maryland banker 3q 2012

THIRD QUARTER 2012the

b a n k e r

THE OFFICIAL PUBLICATION OF THE MARYLAND BANKERS ASSOCIATION

MAKING OUR VOICES HEARDTHE MARYLAND BANKPAC

With its customers under water, Diebold went where it had to go. Above and beyond.

In the aftermath of Hurricane Katrina, Diebold assembled a comprehensive unit to respond to every customer without exception. It’s another example of Diebold doing more to build relationships. Relationships that have inspired us to become

leaders and innovators in the banking industry for more than 150 years.

For the entire story, visit diebold.com/boldservice.

1.800.806.6827 diebold.com [email protected]

die7614-05_KatrinaAd_Banking NewYork_v01AR_20120307.indd 1 3/7/12 5:15 PM

Third Quarter 2012 | 3

19

ChairmanMichael L. MiddletonChairman & CEOCommunity Bank of Tri-County

Chairman-ElectRobert A. DeAlmeidaPresident & CEOHamilton Bank Vice ChairmanJohn A. Scaldara, Jr.Chairman, President & CEOThe Columbia Bank

Past ChairmanMary Ann ScullyChairman, President & CEOHoward Bank

President & CEO Kathleen M. MurphyMaryland Bankers Association

Publication EditorCynthia L. GentilcoreMaryland Bankers Association

Board of Directors

George J. Behr, Jr.President, Arundel Federal Savings Bank

Andrew M. BertaminiRegional President, Maryland Market, Wells Fargo Bank, N.A.

James R. Bosley, Jr.President & CEO, Farmers & Merchants Bank

Ralph W. Emerson, Jr.Senior Vice President, M&T Bank

Raymond W. Hamm, Jr.Executive Vice President, PNC Bank, N.A.

Michael E. HoughCEO of Maryland Division, Susquehanna Bank

Kim LiddellChairman, President & CEO, The National Bank of Cambridge

Michael G. LivingstonPresident & CEO, The Bank of Glen Burnie

Philip E. LoganPresident, Chairman and CEO, Slavie Federal Savings Bank

Carissa L. Rodeheaver, CPA, CFPExecutive Vice President & CFO, First United Bank & Trust

Daniel J. SchriderPresident & CEO, Sandy Spring Bank

Raymond M. ThompsonPresident & CEO, Calvin B. Taylor Banking Company

William J. Toomey, IIRegional President – Baltimore Metro Region, BB&T

Kelly Whitley Vice President, State Government Relations, Bank of America

J. Scott WilfongChairman, President & CEO, SunTrust Bank, GW/MD

THE WARREN GROUPCreative / Production / Advertisingwww.thewarrengroup.com [email protected]

©2012 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210. Call 800-356-8805.

12

coverMaking Our Voices HeardMoving the Dial with Maryland BankPAC

message from the immediate past chairmanNo Apologies, Please 4

message from the chairmanTransitioning to a New Beginning 5

message from the president Leadership Through Focus and Resolve 6

maryland bank services featured partnerEnergy Insights: What Determines Electricity Prices? 8

Regional Meetings 10

proud to be a bankerHarford Bank Takes up theBanner on National Campaign 11

departments:

news and notes 18 Professional Development Calendar 22

Contents

PUBLISHED BY

280 Summer Street, Boston, MA 02210

Phone: 617-428-5100 Fax: 617-428-5118 www.thewarrengroup.com

186 Duke of Gloucester St.Annapolis, MD 21401

410-269-5977 / 800-327-5977www.mdbankers.com

Third QuarTer 2012the

b a n k e r

The Official PublicaTiOn Of The Maryland bankers assOciaTiOn

Making Our VOices Heardthe Maryland BankPaC

11

10

In my year as chair of the Maryland Bankers Association, I’ve seen the continued misguided attempts by

some of our government leaders to address the painful results of a deep economic downturn with expensive, if not crippling, regulations. I have also seen a continued polarization of public sentiment leveled against the banking industry – public sentiment fed by ignorance and enflamed by partisanship. But I’ve also seen the great value – not to mention common sense and commitment

– that our association brings to the table. I saw us this year move forward in our mission of “taking back” our industry and not allowing its image to be sullied intentionally or accidentally by those who have never been bankers.

