an agenda that bolsters our local, state and federal economies, through the offering of capital to our consumers and commercial customers, in a way that is prudent, effective and meaningful. That’s a mission worth fighting for and one which we will carry forward on your behalf each and every day. Join us in that mission, as together we can make a difference.Diversity, Equity and Inclusion Success Stories and Best PracticesWould you like to share what your bank is doing in the diversity, equity and inclusion space with PA Bankers? Please reach out to Michelle Staton, Chief Operating Officer, mstaton@pabankers.com.

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10 » PA Bankers Association pabankers.comPA Bankers Association Intern Program tenONpageTENollowing a successful pilot effort in 2022, PA Bankers Association is taking the partnership with Shippensburg University statewide to support our member banks in recruiting the next generation of bankers. The goal of this effort is to increase awareness of the opportunities that exist in the banking industry, as well as attract talent in various areas across the bank (retail, operations, IT, marketing, HR, credit, etc.).1. BANKING INTERN & RECRUITING WEBSITE – The website was created specifically for this effort and is made available to PA Bankers Association member banks. A one-stop site for internships, recruitment and professional development programs, including guidebooks and several other useful resources that can assist you in your talent acquisition and retention needs. The passcode to access the site is: PBA2023! 2. BANKING DISCOVERY: EXTERNSHIP PROGRAM- Two residential week-long programs, hosted by Shippensburg University and planned by Pennsylvania Bankers Association member banks, will provide in-depth opportunities and early talent experiences focused on the banking industry for college-age students. Cohort One: May 2023, Cohort Two: August 2023. The goal is to offer the externship program to other PASSHE schools to be used statewide.3. CAREER AND LEADERSHIP SKILLS ACADEMY - VIRTUAL PROFESSIONAL DEVELOPMENT FOR BANKING INTERNS - For the second year in a row, Shippensburg University will deliver a 10-week, live online series of professional and leadership development sessions for your interns. Topics include emotional intelligence, personal branding, networking, and inclusion and belonging in the workplace. If you would like your interns to participate. Please click here to register4. RECRUITMENT BEST PRACTICES - The Shippensburg University’s Career Center team has developed a digital guide of best practices and detailed contact information on how to recruit interns and employees from the universities that make up Pennsylvania’s State System of Higher Education (PASSHE). 5. RECRUITMENT ASSISTANCE AT SHIPPENSBURG UNIVERSITY - The Shippensburg University’s Career Center team is hosting internship workshops focused on the Pennsylvania Bankers Association partnership. For more information contact career@ship.edu.6. STATEWIDE RECRUITMENT ASSISTANCE - In addition to posting your opportunities on Handshake, member banks can send links to open internships and employment opportunities, along with a PDF description to the Shippensburg University’s Career Center team. The team will share opportunities throughout the PASSHE system career teams. Contact the Shippensburg University’s Career Center team at career@ship.edu.7. INTERNSHIP PROGRAM DEVELOPMENT RESOURCE - The Shippensburg University’s Career Center team has developed a digital guide of best practices and step-by-step advice on how to create an internship program from conception to implementation. 8. INTERNSHIP PROGRAM DEVELOPMENT CONSULTATION - The Shippensburg University’s Career Center team will provide 1:1 consulting to help you get your program started. For more information contact career@ship.edu.9. HANDSHAKE: UNIFORM CAREER MANAGEMENT SYSTEM - All PASSHE universities use Handshake as their career management system for internship and job postings, event management and other on-campus recruitment opportunities across the system. More information is available in the digital guidebook. 10. BANKING DISCOVERY: SUMMER CAMP FOR 8TH GRADE MIDDLE SCHOOL STUDENTS - This camp, hosted by Shippensburg University and Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) will focus on increasing college and career readiness of low-income students in Pennsylvania. The June 2023 camp will have several sessions for both students and parents on career pathways in banking, as well as financial literacy activities.

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12 » PA Bankers Association pabankers.comcommunityCORNERNew Tripoli BankNew Tripoli Bank has donated $100,000 to the Northwestern Lehigh Education Foundation as part of its ongoing effort to support public education in the community. The donation will be used to support approved Educational Improvement Tax Credit 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 ever-changing world. These funds will be used to continue replacing the Promethean Board smart boards in high school classrooms as well as other projects in need of funding.WelcomeAFFILIATE MEMBERS:FINANCIAL INSTITUTION MEMBERS:• Szaferman Lakind Blumstein & Blader, PC• The Plateau Group, Inc.• Troutman Pepper Hamilton Sanders LLP• Marquette Savings BankNEW TO PA Bankers1st Summit Bank Penn Community Bank1ST SUMMIT’s Employee Foundation raised $1,000 during their military appreciation fundraiser to donate to Wings For Our Heroes, a not-for-profit organization that provides outdoor adventures and adaptive equipment to military, police, firefighters, and EMS workers who have been disabled in the line of duty. This awesome organization gives to those who gave to us.Penn Community Bank has contributed $25,000 to Montgomery County Community College (MCCC) in support of its Workforce Development Division’s new MontcoWorks Apprenticeship Program (MAP).The program offers students the opportunity to gain in-demand workforce skills and college credits at no cost, while training alongside professionals and earning a steady paycheck from a partnering employer.

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14 » PA Bankers Association pabankers.comcommunityCORNERNexTier Bank Juniata Valley BankNexTier Bank made a generous contribution to the Seneca Valley Foundation through Pennsylvania's Education Improvement Tax Credit (EITC) program. These funds will support Engineering & Accounting courses. Juniata Valley Bank (JVB) is committed to being a great place to bank AND a good neighbor. In this photo, Tina Smith, SVP/Director of Human Resources, presents JVB’s annual corporate donation for $9,000 to Colette Hartzler, Executive Director of the United Way of Mifflin-Juniata. Pennian BankTeam members from Pennian Bank recently presented an EITC contribution to students at Cumberland Valley Eagle Foundation. Some of these funds support its summer reading booster program, which provides reading support to students who could benefit from summer skills practice. 800.520.6685 info@appienergy.com appienergy.comOur team of experts will assess your facilities'energy needs and take the burden of energymanagement off your plate. Provide a real-time, apples-to-apples comparison of supplier pricingNegotiate on your behalfMinimize budgetary riskProvide customized energy management solutionsSet & meet energy efficiency & sustainability goalsAS YOUR TRUSTED ENERGY ADVISOR, WE CAN:Conta c t u s today f o r y o ur co m p l i m e ntary e n e r g y asse s s m e n t : 20222023

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16 » PA Bankers Association pabankers.comfeatureARTICLE• First-Ever DEI Conference Held in April 82 attendees – included a pre-conference roundtable session, which was followed up with a virtual roundtable session in October 2022.• DEI TRACC Development of a roadmap for PA Bankers members to guide them through their DEI journey. Pilot effort launched with two member banks to further refine the tool in-practice before making it available to all member banks in April 2023.• Bank On Certified Accounts » PA Bankers forms Statewide Bank On Coalition to support existing local Bank On coalitions as well as areas of the state not currently covered by a local coalition. » The number of Bank On certified accounts in PA increased from 7 at the beginning of 2022 to over 40 at the end of 2022 » Michelle Staton joins Naomi Camper at ABA Convention to talk about PA Bankers’ efforts and encourage banks to join Bank On CoalitionsDEI EFFORTSHIGHLIGHTS OFAS WE CONCLUDE ANOTHER YEAR, WE CELEBRATE THE SUCCESSES OF PA BANKERS AND ITS MEMBERS IN 2022.PA Bankers INTERN PROGRAM Pilot effort launched in partnership with Shippensburg University in Central PA and three member banks to refine the effort before the statewide launch in 2023.

