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75 Years of Successfully Supporting Community Lenders
Tuesday, January 01, 2008 (1488 reads)


­­It was 1932 and The Great Depression was taking a heavy toll. More than a quarter of Americans were out of work. A quarter million homebuyers lost their mortgages. And thousands of lending institutions had collapsed. In response, President Herbert Hoover proposed legislative action to reduce home loan foreclosures and support the re-emergence of widespread homeownership. And when Congress passed The Federal Home Loan Bank Act of 1932 and chartered a network of regional federal home loan banks (FHLBs), new life was returned to the housing sector. This law and subsequent partnership helped set the stage for the eventual economic turnaround that led the country out of the depression.

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Community Bank Audit’s Changing Role
Tuesday, January 01, 2008 (2240 reads)

Traditionally, the role and responsibilities of the audit committee have always been critical to a community bank’s integrity, transparency and internal control environment. In addition to ensuring the quality and integrity of the bank’s audit and related accounting practices, the audit committee provides board oversight to ensure legal and regulatory compliance.
Greatly influenced by the glare of the Sarbanes-Oxley spotlight, the role of audit committee members continues to evolve to include broader oversight in matters of financial responsibility and risk management, including potential implications for the bank’s financial condition. No longer are community bank boards comprised primarily of members who are key customers of the bank or community business leaders.

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Planning for a Pandemic
Tuesday, January 01, 2008 (1646 reads)

"Back-up is not enough.”
“Documentation is key.”
“Overall, we believe we were able to re-affirm our pandemic and business continuity plans.”
These are the words of Milford Bank’s CEO Robert Macklin, Security & Facilities Manager Ric Biroscak and Branch Administration Vice President Jorge Santiago in an interview discussing their experiences with a national pandemic planning exercise. Milford has been early to proactively respond to concerns about pandemic planning. In 2007, the bank collaborated with the Milford Chamber of Commerce and Milford Health Department to create a community pandemic continuity guide for businesses, leveraging banking and other national guidance to provide for their community, in addition to providing for the bank’s own welfare. The resulting document is available on the Milford Chamber of Commerce Web site.
In September-October 2007, the Financial Banking Information Infrastructure Committee and the Financial Services Sector Coordinating Council coordinated a national financial services pandemic flu exercise. In a media briefing following the event, it was reported that 2,775 organizations were involved in the exercise, 62 percent of which were banks and credit unions.

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Automating Your Data Center
Tuesday, January 01, 2008 (1442 reads)

Efficiency. To a financial institution, it has many meanings. It could mean having knowledgeable and capable staff to handle customers. It could mean discovering ways to save energy and becoming more energy efficient. It could mean the ability to produce critical documents at any given moment in response to an audit or government request. It could mean having computer systems working at optimal capacity and with no outages and downtime. But any way you want to define efficiency, it always comes back to the data center – it is the backbone of a financial institution and when it’s efficient, so is everything else.
IT automation is taking a data center’s more manual tasks and making them automated – making them regularly occurring and streamlined. It’s making critical information instantly “visible” or completely accessible at the “flick of a switch.”

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Community Banks Take a Stand on Subprime Meltdown
Tuesday, January 01, 2008 (1762 reads)

When Connecticut Department of Banking Commissioner Howard Pitkin went to his analysts and bank-examination data to verify whether any of the state’s community banks had made subprime loans, he got the answer he was expecting.
None of them had.
“The answer in Connecticut is unequivocally no,” he says. Neither did community banks participate in structured investment vehicles or collateralized mortgage obligations, he says. “I don’t say they don’t work out loans with their customers. But a subprime loan is not their line of business. In nearly all cases, it doesn’t contribute to the health of the community.”
The state’s community banks want their customers to know this, too. Six of them have created an opinion ad that ran in the local media emphasizing that they do not engage in subprime lending, and that they can offer counseling to affected borrowers and refinancing to those who qualify for traditional mortgage programs.

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Tuesday, January 01, 2008 (1294 reads)

The beginning of a new calendar year provides us with a good opportunity to stop and take a look ahead to see what are likely to be the dominant challenges facing the banking industry in 2008. To do that, it will help to look back a bit at 2007 as well.
Predicting the future is a crap shoot at best, much like listening to an economist give his assessment of economic growth for the next 12 months: “On the one hand, employment is expected to continue with modest expansion, but that is contingent on world energy markets, the Mideast, the Chinese economy, consumer confidence and election results,” coupled with, “On the other hand …,” you know the rest. These first few weeks of 2008 amplify that sentiment.