One of the attributes that I most value in the association is its inclusiveness and its focus on open communication. And we heard from many of you this year that you value that communication and that willingness to listen in order to influence as well. It is a major reason for our successes.

Given this philosophy, one of the outstanding qualities of our association’s mission is that we represent all banks

– not just large ones or small ones. Much of the power of the industry is in its diversity. And we have developed partnerships with industry groups that don’t necessarily share all our views. As a result, we believe that we have been able to influence some of the tone and tenor of the conversations around the future of the industry and that we have a better chance of continuing to do so than if we

did not believe so passionately in keeping a dialogue going.

We have spent a great deal of time focused on an internal dialogue as well – that of member engagement. In his column in this issue, our incoming chairman, Mike Middleton, stresses the importance of engagement. Without it, our organization is not sustainable. Maryland is a small state with a relatively small potential membership base. Maryland has seen more consolidation in the banking industry than most other states. And all of our members face greater financials challenges in 2012 than they did in 2005. So input from all members in multiple forums becomes all the more important.

In this past year, the association has served as a very effective advocate for the industry in the forum of legislation. We have been able to get pro-industry bills passed – not just to quash bills that would have been detrimental to our member banks. In advocacy as in other matters, we do not want to be solely on the defensive, but to be an active partner in the legislative process.

The reemphasis on the Maryland Banking School brought in more students this past year. Our members showed that they see the long term value associated with training our future leaders The refocusing of Maryland Bank Services Inc., our wholly-owned subsidiary, helped us to determine which partnerships are most valuable to our members and the association. This year, we spent a lot of time defining what value that was and shifting the economic model accordingly.

One of our most consistent themes has also been to take a much more aggressive position on the industry’s image, and not to be apologetic or reactive. We, better than anybody, understand what we do in our communities every day.

What would these communities look like without banks? My predecessor in the chairman’s post, Scott Wilfong, deserves the credit for continuing to raise this question. First, there wouldn’t be the same level of connectivity. Banks exist to match excess liquidity with opportunities for growth, not only for themselves but for their customers. Also, without banks’ presence, we would lose a major source of community leadership, in regard to bankers’ presence on non-profit boards, as well as volunteer hours and grants made in the community. We continue to solicit your help in getting out that message.

Like all outgoing chairs, I now stand between the past and the future. The message of where would we be without banks has been linked to the message of where would our banks be without their association. We have stood tall; we have reached out; we have explained and hopefully we have enlightened. As Mike Middleton notes, the need to change never ends but each of you should be proud of what you continue to accomplish each and every day. You are re-capturing the standard. ■

Mary Ann Scully is the outgoing chairman of the Maryland Bankers Association. Reach her by email at [email protected].

No Apologies, Please

MARY ANN SCULLY | MBA IMMEDIATE PAST CHAIRMAN CHAIRMAN, PRESIDENT & CEO HOWARD BANK

Message from the Immediate Past Chairman

4 | The Maryland Banker

If anyone had told me in 2008 that I’d be quoting a decidedly unbankerly impresario/entertainer at the top

of my first column as chairman of the Maryland Bankers Association, I would have said, “that’s not within the realm of the likely.” But look at what she said, and consider the value of the thought. And then consider what tremendous changes, once considered unlikely, have occurred in our industry since then.

Change happens. You can’t change change. You can only manage the transition to a new beginning. That’s also the mantra of Bill Bridges, author of Managing Transitions. He, too, notes that

“transition starts with an ending. You can’t grasp the new thing until you’ve let go of the old thing.”

Customer demand, balance sheet reconfiguration and tremendous public policy pressures have resulted in an annealing process that has tempered our association.