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featureARTICLEHIGHLIGHTS OFLEGISLATIVE SUCCESSES $416,980.50Exceeded goal for 2022 48 attendees   38  1,000 banker lettersFEDERAL LEVEL  STATE LEVEL  We returned to more in-person programming in 2022 post-pandemic, while continuing to offer ABA programming, webinars through OnCourse and other virtual training events. Attendance numbers for 2022 include:2432381,169NUMBER OF ATTENDEES AT CONFERENCES, SEMINARS AND ANNUAL CONVENTION NUMBER OF ATTENDEES AT PA BANKERS’ SCHOOLS NUMBER OF ABA TRAININGS TAKEN NUMBER OF WEBINARS THROUGH OnCourse PROFESSIONAL DEVELOPMENT 1,50418 » PA Bankers Association pabankers.comTOTAL SOCIAL MEDIA FOLLOWERS 7,236 Barry Pelagatti, Next Level AdvisorWhatever your next move, we’re here to help.At RKL, we’re focused on helping banks like yours achieve what’s next. Whether it’s enhancing your protability, minimizing your tax obligations, driving efciency in your operations or adopting new technologies, we’re advisors for growth. However you dene “next level,” count on our team of advisors to help you navigate the everyday while focusing on the bigger picture to drive you and your bank forward.Learn more at rklcpa.comCPA & Advisory | eSolutions | Private Wealth | Virtual Management SolutionsADVISORS forGROWTH

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20 » PA Bankers Association pabankers.comfeatureARTICLE2023June 8 - 11, 2023 | The Boca Raton | Boca Raton, Fla.PA Bankers 2023 ConventionExperience four days of informative, inspirational and timely educational content, dynamicspeakers, community service, networking opportunities, fine dining and entertainment duringthe PA Bankers 2023 Convention.TOPICS KEYNOTE SPEAKERSEXPERIENCE THE BOCA RATONCEO Peer ExchangeDEI and the Culture of Your BankInvestment PanelCommunity Banking and BaaSCRA Strategy Succession Planning Increasing Revenue, Reducing Expenses andImproving the Customer ExperienceMoving to an Enterprise Data StrategyThe State of the Health Care System and theCost of BurnoutLooking Both Ways on ESG ConsiderationsWhat Do Millennials and Gen Z Groups Wantfrom YouSolving Your Main Office Space Needs in aChanging EnvironmentJeb BushFormer Governor of FloridaJames M. OlsonFormer Directorateof Operations ofthe CIAFrom The Boca Raton:Our story began in 1926, with a 100-room inn nestled inthe brand-new city of Boca Raton. As we grew over thedecades and became a South Florida institution, fanscame to know the resort as simply The Boca Raton. Nowembracing that title as our official name, The Boca Ratonwelcomes you to experience the extraordinary.PA Bankers CONVENTIONPreview

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PA Bankers Association » Spring 2023 21Questions? Contact: Jackie Catalano | jcatalano@pabankers.com | (717) 255-6939Visit www.pabankers.com to register today.OPTIONAL ACTIVITIES - Preregistration RequiredCHARITABLE OUTREACH PROGRAM: VOLUNTEERING WITH "BOCA HELPING HANDS"Wednesday, June 7 | 12:45 –4 p.m. | No additional cost. | Limited to the first 53 registrants.Boca Helping Hands provides food, medical and financial assistance to meet basic human needs as well aseducation, job training and guidance to create self-sufficiency to those in need in Palm Beach County. Conventionattendees may volunteer to help fill shelves, pack bags of food, produce and nonperishable items for distributionto the community and elementary school-age children for summer camps. CATAMARAN SAIL & SNORKEL TOUR Thursday, June 8 | 8:45 a.m. – 1 p.m. | $185/person | Limited to the first 49 paid registrants. Must be 10 years of age.Sailing on the “Island Breeze” Catamaran is an experience to remember. As our guest, you will enjoy a scenicintracoastal waterway cruise, then sail out into the Atlantic Ocean and see the amazing marine life. Swimming,sailing and snorkeling are some of the activities to experience on our cruise. You’ll find there’s nothing like theexhilaration of sailing in the open ocean as our hulls cut through the water, gliding over the waves with the soundsof the winds in our sails.CRAFT BREWERY TOURFriday, June 9 | 12:45 – 4 p.m. | $170/person | Limited to the first 50 paid registrants. Must be 21 years of age.What better way to spend part of the day than with a great craft brewery adventure! We visit three local breweriesin about three and a half hours. You will learn about the beer making process, types of beer, the breweries andmuch more. Did we mentioned that you will also be sampling great beer along the way? This three-brewery tourwas created for guests looking to enjoy great local craft beer. You're offered generous beer samples andinformative behind-the-scenes tour.A MISSION TO SAVE FLORIDA'S SEA TURTLES AT GUMBO LIMBOFriday, June 9 | 12:45 – 4 p.m. | $160/person | Limited to the first 46 paid registrants. At the edge of the Intracoastal Waterway and the Atlantic Ocean in Boca Raton lies the one-of-a-kind 20-acreGumbo Limbo Nature Center. It is here on these natural beaches where sea turtles have emerged for centuries tolay their hatch of eggs and return to the world's oceans and seas. It is also where you will be immersed in theconcerted effort of Florida conservationists to save the world's rare and endangered sea turtle populations. PA BANKERS CONVENTION OPENSaturday, June 10 | 1:30 p.m., scramble format | Resort Golf Course $200/person (includes greens, cart fees and boxed lunch) | Limited to the first 128 paid registrants.PICKLEBALL TOURNAMENT Saturday, June 10 | 2 p.m. | Resort Pickleball Court | $100/person | Limited to the first 24 paid registrants.

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24 » PA Bankers Association pabankers.comgovernmentRELATIONShere’s a saying that “everything old is new again,” and that’s certainly an adage you can bank on in Washington, D.C.—especially when it comes to poor public policy proposals. A textbook example of this unfolded during the 117th Congress, when our industry found itself once again facing a bad idea that we thought had been soundly defeated: placing restrictive routing mandates on credit cards, like those imposed on debit cards by the Durbin Amendment over a decade ago. The idea came in the form of a bipartisan bill—the so-called Credit Card Competition Act—introduced in the Senate by Sens. Dick Durbin (D-Ill) and Roger Marshall (R-Kan.) and in the House by Reps. Peter Welch (D-Vt.) and Lance Gooden (R-Texas). Bankers know all too well that the 2010 Durbin Amendment had disastrous consequences for banks and their customers: it increased the costs of checking accounts and debit cards and ultimately led to the elimination of popular debit card rewards programs. The Durbin Amendment’s most damaging provisions apply to banks of all sizes, causing a nearly 25% cut in the per-transaction debit card revenue earned by banks with under $10 billion in assets. At the same time, it helped line the pockets of large retailers who talked a big game about passing savings on to consumers—but 10 years’ worth of data tells us that simply isn’t what happened. In fact, the Federal Reserve published a study finding that only 1% of merchants lowered prices for consumers since the Durbin price controls took effect. What’s more, the Credit Card Competition Act also goes several steps further than the Durbin amendment—not only would it require banks to add a second network to their customers’ cards, but it would limit them to options set by the Fed, unlike the Durbin Amendment, which allowed banks to choose between any two unaffiliated networks. The Credit Card Competition Act also requires banks to accept virtually any kind of transaction—functionally requiring them to onboard potentially many more than two networks, even networks that don’t meet basic data security standards.Given the potentially catastrophic effect the bill could have on community banks and bank customers—while providing no tangible cost savings or benefits for consumers—the industry sprang into action to set the record straight. Immediately following the bill’s introduction, ABA led a coalition of eight national financial services trade groups in issuing a statement of strong opposition to the bill. We then followed this up with numerous letters, op-eds, grassroots calls to action and co-branded ads with the Texas and Kansas bankers associations that ran in their respective districts. The efforts were amplified by an op-ed from the Florida Bankers Association and a creative “Don’t Let Congress Steal Your Credit Card Rewards!” social media campaign from the Missouri Bankers Association. In early December, we then expanded that effort into an all-out media blitz to stave off any last-minute efforts to attach the bill to a must-pass piece of year-end legislation. Every step of the way, our efforts at the national level were complemented by robust advocacy efforts by our partners at the state bankers associations, who stepped up to make calls, attend Washington fly-ins, pen letters and columns, and even appear on national TV to address our concerns about the bill. Together, we blanketed Capitol Hill with a succinct, united message: the Credit Card Competition Act is terrible public policy that should not be enacted. Our combined efforts proved the hollowness of this bill—it failed to attract a single cosponsor beyond the initial two in both the House and Senate or gain enough support to advance as a standalone measure and was successfully blocked from any other bills moving through Congress as the lame-duck session came to a close. This win underscores the tremendous value of our state association alliance and demonstrates the power that our industry can have when we unite behind one message. It’s also an important reminder about vigilance.We can’t say for certain whether and how these bad ideas will rear their heads again in Congresses to come. But what we can say is that if they do, our industry will be ready to respond. TBeating Back a Bad Idea: How Bankers United to Play Defense Against Durbin ExpansionABOUT THE AUTHOR: Email Rob at nichols@aba.com