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Subprime: Time to Investigate
Tuesday, January 01, 2008 (1246 reads)

received the following in the mail recently:
“Your first mortgage, originally funded by ‘X Bank,’ can be restructured to a 10-year fixed payment of only $100 per month. This is not a typographical error. Your payment rate is only .375 percent and is fixed for 10 years … You can receive an additional $75,000 in cash, which will add only $23 to your monthly payment.”
The solicitation goes on to explain that the payment rate of .375 (note: payment rate, not interest rate) continues up to 10 years until the loan reaches a maximum allowable principal and deferred interest balance; so both negative principle and interest amortization!
This solicitation came from a mortgage company, not a bank. Herein lies the problem. The traditional bank continues to provide good service to their customers. Helping the consumer achieve their dream of buying their first house, the banker works with the customer, assuring that loans will be paid back and people’s lives will not be disrupted.

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Raising the Bar in 2008
Tuesday, January 01, 2008 (1584 reads)

It’s hard to believe, but as I write this column the holidays are fast approaching and 2008 is just around the corner. Thanks to the leadership of Chairman Roger Bosma and our board of trustees, as well as the hard work and effort of our dedicated NJBankers staff, we can look back on 2007 with great pride at all that’s been accomplished. There’s no question that NJBankers finished the year a much stronger organization than the one that started the year.

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Democrats Maintain Control of NJ Government
Tuesday, January 01, 2008 (1585 reads)

he result of the November general elections altered the make-up of the Legislature in both houses, as the Senate Democrats now have a 23-17 margin and the Assembly Democrats lost two seats and changed to 48-32.
The big surprise was the defeat of the constitutional dedication of 1 percent of the state sales tax to property tax relief and issuance of $450 million in bonds to fund stem cell research projects. It would seem that taxpayers have spoken, but that will not deter the proponents of stem cell research as Gov. Corzine and legislative leaders said they were going ahead with plans of a separate, previously approved measure to borrow $270 million to build five stem cell research facilities in New Jersey.
Even though the Senate Democrats picked up a seat, a bittersweet loss was that of Sen. Ellen Karcher, D-12. She was defeated by Assemblywoman Jennifer Beck in a race that saw Karcher’s campaign outspend Beck by six to one. Sen. Karcher’s Assembly counterpart, Michael Panter, also lost his reelection, swinging that district back to the Republicans. Districts 1 and 2 went to the Democrats with Assemblymen Van Drew and Whalen moving to the upper house and solidifying a powerful southern voice. Sen. Stephen Sweeney also bested Sen. Paul Sarlo in a heated vote on who would be the next Senate majority leader. Senate President Richard Codey will remain in his position as leader of the Senate Democrats. Current Assembly Speaker Joe Roberts will continue in that role and Assemblywoman Bonnie Watson Coleman remains majority leader. The Senate Republicans replaced long time Minority Leader Sen. Leonard Lance with Sen. Tom Kean Jr. and Assemblyman Alex DeCroce held on to his post as minority leader.

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A Successful Sales and Service Culture
Tuesday, January 01, 2008 (1860 reads)

If a community bank – or a bank of any size – wants to succeed in the long run and attract new customers, its personnel must think of themselves as “problem solvers.” But just thinking that way is not enough.
The best results generated by sales, service and cross-selling promotions happen when employees are a part of a healthy, well-trained sales culture. To promote this type of environment, bank leadership needs to focus on combining employee knowledge and experience with the perceived need of the customer. This combination enables the bank to offer the best possible solutions to the customer.

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Establishing a Board Portal
Tuesday, January 01, 2008 (1572 reads)


Convincing a financial institution’s board of directors to convert to a paperless system of communicating may not be the easiest thing to accomplish. But in the long run, board members both young and old, the tech-savvy and the not-so-savvy, will appreciate the benefits of a secure board portal.
What is a board portal? It is a Web site designed to facilitate delivery and tracking of board information with the capability to work on many platforms. The Sarbanes-Oxley Act has put increased responsibility upon many boards of directors to fulfill their fiduciary duties to stockholders. This has caused many boards to seek additional outside, independent members. Ultimately, this means a greater frequency of meetings; amplified, wide-spread communication; and increased document review. A board portal securely supports communication and workflow for these boards.

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A Different Kind of Bank
Tuesday, January 01, 2008 (1527 reads)

Here’s the typical scenario: a couple of local business people start talking about the “good old days” in banking, when they were dealing with their local community bank and everyone in the office knew them. The local bank president was active in the community and knew everyone in the local market. Getting your banking done was personal, quick and relatively easy. After several mergers with non-area big banks, the local bank, as well as the local banker, was gone. Getting something done was anything but personal, quick or easy.

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Robbery Prevention, Apprehension and Recovery
Tuesday, January 01, 2008 (1792 reads)

For over 15 years, I pursued a career as a self-employed addict, drug dealer, gambler and thief. I risked my life and sacrificed my family to satisfy my need for money, attention and independence. Ultimately, my disregard of values and discipline resulted in a 13-year federal prison sentence.
Following a subsequent six-month crime spree, which included five armed bank robberies in three states, my self-destructive lifestyle was brought to an end. I soon found myself within the razor wire and armed confines of the Federal Correctional Complex in Florence, Colo., where my neighbors included such notorious criminals as Timothy McVeigh and Terry Nichols.

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