The process has encompassed consolidation, bank closures, contraction of bank spending on training and education, and evolving professional development needs, as well as increases

in the policy issues requiring the association’s focus and resolve.

As the new realities of the banking industry come into focus, members and the association are looking forward, to the transitions and challenges we will face. Not in the sense of a collegial embrace, but in the sense of in a common phrase, getting our arms around these opportunities. We recognize that successful transitions in work and life involve an awareness that the way things used to be are forever changed.

It is with this reality that the theme for the association in 2012-2013 is

“Transitions,” embodied in the following goals:• Leverage the collective strength of

the MBA’s members by encouraging greater involvement and engagement through member banks.

• Be a timely and relevant resource to our members so that they may benefit from the association’s offerings and thus provide overall financial support of the MBA.

• Serve as the Maryland banking industry’s tireless advocate at the state and federal levels of government,

with the media and with the public to achieve necessary changes to laws and regulations, and mitigate the risk of increasing public policy pressures.

The forces facing our industry and our association could be considered formidable – increasing demands and shrinking resources. We need input from a lot more people than we’ve had before, and that means input from the bottom up. Bridges advises, “people aren’t in the market for solutions to problems they don’t see.” Leaders must first sell the challenge, not the solution. When that happens, the people who work with you and for you may come up with a better solution, and will take their own ownership of change.

It is an honor to serve as your chairman for the upcoming year and face the change that is inevitable. The old shore is becoming more distant, and the new one is coming closer. Let’s all be prepared. ■

Michael L. Middleton is the chairman of the Maryland Bankers Association. Reach him by email at [email protected].


If you want to reach the other shore, you have to lose sight of this one. — Lady Gaga

Transitioning to a New Beginning

MICHAEL L. MIDDLETON | MBA CHAIRMAN CHAIRMAN & CEO COMMUNITY BANK OF TRI-COUNTY

Message from the Chairman

The 2012-2013 MBA OFFICERS

CHAIRMAN CHAIRMAN-ELECT VICE CHAIRMAN PAST CHAIRMAN

Michael L. MiddletonChairman & CEO

Community Bank of Tri-County

Robert A. DeAlmeidaPresident & CEOHamilton Bank

John A. Scaldara, Jr.Chairman, President & CEO

The Columbia Bank

Mary Ann ScullyChairman, President & CEO

Howard Bank

Leadership Through Focus and Resolve

KATHLEEN M. MURPHY | PRESIDENT & CEO MARYLAND BANKERS ASSOCIATION

Message from the President

It’s hard to believe we are nearly in the midst of summer! I hope that you are taking time in these warmer months to reflect and recharge. It’s important! We know that your

work never ends. The impact that you make every day with your clients and in your communities has propelled our state toward economic recovery.

I love the theme that MBA Chairman Mike Middleton has chosen this year: Transitions.

The banking industry has been through a time of tremendous change since 2008, and, as a result, the Association has as well. He reminds us that change is the only constant.

We are all looking at the world a little differently today – the new economy, new customer expectations, new regulatory pressures and demands. Change requires focus and resolve – it also requires tremendous leadership. I continue to be in awe of the way our members are leading their banks or lines of business – this banker leadership is embodied in the Association, as well.

As part of the Association’s Annual Convention each year, as has happened for 116 years, the membership has voted for a slate of officers and directors to lead the MBA. At the annual meeting earlier this month, we transitioned to a new board and officer team, which is uniquely configured and positioned to lead the association and the industry during this time of transition.

These individuals are applauded for their involvement in and support of the MBA. We are grateful for their leadership. ■

What’s On Your Mind?

It’s my honor to serve this great industry. Please contact me at any time to discuss industry issues of importance to you at [email protected] or 443-837-1601.