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26 » PA Bankers Association pabankers.comgovernmentRELATIONSThere are more than 50 new members of the PA General Assembly. Included within these pages are photos and district information for each new member in both chambers. If you know any new members, please let us know. We will periodically send calls to action, requesting you to contact your state House or Senate member. We may also make an individual ask of you to call your legislator on a particular issue. Our grassroots network is large and strong. Thank you for advocating for this industry.To find your members, please use the Find Your Legislator tool. Meet the 50 New Members of the PA General AssemblyJOSEPH ADAMSDistrict 139Republican Wayne County (Part) and Pike County (Part)JAMIE BARTONDistrict 124Republican Schuylkill County (Part) and Berks County (Part)LISA A. BOROWSKI District 168Democrat Delaware County (Part)MARLA BROWN District 09Republican Lawrence County (Part)JACOB D. BANTA District 04Republican Erie County (Part)ANTHONY A. BELLMON District 203Democrat Philadelphia County (Part)TIMOTHY BRENNAN District 29Democrat Bucks County (Part)ROSEMARY M. BROWN Senate District 40 Republican Lackawanna County (Part), Monroe County and Wayne County (Part)

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32 » PA Bankers Association pabankers.coma aheadlook   Please note: all dates and locations are subject to change. This includes changing in-person events to virtual oerings.AMERICAN MORTGAGE CONFERENCE PA Bankers Training Room, Harrisburg, Pa. may 1-3General AssociationDEI CONFERENCE Hershey Lodge & Convention Center, Hershey, Pa.april 19-20PA BANKERS 2023 CONVENTION The Boca Raton, Boca Raton, Fla.june 8-11

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36 » PA Bankers Association pabankers.comvendorARTICLEShe engine that takes you nowhere is no engine at all. Whether it needs a jump-start or a simple punch on the accelerator, the engine that makes motion is the one that gets you to your destination. For financial institutions, that destination is a profitable year driven by an active, engaged, and profitable customer base. If bank marketers would spend as much energy, money, and focus keeping current customers engaged as they generally spend trying to acquire new customers, the improved bottom line would be surprising. Not only do engaged, product-active customers add to the profit column, but converting inactive customers into active customers changes the loss column and translates to a double win for the bottom line. Using proven marketing tools and implementing a plan to jump start that engine, and then to keep it going, is something your financial institution should be all about. Here’s what you need to know.DIFFERENT CUSTOMER JOURNEYS: ONBOARDING VS. ONGOINGNew customer onboarding is a different experience for customers compared to maintaining a healthy ongoing relationship with current customers. The onboarding journey is important and predictive of the likelihood that an institution retains a customer, but there are important differences in the requirements of each. In short, for onboarding, have a well- planned and efficient process that focuses on easy account set-up and strategically timed, regular communication. Automating the onboarding process using the right marketing technology to ensure on-point communication is a key to success. Attrition is greatest in the first year, so thoughtful implementation of your onboarding strategy is non-negotiable. Building trust happens during this phase, so build intentionally.In contrast, the ongoing customer relationship is about building a deeper, more personal relationship. Business Wire summarizes an important finding from the Javelin study “Convert ‘Silent Attrition’ into Banking Engagement and Profits” regarding the difference: “Promote engagement first, cross-sell later – Make it convenient for the customer to move through the onboarding and activation phase of their lifecycle, and then build deep relationships with targeted cross-sell.” Your ongoing relationship with current customers should be marked by personalized communications, more product-based contacts like strategic cross-selling, and loyalty activities/offers that acknowledge longevity. Know the difference and execute accordingly.BE PROACTIVE. PREVENT DISENGAGEMENT BEFORE IT HAPPENS.The best engine is the kind you keep fueled and running regularly. You want to keep existing customers engaged and happy; the payoff is not small. Khalid Saleh at Invesp reminds us, “The probability of selling to an existing customer is 60 – 70%, while the probability of selling to THow to Jump Start Your Idle Banking CustomersRe-engaging dormant customers is a profit-making engine you don’t want to ignore

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PA Bankers Association » Spring 2023 37a new prospect is 5-20%.” A CRM with robust marketing automation tools is a best friend for this task. For example, automated trigger campaigns are a great way to schedule regular and personal communications with existing customers. Types of useful triggers include balance changes, loan maturation, and milestone birthdays (like age 40 or 65 when life changes impact financial interests). For CRMs that have analytic tools, you can couple the age profile with wealth and demographic data to more successfully offer retirement planning or life insurance products to the best customer candidates.In addition to trigger campaigns, capitalize on personalized contacts like automated birthday emails and cards or a product offer generated from a targeted segmentation. Offering a current customer the right product at the right time sends the message that you are paying attention and keeping their needs and wants front of mind. Use all the data you gather about your customers, whether through the core banking system or even more efficiently through a CRM, to know more about who the customer is—then do the work of having a relationship with them. Demonstrate you know your customer at every digital transaction and marketing opportunity. Wunderkind states, “According to Accenture, 91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations.”Don’t forget for current customers including educational events, anniversary- related discounts or product specials, and institution-wide activities like customer appreciation events. Another effective loyalty reward is offering your customers an annual financial check-up. A valuable relationship builder, it communicates your institution’s proactive care and intent and affords you the opportunity to review customer accounts and goals and make necessary adjustments. These types of regular personalized touches with your customers keep them engaged and increase loyalty and retention.FOR CUSTOMERS ALREADY IDLE, HERE’S HOW TO JUMP START THEMThe important first step is to determine which of your customers you consider inactive. For example, how long must an account be inactive for you to consider it dormant? Is the customer a single account holder? For multiple account holders, is the full relationship inactive? After setting the criteria, identify those customers. Here, a good CRM is extremely helpful and a time-saver; for instance, you can create automatic triggers in the CRM to assign follow-up activity to an employee once an account becomes inactive. Do a careful analysis of the characteristics of these customers so that you understand who they are and the best way to communicate within the demographic. For example, some customers may respond quickly to an email or text, whereas others may prefer a standard letter sent via USPS. After you know your audience, use their preferred method of communication and reach out. Again, personalization here is powerful, so make the initial contact one that capitalizes on every piece of customer data you have available (e.g., transactional data, profile information, product preferences). Make an initial contact focused on reacquaintance and not on hard sales.From here, develop a customer-specific response plan. Answer questions like, “How often and how many times should you reach out without a response?” “After some period of non-response, is a reward or discount offer appropriate to entice a response?” “What steps should you take after receiving a response, and how specifically should you cater that response to the demographic of each customer?” If your financial institution has the right marketing tools, consider automating a series of contacts for your entire dormant customer population in which they hear from you regularly until they respond or until a predetermined period of time passes. Don’t forget, after you launch your “jump start” plan, be sure to design in a way to measure the plan’s performance and tweak your methods as the results begin to emerge.THE PAYOFFSpending the time and money to recognize and find your dormant customers, then to implement the plan to woo them back to an engaged relationship with your bank or credit union is energy well spent. Saleh reiterates, “Existing customers are 50% more likely to try new products and spend 31% more, when compared to new customers.” The translation of these statistics to the bottom line of your institution is significant. These idle engines are worth jump-starting. Get the engine going, and you and your customer are going where relationships are satisfying and profitable.ABOUT THE AUTHOR:  Joyce has been a National Sales Representative for 360 View for over 15 years helping financial institutions build better relationships with their customers and prospects. She provides insight into sales and service automation, enhancing business process workflows and improving overall customer experience with 360 View.

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38 » PA Bankers Association pabankers.comvendorARTICLESlimate change and risk management have become a hot button topic for financial institutions in recent years as a result of the rising concern by policymakers, international organizations, financial regulators, and so many others. There has been such a push in recent years for a more environmentally friendly world as we see changes in organizational resources and operations, investor expectations, environmental activists, and even the expectations of the current administration. With all the focus on environmental safety, considering the impacts and learning how to manage the risk is the inevitable for financial institutions. .WHAT IS CLIMATE CHANGE?When it comes to climate change, this is considered to be a change in global or regional climate patterns. More specifically, a change in global or regional climate patterns from the mid-20th century through today, which has been largely attributed to an increase in atmospheric carbon dioxide levels which are produced by fossil fuel usage. It can be a controversial topic among various group but whatever side of the fence you stand on when it comes to climate change, there are climate-related financial risks faced by banks and managing that risk can be critical.WHAT TYPE OF RISK SHOULD FINANCIAL INSTITUTIONS CONSIDER?According to the varying regulatory agencies, climate change and the transition to a low carbon economy have been identified as factors which have contributed to emerging risks in which financial institutions and the overall financial system of the United States are faced with. The agencies indicate that banks will likely be impacted by physical risks and transition risks associated with climate change. The harm to people and property which arises from acute, climate-related events (flooding, hurricanes, heatwaves, etc.) is considered physical risks. Stresses to financial institutions as a result of the shifts in policy or consumer or business sentiments, or changes Climate Change & Climate Risk Management for Banks

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PA Bankers Association » Spring 2023 39in technology in order to limit the impact of climate change are considered transition risk. Basically, transition risk is the risk as a result of the transition to a more environmentally friendly process or way of conduction business and operations. Other risks that financial institutions should consider as it relates to climate change and the environment include credit risk, market risk, liquidity risk, operational risk, and reputational risk. Banks must consider the various areas of risk, especially as they consider the safety and soundness of their institution.PRINCIPLES FOR MANAGING CLIMATE RELATED RISKWhile there isn’t specific regulatory guidance for achieving compliance and managing the risk related to climate, at the current time, we are likely to see this type of guidance in the near future. Regulatory agencies have addressed the issues and have requested feedback for managing the risk and are looking at implanting regulatory requirements for large financial institutions. This would include banks with over $1 billion in assets. The OCC (Office of the Comptroller of Currency) along with other regulatory agencies have released guidance, requests for information, and a set of principles by which financial institutions should consider in managing climate related risks. The information released by the OCC includes a set of general principles as well as the specific areas of risk management. The general principles touch on governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. The general principles provide guidance for developing an effective framework that is essential to the bank’s safe and sound operations. The principles outline expectations for board and senior management oversight, guidance for developing a written program, the areas of consideration for planning which should take into account the bank’s overall business strategy, risk appetite, and financial, capital, and operational plans. It is also important that management is involved in the oversight of the development and implementation process for identifying, measuring, monitoring, and controlling climate-related financial risk exposure within the bank’s management framework. Sound climate risk management is dependent upon the availability of relevant, accurate, and timely data; therefore, management should incorporate climate related financial risk information into the bank’s internal reporting, monitoring, and escalation processes to facilitate timely and sound decision-making across the bank. An important approach for identifying, measuring, and managing climate-related risks is the development of climate-related scenario analysis. In order to ensure this framework is effective and successful, financial institutions should consider a risk assessment process as part of their sound risk governance framework. This will ensure that the board and senior management are able to identify emerging risk in order to develop and implement the appropriate strategies to mitigate and manage the risks. The guidance issued by the OCC suggests that financial institutions should consider incorporating climate-related financial risks when identifying and mitigating all types of risk. While the agencies will eventually elaborate on risk assessment principles in subsequent guidance, it is suggested that financial institutions consider credit risk, liquidity risk, other financial risk, operational risk, legal/compliance risk, and other nonfinancial risk. CONCLUSIONWhile there isn’t currently a specific set of guidance that financial institutions must abide by when it comes to climate risk, compliance, and management, this is an area which all banks should begin considering from a safe and sound banking standpoint. It is looking like the future guidance related to climate risk will only apply or be required by large financial institutions, however, the guidance and risk considerations should be contemplated by institutions of all sizes. Risks can impact even smaller institutions, therefore, taking a proactive approach rather than a reactive response is always the best plan of action. It is important that financial institutions stay abreast of the hot button area of climate change and climate risk, from a compliance and risk management perspective, as the society in which we are living continues to set a higher standard for an environmentally friendly world. ABOUT THE AUTHOR: serves as developing curriculum and presentations, as well as presenting at various schools and seminars, both live and in a livestream/hybrid format. Julia has over 20 years of financial industry experience to the Compliance Alliance team.20222023

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40 » PA Bankers Association pabankers.comvendorARTICLESow are long-term lending profits built? One well priced loan at a time.Even when slow and steady progress is the acknowledged goal, pricing loans effectively is no easy feat.A key ingredient to determining the right pricing for any loan is the prime rate. While the Federal Reserve sets the federal funds target rate, banks set their own prime rates based on the rate established by the Fed.When the federal funds target rate moves, so inevitably do the prime rates at banks. Generally speaking, the prime rate tends to be “Fed funds plus 3.” So, if the federal funds rate is around 2.5%, as it was in July 2022, then the prime rate would be 5.5%.Rates have fluctuated dramatically over the past years, even decades. In the early 1980s, for instance, the Federal funds effective rate approached 20%. Between 2010 and 2021, however, the rate never moved far from zero percent.At the beginning of 2022, inflation began rising and the Fed hiked interest rates several times. On Sept. 21, the Fed raised interest rates three-quarters of a percentage point. The same sized hike that Fed Chair Jerome H. Powell had called an “unusually large one” in June no longer had the power to surprise as inflation in the U.S. showed few signs of improvement. Supersized rate hikes, headlines said, were “the Fed’s new normal.”For 2023, who knows when the Fed stops raising rates or when inflation will begin to subside, but the US Yield Curve is looking more like a water slide at your nearest amusement park!The best way to approach loan pricing is to set out a disciplined plan. Below are the six essential steps for creating and carrying out such a plan:1. SET QUARTERLY LOAN YIELD GOALSBefore your lending team can rally behind a goal, you have to define that goal for everyone.In general, quarterly goals seem to work best for loan pricing. That’s because three-month horizons tend to be manageable in size and scope.Climbing the NIM Mountain: Loan Pricing Discipline is key to reaching new highs!