GlenLake One · 4140 ParkLake Ave, Suite 530 · Raleigh, NC 27612 · 919-846-1601 · www.CreditRiskMgt.com

Credit Risk Migration AnalyzerBank Specific · Defendable · Repeatable

· Estimates Probability of Default & Loss Given Default Parameters

· Projects Credit Losses by Loan Product Type Over Quantifiable Time Horizons · Uses Existing Internal Risk Rating System Data

[ ]C RAM

· Enables Risk Grade Validation

Contact Credit Risk Management today for an online demonstration

Blending Credit Talent & Technology to Serve Over 200 Banks Since 1989

The 2012-2013 MBA DIRECTORS

George J. Behr, Jr.President

Arundel Federal Savings Bank

Andrew M. BertaminiRegional President, Maryland Market

Wells Fargo Bank, N.A.

James R. Bosley, Jr.President & CEO

Farmers & Merchants Bank

Ralph W. Emerson, Jr.Senior Vice President

M&T Bank

Raymond W. Hamm, Jr.Executive Vice President

PNC Bank, N.A.

Michael E. HoughCEO of Maryland Division

Susquehanna Bank

Kim LiddellChairman, President & CEO

The National Bank of Cambridge

Michael G. LivingstonPresident & CEO

The Bank of Glen Burnie

Philip LoganPresident, Chairman and CEOSlavie Federal Savings Bank

Carissa L. Rodeheaver, CPA, CFPExecutive Vice President & CFO

First United Bank & Trust

Daniel J. SchriderPresident & CEO

Sandy Spring Bank

Raymond M. ThompsonPresident & CEO

Calvin B. Taylor Banking Company

William J. Toomey, IIRegional President-Baltimore

Metro Region, BB&T

Kelly WhitleyVice President, State Government

Relations, Bank of America

J. Scott WilfongChairman, President & CEO

SunTrust Bank, GW/MD


Maryland Bank Services Featured Partner

Energy InsightsWhat Determines Electricity Prices?

Historically low electricity and natural gas prices are making headlines, but what

lies ahead for the United States’ energy market? Electricity prices closely track natural gas prices, but the two are not completely synchronized. And, natural gas is used to generate a significant portion of the electricity consumed in the United States.

What determines electricity prices?Electricity prices change constantly

– literally every five minutes, every day. A multitude of factors affect prices, some modestly, some dramatically. Some factors have a short-term impact while others are long lasting. For example, weather conditions, natural disasters and consumer demand influence electricity prices from one day to the next. Legislation, regulatory changes, generation efficiency, and electricity grid and infrastructure costs impact electricity prices on a long-term basis. Commodity investors and speculators have been a dominant force in electricity pricing. Remember in 2008 when oil prices were at $140 per barrel? Electricity prices peaked then, as well.

The chart, top right, illustrates the long-term historical wholesale prices of electricity. Note the volatility and price trends. Since the worldwide financial crisis hit in the summer of 2008, electricity prices have generally trended downward to the point of today’s nine-year historical low.

DisastersIn 2005, the hurricane season

produced destructive storms, most notably Rita and Katrina, and the cost of electricity skyrocketed. Since 2005, hurricane seasons have remained relatively calm and had minimal influence on electricity prices. Of course, hurricanes, earthquakes, winter storms, and other major weather events cause price volatility.

In addition to causing prices to spike, natural disasters have ripple effects through the energy industry. For example, when an earthquake and tsunami devastated Japan in 2011, a nuclear meltdown ensued at Fukushima Daiichi Nuclear Power Station. In the United States, the Nuclear Regulatory

Commission reviewed the ability of domestic nuclear reactors to withstand natural disasters. As a result, several nuclear facilities were taken offline, and some new nuclear projects were abandoned at substantial economic loss to facility owners and local communities.

Disasters are felt on a political and governmental level too. Democrats and Republicans often disagree in response to disasters, such as the Fukushima nuclear meltdown and the BP oil spill in the Gulf of Mexico. This causes delayed responses and additional costs to consumers. A bipartisan approach is needed to implement a national energy plan.