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PA Bankers Association » Spring 2023 41Quarterly goals also provide focus, so everyone knows precisely what they’re working towards—and why. What’s more, a quarterly goal allows a team to pivot early when a strategy is not working.For leaders who may be focused on annual goals, quarterly goals are the equivalent of the four periods in a football game. Even though each quarter matters, it’s possible for a skilled coach to learn from a disappointing score and change the ultimate outcome.Quarterly goals are powerful, but loan officers will still want to establish milestones to make sure everyone is progressing within any three-month stretch. Milestones should be accompanied by “action items,” or concrete steps to make quarterly goals attainable. 2. COMMIT TO PRICING DISCIPLINE“Some people regard discipline as a chore,” famous actress and singer Julie Andrews is quoted as saying. “For me it is a kind of order that sets me free to fly.”“Discipline” could be viewed as the key ingredient that separates “goals” from “accomplishments.” A goal can be a nice-to-have dream for the future. After we begin imagining how to achieve that goal and take the necessary, disciplined steps, the goal holds the promise of becoming a future “accomplishment.”The difference between “goals” and “accomplishments” is also the difference between realistic thinking and optimism. Too often, lenders pat themselves on the back for having great people and terrific service, believing that customers will pay a premium for those attributes. A bank that possesses a unique magic is terrific, but customers are not always willing to pay for intangibles.Most bankers understand that too much subjectivity can interfere with pricing loans effectively.Pricing discipline means taking a realistic perspective, but it also means ensuring adequate compensation for the risks a bank is assuming. Some banks have found that they can pick up an additional five to 10 basis points in interest simply by having a structured pricing methodology in place.Finally, a sound pricing model prioritizes long-term growth ahead of short-term gain. In other words, a disciplined approach keeps the future in sight at all times. Once a bank is committed to pricing discipline, what matters most is staying the course.Pricing discipline has many advantages, including that it enables a bank to justify itself if charges of discriminatory pricing were ever raised.Banking regulators often urge banks to document pricing and underwriting criteria—including exceptions—as a way of demonstrating that their lending practices are fair.3. BUILD A LOAN-PRICING MODEL THAT REALLY WORKSAn effective loan-pricing model incorporates capital into the equation and makes allowances for different levels of risk among borrowers.It’s important for bankers to slice and dice their credit ratings to make meaningful distinctions. Often, it’s worthwhile to have eight or more categories describing various borrower risk levels. From best to worst, descriptors might range from “highest quality” to “excellent quality,” “good quality,” “acceptable quality,” “minimum acceptable,” “special mention,” “substandard,” and “doubtful.”Next, it’s important to add daily updated and refreshed Yield Curve (i.e., U.S. Treasury Yield curve or LIBOR Swap curve) data to your pricing model. This ensures that fixed-rate quotes always reflect the latest projected rate trends.As much as possible, you want to use dynamic models that change when data changes. Think of refreshing Yield Curve data as part of a trend towards rolling forecasts, or financial models that predict the future performance of a business over a continuous period, based on historical data.In addition, remember that all loans were not created equal; some are more costly to implement and manage than others. Knowing this, you want to make sure that your pricing model takes the cost of originating and servicing a particular loan into consideration.Finally, it’s important to bear in mind that the loan business does not operate in a vacuum but is part of the overall profitability of a financial institution. Make sure you know your bank’s annual profitability targets, and then price your loans to try to meet or exceed those targets on a loan-by-loan basis.4. MONITOR PROGRESS EARLY AND OFTENThe best community banks and credit unions are nimble and able to adapt when plans change.For this reason, it makes sense to assemble the lending team each week to review your progress towards your quarterly goals.Regular meetings in which employees are held accountable for performance are one hallmark of what’s known as “a culture of performance management.” Too often, leadership can track how an organization is performing against its lending goals, but employees do not have access to the same information.All goals set should be measurable and there should be mechanisms in place to assess and discuss whatever progress has been made. Meeting on a weekly basis may seem a daunting goal, but it makes success easier to attain.Say employees are falling short of the loan-pricing targets set. In a scenario like this, managers will want to step in

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42 » PA Bankers Association pabankers.comquickly and figure out what obstacles employees are encountering. Managers who remove obstacles—and coach new and different ways to operate— may be able to right the course and meet quarterly goals.5. KNOW YOUR COMPETITION“The time your game is most vulnerable is when you’re ahead. Never let up,” says Australian tennis champion Rod Laver.If this is true in sports, it’s also true in business. Paying attention to the competition can help you perform better, whether you’re ahead or behind.For banks, it’s an excellent idea to conduct peer-group analyses, keeping an eye on how your closest competitors are pricing loans. Knowing how other banks and credit unions are pricing their loans can help you review your own criteria and ensure you’re not missing anything major.That said, never let other financial institutions sway you from your course without a compelling reason. When in doubt, trust your own analysis for reaching critical pricing decisions.6. RECOGNIZE THE WINS ALONG THE WAYCelebrating small wins is an essential part of success. When the small wins that contribute to a large victory are not acknowledged, it’s easy to become discouraged.Generally speaking, it’s a good idea to celebrate steps towards your loan-pricing goals each and every month.Even when progress seems slow, it’s important to appreciate the gains that have been made. Remember that slow progress is better than no progress at all, and a steady, disciplined approach will win out in the end.IN CONCLUSIONAlthough the details change over time, a disciplined, yet agile, approach to loan pricing can help your lending team navigate short-term challenges without losing sight of longer-term, big-picture goals.vendorARTICLESABOUT THE AUTHOR: He helps community financial institutions (FIs) identify and act upon opportunities to optimize their performance by building and empowering a performance banking culture that transforms all levels of the FI.20222023continued from page 35APPI ENERGY .........................................................................................................................................................................................................  ........................................................................................................................................  .......................................................................................................................................................................................................................... ...................................................................................................................................................................................................  ................................................................................................................................................................................................  ......................................................................................................................................................................................................................................  ....................................................................................................................................................................................................................... ........................................................................................................................................................................................................................... ........................................................................................................................................................................................  .......................................................................................................................................................................................................................................................................................................................................... adINDEX

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PA Bankers Association » Spring 2023 43ABOUT THE AUTHOR:  is for. He oversees KeyState’s Bank Captive Program, the only captive program specifically structured for community banks. Over 90 banks across the country have joined KeyState’s Bank Captive Program since 2012. The Program is endorsed by 27 state banking associations including the PA Bankers Association. KeyState manages tax advantaged investment and insurance structures for over 130 community banks across the country. s Hurricane Ian ripped through the Caribbean, Florida and the Carolinas this past September causing billions of dollars in losses, community banks that formed captive insurance companies (“captives”) were able to fund for some of the uncovered losses. Now other banks are starting to evaluate how captives could help mitigate and manage some of the uninsured losses by their commercial carriers.WHAT IS A CAPTIVE AND HOW CAN IT BENEFIT COMMUNITY BANKS?A captive is a wholly owned subsidiary of a bank’s holding company operating as a licensed insurance company. The bank pays annual premiums to its captive for coverages not included in their regular commercial policies. A captive structure is not meant to replace a bank’s current commercial policies, but to strategically augment them.Captives can cover insurance deductibles and exclusions, as well as emerging risks such as increasing climate catastrophes. With enhanced risk management and a meaningful federal incentive, banks in captive management programs can reduce the annual “total cost of insurance” by 20-30% and increase their average annual EPS by 1-2%. Insurance premiums do not leave a bank’s economic family unless and until the captive pays claims.Generally, S and C Corp banks with $750 million to $15 billion in assets are good candidates for forming a captive insurance company. Over 100 banks across the US have formed captive insurance companies, including 20 banks in Pennsylvania, Ohio, Michigan, New Jersey, and New York. CAPTIVES AND CLIMATE CATASTROPHESAccording to the National Oceanic and Atmospheric Administration (NOAA), Hurricane Ian was the 15th billion-dollar weather disaster this year to date, ranging from severe storms and tropical cyclones to floods and wildfires. “Total losses due to property and infrastructure damage is up to $29.3 billion in 2022 so far,” noted NOAA, but this does not yet include costs for Hurricane Ian, western wildfires and Hurricane Fiona, “which may push the 2022 total closer to $100 billion – a total reached in four of the last five years.”Severe weather events aren’t new, and neither are captives as a loss prevention solution. Ten years ago, in the wake of Hurricane Sandy in 2012, a community bank in New Jersey with coastal branches experienced significant changes to their named storm coverage. Their commercial carrier raised the per-branch deductible to $250,000. This was significant since at least five of their coastal city branches could potentially be impacted by another hurricane. The bank evaluated its options and ultimately decided to form a captive to help pre-fund for these potential losses. In addition to hurricanes, catastrophe insurance protects businesses against natural disasters such as earthquakes, floods, fires, tornados and hail, and against human-made disasters like riots or terrorist attacks. These are all viable risks for banks to consider insuring in their captive. WHY IS NOW THE TIME FOR COMMUNITY BANKS TO EVALUATE CAPTIVES?The popularity of captives is seen in close to 95 new captive insurance company formations in the ten largest US captive domiciles in 2021 with a similar number of formations expected in 2022. Taken together, there are some compelling reasons for banks to assess their current needs and future scenarios where a captive could cover unfunded risks:• Commercial premium increases: Along with increasing costs for natural disasters, cyber coverage premiums are up 20-40%, while banker’s professional liability and crime bond premiums have risen 10%-30%.• Commercial coverage limits: Higher deductibles, broader exclusions, and sub-limits applied to certain coverages make captives a viable alternative.• Coverages not available commercially: These include reps & warranty coverage for M&A transactions, and legal expense coverage for class-action nuisance suits• COVID claim rejections: While many commercial carriers have denied COVID business interruption claims, captive programs have paid out significant COVID related claims.Insuring Calm Before the Next StormNatural Disasters Increase Community Bankers’ Interest in Captive Insurance CompaniesAvendorARTICLES20222023

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44 » PA Bankers Association pabankers.comvendorARTICLESWalking a fine line between growth and riskNext in bankingand capital markets 2023REFINE YOUR BANK’S GROWTH STORYTo stand out in a crowded market, bank executives are refining their growth story around their institution’s unique clients. Whether that’s small business merchant services, a better mortgage experience or hyper-focus on a single industry’s needs, banks are responding to competition by playing to their strengths and exploiting market niches.Despite the uncertainty, now is the time to refine a growth strategy so it’s ready to capture market share when the economy’s fortunes brighten. Today’s macroeconomic conditions also present an opportunity to examine spending on operations and internal systems with the aim of making changes that accelerate go-to-market plans. Constraining budgets can lead to creative thinking that optimizes processes (especially with the aid of technology), lowers expenses and refocuses capital on higher-value businesses.What’s clear is that the refinement of your growth story this year will require continued investment in digital capabilities in concert with strategic cost reductions to weather an expected economic slowdown.transformation was their most critical growth driver in 2022.TRANSFORM USING INDUSTRY CLOUD FOR BANKINGTo date, a slowing economy is having little effect on the sector’s appetite for digital transformation. Banks know they need to deliver more sophisticated digital engagements, which are becoming table stakes to compete for new customers.A rapidly maturing industry cloud for banking is helping accelerate the rollout of mobile and online banking solutions. Today’s leading digital solutions use a common cloud services platform to coordinate activity between a bank’s preferred digital software vendors and its existing computer core.With a common cloud services platform, time-to-market for a digital product can be reduced to weeks from months, fewer computer programming resources are needed and ongoing computing costs are reduced as the solutions leverage the cloud’s flexible pricing models.These combined benefits make it possible for banks to pursue their growth initiatives and reduce expenses amid an uncertain economy.ANKING AND CAPITAL MARKETS EXECUTIVES ARE WALKING A FINE LINE AS THE NEW YEAR BEGINS.On one side is the question of how much capital will be needed during what’s likely to be a hard-to-predict economic environment. Banks are setting aside more money for potentially bad loans, tightening lending standards, closely monitoring deposit flows and streamlining operations.On the other side is the question of how much capital to allocate to growth initiatives. Uncertainty creates opportunity, and leaders who build their institution’s differentiating capabilities can help improve competitive positioning. Where are today’s threats to tomorrow’s growth prospects?• Fintechs are down, but they’re not necessarily out. The disruptors are reducing cash burn rates as capital raising is challenging for business models that often rely on low-cost debt. But as macro conditions improve, capital raising may be concentrated on the strongest fintechs which have a better chance of disintermediating banks.• Established technology and retail brands, hoping to capture more client time and money, are pushing financial services toward captive financing and strategic partnerships. With access to millions of customers, they can quickly scale a digital offering, threatening a bank’s market share similar to what we have seen across credit products and payments. In a worst-case scenario, digitally-savvy established brands may become the face of financial services, pushing traditional banks - and possibly some fintechs - into the background.• Still, the most likely near-term competitive threat comes from banks that are more digitally agile, delivering simpler, seamless and individualized experiences across their portfolio of products and services. Superior digital capabilities, especially those that offer advice to help customers navigate a difficult economy, can be a differentiator, inspiring customers to switch banks for a better experience.It’s a challenging time for banking executives, balancing the opposing needs of spending to increase competitiveness, while managing an expanding set of financial and non-financial risks. Here’s our view of what’s next in banking and capital markets, and how these forces can help shape banking’s future.