BY MICHAEL S. PAYNE, JD, LLM

Electricity - PJM Day Ahead Averages ($/mwh)

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

Mar-06

Sep-06

Mar-07

Sep-07

Mar-08

Sep-08

Mar-09

Sep-09

Mar-10

Sep-10

Mar-11

Sep-11

Mar-12

Legislation/RegulationsA cohesive, harmonious energy

strategy between government and the private sector on a nationwide level is pivotal for the U.S. to advance its energy markets. The Smart Energy Act of 2012 (H.R. 4017) and the Environmental Protection Agency’s Cross-State Air Pollution Rule both demonstrate the need for bipartisan legislation. Prudent regulatory measures must be developed and set into play to enhance growth and address environmental concerns. In the next decade, electricity pricing will continue to be affected by energy efficiency standards and power plant emissions restrictions. Opportunities exist for innovations and the creation of new products and services to meet these challenges.

InfrastructureWho will pay for smart technology

and necessary upgrades to our grid systems? Comprised of millions of individual meters and thousands of local networks, our electricity infrastructure is expensive, challenging to maintain and rapidly aging. Trillions of dollars must be invested nationally in the next few decades to upgrade from the current infrastructure to a modernized, fully interactive, self-healing Smart Grid. As utilities are required to rebuild transmission systems to ensure reliable delivery of electricity to homes and businesses, consumers will see electricity delivery costs rise to cover necessary expenditures. Just a few of many needed upgrades include reclosers, capacitor banks, voltage regulators, automated switches, smart meters, substation transformer monitors, distribution management system platforms, volt/VAR optimization applications, and fault location, isolation, and service restoration applications. Some utilities are spending tens of millions per year. While federal stimulus funds have been issued to some utilities for upgrades,

most utilities will continually increase delivery tariff rates to cover costs.

Environmental effectsThe environmental consequences

of coal mining, gas drilling, and power plant emissions affect electricity prices. In February 2012, the Nuclear Regulatory Committee approved two new nuclear power reactors for the first time in the USA since the partial meltdown at Pennsylvania’s Three Mile Island plant in 1979. Green or renewable generation, including solar, wind and hydro, continues to grow slowly. Most of our nation’s electricity is generated from coal-burning power plants. The EPA has cracked down on air pollution, imposing strict limits on environmental emissions from coal-burning plants.

Meanwhile, natural gas-fired power plants are less expensive to build and often less expensive to operate than coal-burning plants. In the last five years, natural gas drillers have produced an abundance of shale gas, which is now in storage and ready to be consumed. As electricity prices plummet, more power plants convert from coal to natural gas for electricity generation. Lower electricity prices also have the effect of slowing implementation of renewable generation because the costs of installing a green system remain high relative to the cost of traditional electricity.

WeatherAcross most of the U.S., the 2011-

2012 winter season was exceptionally mild. Demand decreased for electricity


Attorneys at Law233 E. Redwood Street n Baltimore, MD 21202

410-576-4000 n www.gfrlaw.com

The leaders in providing legal advice to Maryland’s financial services industry

D. Robert Enten

Carla Stone Witzel

Marjorie A. Corwin

Peter B. Rosenwald, II

Andrew D. Bulgin

Brian L. Moffet

John C. Morton

Timothy A. Perry

Victor A. Kwansa

GF_Banker'sNewsletter 1/11/12 1:07 PM Page 1continued on page 10


to heat homes and businesses as outdoor temperatures were several degrees above normal. Lower demand pushed prices down. In situations when winter weather causes an increase in heating demand, electricity prices tick up.

In the summer of 2011, record high temperatures plagued parts of the U.S. Texas was particularly hard hit. Hot weather significantly increases electricity demand as consumers operate HVAC units to cool homes, churches, schools, businesses and other buildings. The summer is when consumers participating in Demand Response Programs are most likely to be notified to reduce consumption during peak usage periods. At peak times, the grid system can become overwhelmed by consumer demand, which causes electricity prices to drastically climb and be extremely volatile.