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PA Bankers Association » Spring 2023 45BUILD TRUSTED ESG REPORTINGESG continues to be a driver of bank strategy, whether in operations, lending, investing, risk management or compliance.While harvesting the tangible and intangible benefits of trusted ESG reporting requires banks to engage with all three aspects of ESG, environmental sustainability appears to attract the most stakeholder attention because of its importance and complexity for financial services firms. For many banks, trusted ESG reporting rests primarily on a reliable method for calculating scope 3, category 15 financed emissions, which is the bulk of their greenhouse gas footprint. An end-to-end ESG data strategy governing collection, staging, validation and reporting helps banks convey to stakeholders their process of gathering third-party data, improving data quality through upgraded processes and controls, and calculating the full scope of emissions of banking products.As ESG becomes a larger part of a bank’s operations, managers will likely face questions from the board who want to make sure executives:• Evaluate and manage climate risk impacts• Factor ESG risks and opportunities when serving clients• Understand ESG-related product strategies and have appropriate processes and controls to help guard against greenwashing risks• Have a robust plan for ESG business decision-making and for external reportingTogether, the board and management should confirm that trust is the primary goal at every stage of an ESG strategy.commit to align lending and investment activities with net-zero emissions by 2050.DRIVE STRATEGIC CHANGE THROUGH DEALSDeal activity has slowed, but the rationale for a merger — building scale, entering new markets or acquiring tech and talent — remains salient for banks feeling squeezed by peers, upstarts and incumbents alike. A reset in fintech valuations may yet spark a flurry of transactions that bolster a bank’s digital capabilities.Despite economic and regulatory obstacles, deal-making remains one of the fastest ways to transform a company. Given how much digitization work remains to be done in the sector, reconfiguration through a transaction can help firms offset top-line pressures by tapping into new opportunities such as embedded finance, banking-as-a-service or buy now, pay later.What’s not changing is the analytical work of making sure every avenue is explored to increase a transaction’s value amid more stringent regulatory reviews, which can lengthen the time between announcement and closing. MANAGE THE EVOLVING TAX REGIMEFinancial services firms will need to monitor both broad-based and specific tax issues in 2023. Of the former, the Organisation for Economic Co-operation and Development’s (OECD) Pillar Two global tax regime continues to move closer to implementation. Certain tax incentives in the US and abroad, however, could run afoul of the rules, resulting in incremental tax.Included among the specific tax issues are the US book minimum tax, digital asset transactions tax and ESG tax credits.US legislation has been drafted around tax information reporting on cryptocurrency and non-fungible tokens (NFTs). Taxation of digital assets — and the income they produce — is a key target, both at home and abroad. And regulation around those is expected to receive increasing attention due to recent, high-profile bankruptcies. Banks should expect regulators to provide guidance on reporting requirements, resulting in a need to prioritize holistic data strategies.The rules around ESG tax credits continue to evolve after passage of the Inflation Reduction Act. New allowances and new tax structures housing ESG tax credits can impact a bank’s ESG profile as well as the economic value of various lending and intermediation transactions.policy is their biggest concern.ABOUT THE AUTHORS: business. He is focused on supporting our clients manage the complexities of today's regulatory, financial and constantly changing business needs. With a background in consumer banking, he advises our financial services clients on a range of topics including strategy, regulatory enforcement and innovation. currently business encompassing our assurance and tax capabilities. Additionally, Rob leads one of our largest global audit clients operating in the BCM industry. Rob also works to develop relationships across the industry at both audit and non-audit clients.

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46 » PA Bankers Association pabankers.comvendorARTICLESompetition for banking Small & Mid-size Businesses (SMBs) is fierce, with more than 80% SMBs reporting* that a bank they don’t do business with has contacted them within the past 12 months. More than half have been targeted by five or more financial institutions. So if you’re making cold outreach, believe me, you are not the only one dialing (or emailing, or sending a note on LinkedIn). The most successful bankers in the SMB contest will be the ones who can rise above the noise. Whether by demonstrating industry expertise or by finding a common bond with a prospect, your ability to turn a cold call into a warm conversation can help you add value to your prospects and develop successful relationships. If you want to stand out and make an impact with your prospect outreach, you need to do your research and get prepared to warm up your cold calls. Here are a few ways you can create intelligence for warmer outreach.1. FIND YOUR TARGET COMPANIES With so many small businesses, the biggest initial challenge is finding reliable sources of company data to search. Manually combing through state directories, local business listings, and trade references on new businesses is a slow and painful method of screening for potential leads. It’s not systematic, and it wastes your precious time. Even if you have a digital source of company data, filtering companies by revenue, number of employees or geographic location can yield unexpected or misleading results if the information is outdated or otherwise inaccurate. Utilize intelligence from multiple sources - this helps to cross-reference information and solidify your access to accurate firmographic data so long as the information can be easily searched and filtered for quick access. Beyond the pitfalls of basic firmographic data, the typical industry classifications also provide a very incomplete picture of the small business market. SIC and NAICS codes are often too generic, preventing granular industry targeting and not reflecting new sectors of the economy, like robotics, cloud computing and cybersecurity. Take advantage of technology and automation to gather industry keywords directly from company websites - enabling you to find companies based on how the companies are actually describing themselves. Your best target companies will often share similarities with your best existing clients. Target your search for those similar companies in familiar industries to demonstrate your existing knowledge. 2. IDENTIFY AND REACH DECISION MAKERS First the good news - unlike large corporations, in Small to Mid-Sized Businesses there may be just one or two people who have financial decision-making authority. Now the bad news - while the CEO or CFO’s name may be readily available from the company website, their contact details are a closely-guarded secret. They are busy people and they often don’t have executive assistants answering their phones and booking appointments for you to see them! While smaller companies may have fewer gatekeepers before reaching the decision-makers, you still need the right information. To identify and connect with targeted decision-makers requires accurate and timely data and, as with company data, there is no one single “nirvana” data source. Work with a platform that provides accurate data from multiple sources to help you zero-in on the best way to contact your targeted executives. 3. NEXT-LEVEL PREPARATIONTo make an impact on cold outreach, you need to prove you can add value to the person you are speaking with. You can’t do that without knowing the industry, the business and the person on the other end of your call. While nobody would expect you to be an expert in every industry, when Warm Outreach: How to Create Intelligence to Increase Cold-Call Success

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PA Bankers Association » Spring 2023 47ABOUT THE AUTHOR:  is aat With extensive knowledge and experience working with SaaS companies in Financial Services, Chris has established himself as an asset to his clients, passionately leveraging technology to solve client issues. you reach out to a small business owner, you are reaching out to someone who likely is an expert in their specific industry. This highlights the need to get a digestible overview of your target industry so you can understand its unique challenges and opportunities. This insight can also help you craft a relevant value proposition that accounts for industry forecasts and outlook.Since you’ve already identified the right businesses (Step 1) and their key contacts (Step 2), you can dig a little deeper into your contact’s history to help you develop a thoughtful message for your outreach. Researching a contact’s board and association memberships, affinity groups or notable recent news about them can help spark a conversation with a message tailored to add value to the business and the individual. 4. LEVERAGE RELATIONSHIPS & FIND CONNECTIONSSmall business owners value trusted opinions when it comes to making decisions like changing financial service providers. They’ll look to those they already trust, relying on information and advice from colleagues and current partners to save time developing new relationships. The relationships you build with clients and other sales partners can be a powerful source of new leads within their industry network. Also, by affiliating yourself with other industry influencers – lawyers and accountants for example – and referring people to them you will build your profile with these Centers of Influence and raise the likelihood of receiving qualified leads yourself.As important as it is to build your network and expand your reach of influencers, you also need to recognize your connections. Using relationship mapping technology, you can find common connections between yourself and your prospects. Strengthening these close relationships can give you an advantage when it comes to turning a cold call into a warm introduction.5. TIMING IS EVERYTHINGSometimes, your research and networking has done well to get your foot in the door with your initial outreach, but the timing may be off. Rather than abandoning or forgetting about that prospect, having a mechanism to trigger a conversation when something has happened (or when there’s an opportune time to speak) is critical to keep you on the pulse of your prospect. Leveraging an automated alert system helps you keep track of important events for your target prospects. Getting a notification that a company has recently landed a new deal, or that the CEO is speaking at an upcoming trade show, or has been recognized for some achievement in their community can give you a reason to reach out. A quick note or call to congratulate them can trigger new discussions, or reopen a previous lead. These alerts can also prove valuable with your client retention efforts, serving as a reminder to check in with your existing clients even if it’s off your typical review schedule. Your consistent and informed outreach reinforces your credibility, shows that you care, strengthens your relationship and helps close (and keep) the business!6. LEVERAGE TECHNOLOGY TO CREATE A PROCESSTo consistently warm up your cold calls and deliver value to your small business prospects as described above, you need to develop an effective process to conduct your research and put it to use. To optimize your efforts, that process needs to be easy to use, organized and repeatable. You don’t have to limit these processes to prospecting. Employing a similar strategy can support client retention as well. Finding the right tools and leveraging their full capabilities can aid this process, helping you efficiently and proactively research companies and saving time that can be used to build new relationships and strengthen your existing client bonds. Success in SMB Business Development requires building strong relationships. Gain knowledge with quality industry, company and firmographic data. Look for accurate contact details and quality relationship insights on senior executives. Use that intelligence to make warm outreach that is genuine and informed to stay in touch with prospects and keep you on their radar. Seek out tools which integrate data and workflow to save time identifying and qualifying targets. Most importantly, use relationship intelligence & management skills to build and strengthen your network of SMB influencers and referrals. Banking, like business, is personal. It’s ALL about relationships in the end!

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50 » PA Bankers Association pabankers.comBANK HEALTH CARECONSORTIUM OF PA*43 Banks Received Credits inSurplus of Over $13.9 Million in 2021With an AverageNet Funding Increase in Single Digits.Wayne Whipple, (717) 255-6925wwhipple@pabankers.com  PA Bankers Members *Vendors provide products and services to both financial institution members and Affiliate Members.ABA INSURANCE SERVICES*Bond, D&O, Cyber Insurance, andEmployment Practices LiabilityPatricia Williams, (216) 220-1280pwilliams@abais.comACCUME PARTNERS BY CHERRY BEKAERT*Outsourced Internal Auditingand Risk Management ServicesNicole Lloyd, (717) 903-3142nlloyd@accumepartners.comANDERSON GROUP*Integrated Marketing andCommunications andBusiness IntelligenceLinda Anderson, (610) 678-1506LAnderson@ThinkAnderson.comAPPI ENERGY*Electricity and NaturalGas Procurement Services, UtilitiesManagement PlatformMargo Madden, (667) 330-1239mmadden@appienergy.comBANKERS ALLIANCE*A Family of Bank Compliance ServicesThat Includes Compliance Alliance,Review Alliance andVirtual Compliance OfficerWayne Whipple, (717) 255-6925wwhipple@pabankers.comBANZAI!*Interactive, Award-Winning CourseTeaching Students Real-WorldFinance, No Upfront CostKatie Rigby, (801) 821-9055katie@banzai.orgCOMMONWEALTH CHARITABLEMANAGEMENT*Application and Administrationof EITC ProgramsCristine Clayton, (570) 278-3800cclayton@commonwealthcharitable.orgTHE BAKER GROUPAsset/Liability ManagementSoftware and ServicesCharles Amis, (405) 415-7231Charlie@gobaker.comBANKTALENTHQ*Diversity is Essential -Find Talent in all the Right PlacesWayne Whipple (717) 255-6925wwhipple@pabankers.comCORNERSTONE ADVISORS*Core, Debit EFT, Card Program, LoanOrigination, Bill Pay, Mobile Banking &ATM Contract NegotiationJennifer Wagner, (480) 425-5204jwagner@crnrstone.comCRA PARTNERSTurnkey CRA Compliance/High-Yielding CRA CreditsTerry B. Rooker, (901) 529-4781terry.rooker@SHCPFoundation.org

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PA Bankers Association » Spring 2023 51GLOBALVISION SYSTEMS, INC.Anti-Money LaunderingCatherine Lew, (818) 998-7851 x128clew@gv-systems.comEVOLV*Merchant Processing, Search EngineOptimization, Website Design and SocialMedia ManagementJoy West, (540) 235-7111Jwest@poweredbyevolv.comPAYLOCITY*HCM Solutions andEngagement SoftwareLisa DeJoy, (717) 303-7663ldejoy@paylocity.comDEALERTRACK COLLATERALMANAGEMENT SERVICES, INC.Electronic Lien and Title ProgramWayne Whipple, (717) 255-6925wwhipple@pabankers.comTHE FULCRUM GROUPINTERNATIONAL, INC.*Reviewing, Re-Negotiating andBidding Check Printing RelationshipTed Amon, (770) 736-5787ted@thefulcrumgroupintl.comDELUXE CORPORATION*Check ProgramTodd Wroblewski, (724) 625-5599todd.wroblewski@deluxe.comPWCAMPBELL*Design-build, Branch Experience and Consulting ServicesErin Campbell, (800) 253-7430erin.campbell@pwcampbell.comINVESTORS TITLEINSURANCE COMPANYMulti-Bank Owned TitleInsurance ProgramKaren Barnett, (419) 577-5900kbarnett@invtitle.comKEYSTATE CAPTIVE MANAGEMENTCaptive Management andInvestment Portfolio ServicesDavid G. Guerino, (802) 233-262dguerino@key-state.comKLARIVIS*Data Analytics Solution Designed by Bankers for BankersAmber Robinson, (603) 860-3162amberrobinson@klarivis.comWEBBER ADVISORS*Multiple Medical, Drug, Dental &Vision Options and EB SolutionsBrad Webber, (814) 695-8066bwebber@lrwebber.comTHE KAFAFIAN GROUPPerformance & Profitability ManagementRobert E. Kafafian, (973) 299-0300 x106rkafafian@kafafiangroup.comNCONTRACTS*Integrated Compliance, Vendor and Risk Management, Board Encouragement PlatformJason McFarlane. (917) 504-6491jason.mcfarlane@ncontracts.comNFP EXECUTIVE BENEFITS*BOLI, Executive Compensationand Long-Term CareDavid Shoemaker, CPA/PFS, CFP®(901) 754-4924david.shoemaker@nfp.comNEW ERA TECHNOLOGY*Managed Service Provider for Voiceand Data CommunicationMichael Foglia, (973) 503-5809michael.foglia@neweratech.comVendor 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.

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52 » PA Bankers Association pabankers.comThe Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.Oklahoma City, OK | Austin, TX | Dallas, TX | Houston, TX | Indianapolis, IN | Long Island, NY | Salt Lake City, UT | Springﬁeld, IL Member: FINRA & SIPCwww.GoBaker.com | 800.937.2257MEETING CLIENT NEEDS » Asset Liability Management » Investment Portfolio Services » ALM/Investment Education » Funding/Liquidity Management » Bond Accounting/Analytics/Software Solutions » Public Finance » Regulatory ComplianceTo be successful in today's ﬁnancial climate, you must have not only the proper partner, but also the proper approach to achieve high performance. The Baker Group is this partner, and our approach is to oer sound strategies and accurate information to guide your institution to the next level. This is the reason we’ve been the industry’s recognized leader in innovation for more than forty years.To experience The Baker Approach in meeting your ﬁnancial objectives, call your Baker representative or Ryan Hayhurst at 800.937.2257.The Baker Approach

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The Baker Group LP is the sole authorized distributor for the products and services developed and provided by The Baker Group Software Solutions, Inc.Oklahoma City, OK | Austin, TX | Dallas, TX | Houston, TX | Indianapolis, IN | Long Island, NY | Salt Lake City, UT | Springﬁeld, IL Member: FINRA & SIPCwww.GoBaker.com | 800.937.2257MEETING CLIENT NEEDS » Asset Liability Management » Investment Portfolio Services » ALM/Investment Education » Funding/Liquidity Management » Bond Accounting/Analytics/Software Solutions » Public Finance » Regulatory ComplianceTo be successful in today's ﬁnancial climate, you must have not only the proper partner, but also the proper approach to achieve high performance. The Baker Group is this partner, and our approach is to oer sound strategies and accurate information to guide your institution to the next level. This is the reason we’ve been the industry’s recognized leader in innovation for more than forty years.To experience The Baker Approach in meeting your ﬁnancial objectives, call your Baker representative or Ryan Hayhurst at 800.937.2257.The Baker Approach20222023

paBanker Magazine Spring 2023

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