Consumer demandUltimately, electricity prices are

affected most by the amount of consumer usage, and the time of day and season that electrons are consumed. Every day, grid systems across the U.S. work constantly to provide reliable supply to all consumers. Imagine the ever-increasing demand for electricity for schools, institutions, individuals, businesses, government, and other consumers. It makes sense that electricity prices are highest during times of peak demand in the late afternoon, and lowest overnight when demand drops. In any case, usage is likely to steadily increase. ■

Michael S. Payne, JD, LLM, is executive vice president and corporate counsel of Affiliated Power Purchasers International LLC (APPI Energy), an independent consulting firm that is endorsed by 140 affinity groups. Since 1996, APPI Energy has assisted more than 3,300 organizations with locations across the United States to reduce and manage energy costs. For unbiased advice, at no upfront cost to you, contact APPI Energy at 800-520-6685.

continued from page 9

2012 MBA Regional MeetingsIt was a great turnout by our membership at this year’s Regional Meetings! We

had over 200 attendees at the four regional meetings held in Hagerstown, Royal Oak, Sandy Spring, and Baltimore.

Let the MBA know what your institution is doing for the Proud to be a Banker campaign. Send photos and information on your campaign to the MBA’s Cindy Gentilcore at [email protected].


Harford Bank Takes up the Banner on National Campaign

Harford Bank was looking for a new communications campaign when it became aware that the American

Bankers Association (ABA) had launched one of its own – the Proud to be a Banker campaign. “It was a good time for us,” says Charles H. Jacobs, Jr., bank president and CEO. “Harford Bank set a goal of informing our stockholders, customers, employees and citizens in our community the benefits of a community bank and how proud we are serving our community.”

Harford Bank has eight branches in two contiguous counties. It launched a promotional campaign utilizing five billboards in its market areas, a website home page, lobby brochures and signs, employee buttons and an online employee

survey, with results shared with employees. It also created and engaged a mid-level employee

committee of six with a $3,000 budget.Harford also produced an

informational customer brochure regarding the role of community

banks. Among the facts listed: Its 67 employees and its directors participated in civic groups, leadership positions and other volunteer efforts, and charitable grants to 94 organizations in its communities. But it also addressed the larger issues of the

role of community banks in the nation’s economic well-being, and

the implications of federal regulation.The tab for Harford: just over

$5,000 beyond the bank’s initial annual communications budget for the year because

of the supportive efforts of the ABA. ■

ven some of the co-sponsors of the Dodd-Frank Act now admit that it would have benefited from more nuanced input from the banking and financial sector. Some lawmakers who voted for it now express voter’s remorse. That’s the take of political expert and litigator Lee E. Goodman, an attorney with the Washington, D.C., law

firm LeclairRyan. He likens what he describes as a rush to legislate in a time of perceived political crisis to a runaway train that bankers and others in the financial services industry could not stop.

That’s where trade groups like the Maryland Bankers Association (MBA) come in, he says. “They are necessary to watch and study legislation from its infancy and they must remain engaged with elected officials all the time.” He adds, “You cannot spring into action at the last minute and hope someone will hear you.”

Breanna Olson is senior manager of the political involvement practice of the Public Affairs Council, based in Washington, D.C. “It’s unfortunate that sometimes it takes a crisis to emphasize the importance of an organization [and its members] being engaged,” she says. Successful advocacy requires a long-term approach to public affairs, before a crisis arises. Trade associations must make their presence known through PACs, grassroots efforts or lobbying teams. Organizations that get their calls returned by lawmakers are generally the ones that have been engaged beforehand.

Mike Middleton, MBA chairman, and chairman and CEO of Community Bank of Tri-County, former chair of the Maryland BankPAC, says that the PAC did manage to make its voice heard during the financial crisis. Access to lawmakers during that period was critical, he says. “We moved the dial somewhat, and that’s the key,” he says. “Without access, you can only watch as somebody else shapes the conversation.”

William Grant, chairman, president and CEO of First United Bank & Trust, concurs. “You’re either a participant or you lose,” he says. “Just being on the sidelines is no longer a viable option.” He observes the positive impact that good PAC participation has, both at the state level with the MBA and at the national level with the American Bankers Association (ABA).

The multiplier effectFunding individual candidates is the hallmark of a trade association PAC (see sidebar,

page 15). Skeptics would say that PAC funds are bribes. This is not the case. “Congress by and large is comprised of overwhelmingly honest people,” Grant says.

By Christina P. O’Neill

continued on page 14

MAKING OUR VOICES HEARDMOVING THE DIAL WITH MARYLAND BANKPAC


E

Olson says the upsurge in PAC activity by the banking industry after financial reform was enacted surpassed that of many other industries. PACs that raise more money can spend more money – however, the spending-per-candidate limits have not changed. For a trade association’s federal as well as state PACs, both have contributing and fundraising limits.

But while a trade association PAC may be limited in the amount of money it can direct toward each candidate, it represents hundreds of individuals pooling resources – and that signifies votes. PAC contributions create a multiplier effect, Middleton notes.

“If someone is going to give money to a PAC, they will take their family to the voting polls. They become more engaged,” Middleton says. Additionally, Maryland’s proximity to the nation’s capital gives the association an advantage not shared by more distant PACs – increased access to lawmakers. “We get to see them in between sessions, recesses and the whole route,” he says.

Broadening the base of supportHowever, today’s tendentious political

climate has made bank employees skeptical of what’s going on in Washington and in state capitals. So, what’s the best way for a bank that’s involved with a PAC to broach the subject of PAC support to the rank and file?

Grant’s First United Bank & Trust is a state-chartered bank. Under state election rules, the state-chartered bank is allowed to contribute $4,000 of corporate money in an election cycle. First United Bank & Trust currently contributes $1,000 each year to Maryland BankPAC. Additionally, the bank solicits personal contributions from board members, its advisory board, officers and management at vice presidential levels and above. Grant says directors and executives participate fully, and vice presidents and advisory board members are at about the 80 percent mark.

However, he does say it’s a delicate balance. Some employees are philosophically opposed to engaging in anything political at work. “That’s fine,” Grant says. “We take our political stands, we tell people it’s important to be engaged.”


Rules of EngagementLee E. Goodman is leader of the Government Relations, Election Law

and Campaign Finance practices at the national law firm LeClairRyan.

Here, he gives a primer on PACs.

Federal PACThere are two kinds of federal PACs. The first is a PAC that makes

contributions to federal candidates. The second is a PAC that does not

make contributions to federal candidates, but makes only independent

expenditures to fund advertisements to elect or defeat candidates.

The MBA has two PACs – federal and state – which make contributions

to individual candidates. They raise contributions from individual

employees of the member banks of the MBA, and they use those funds

to make direct contributions to candidates.

Federal law strictly restricts who can donate to a federal PAC that makes

contributions to federal candidates. The law also limits how much money

they can donate to the PAC and how much money the PAC can in turn

contribute to a federal candidate’s campaign.

Goodman notes that the Maryland BankPAC can solicit contributions

from individuals only if the member institution grants Maryland BankPAC

permission. When permission is granted by the chairman, president, and/

or CEO of the member institution, materials are provided for distribution

within the bank. These individuals must donate using their own personal

funds. Banks cannot make contributions for them and cannot reimburse

their employees’ contributions to the PAC.

Each individual can contribute up to $5,000 per year to the MBA’s federal

PAC. (Federally-chartered financial institutions, including national banks and thrifts, are prohibited from making corporate contributions to political action committees and to candidates for public office in connection with any U.S. election – federal, state or local.)

The PAC can donate up to $5,000 per election to a federal candidate.

Federal law recognizes that there typically are two elections each cycle,

a primary election and a general election, so the PAC can donate up to

$10,000 per election cycle ($5,000 for the primary and $5,000 for the

general election).

All of these contributions are publicly reported on the website of the

Federal Election Commission. There is complete transparency, Goodman

states.

Editor’s Note: Lee E. Goodman has authored several articles on the regulation of political activity, including a chapter on federal regulation of political speech on the Internet in the book Law And Election Politics: The Rules of the Game (Lynne Reinner Publishers 2004).


Only two people in the bank know who participates and who doesn’t, though the overall level of participation is disclosed. This firewall of privacy is intended to dispel a misperception that employees who contribute more to the Maryland BankPAC might be more likely to get a promotion, Grant says.

As for the rank and file, the bank holds new-employee and board of directors’ orientations and suggests a modest contribution of 50 cents per biweekly pay period. “What’s important for us, when we talk to Congress, is that [PAC support] isn’t just a few individuals. This is 200 associates, not just the top [echelon].” Associate-level participation stands at 60 percent.

Strong PACs involve director and employee campaigns such as the First United campaign and they are easy to do, according to the MBA.

At Harford Bank, the outreach effort is also regarded as a delicate balance. Harford became a state-chartered bank in 2001, and currently makes an annual $1,000 corporate contribution to the Maryland BankPAC. Bank President and CEO Charles H.


PRIME BANK SPACE AVAILABLE FOR RENT IN CITY CENTER• 3,500SQFTClassARetailspaceforleasewith

24houraccessATMspacelocatedina280,000sq.ft.ClassAbuildingwithapublicparkinggarage.

• Officebuildingprovidesover1,000tenantemployeesaspossiblebankcustomers

• $1.6millioninrenovationsalreadycompleted,includinga1,400SQFTmezzaninewith3glass-frontofficesandaglass-frontconferenceroom;alloverlookingthebranchspace

• LocatedwithinwalkingdistanceoftheInnerHarbor,Harborplace,theGallery,MountVernonCulturalDistrictandmanyotherareaamenitiesandhotels

• Morethan5,000peoplewithinwalkingdistanceofbranchlocation

• 1blockfromtheCharlesStreetmetrostation• Streetlevelsignageavailable• 3,690SQFTConferenceCenteravailablefor

tenants’use

• Ampleparkinggarageprovidesabout300newbusinessfoot-trafficeverytwoweeksand120jurorseverytwoweeks

• 24-hoursecurity• On-SitePropertyManagementthatismotivated

torenttoafinancialinstitutiontoservicetenants• EasyaccesstoI-83andI-395• 11,000SQFTofofficespacealsoavailablein

thebuilding

200 Saint Paul Place Suite 2121 Baltimore, MD 21202(410) 539-2700

[email protected]

Maryland State BankPAC

The Maryland State Board of Elections governs the MBA’s

state PAC and establishes who can contribute, the limits on

those contributions in a four-year cycle, as well as limits on

the amount of support the Maryland BankPAC can give to

candidates. The PAC can donate up to $6,000 per election

cycle to a state candidate.

An individual person and/or corporation may contribute

directly or indirectly no more than $4,000 to one political

committee – for example, the Maryland BankPAC – and a total of $10,000 to

all political committees during a four-year cycle. A PAC can contribute $6,000

to the MBA’s state PAC in a four-year cycle. (Federally-chartered financial institutions, including national banks and thrifts, are prohibited from making corporate contributions to political action committees and to candidates for public office in connection with any U.S. election – federal, state or local.)

The four-year cycle is determined by the gubernatorial election and begins

January 1 after the election and ends in the year of the next election.

The Maryland BankPAC communicates these rules to members as part of its

state fundraising efforts and tracks contributions and expenditures with detailed

PAC software. Just as at the federal level, state reporting requirements are

carried out by Maryland BankPAC with the Maryland State Board of Elections.

Sources: Maryland State Board of Elections and the Maryland Bankers Association.

continued on page 16


Resourceful.Responsive.Reliable.

Celebrating 25 Years as Your Strategic Partner, Never Your Competitor

www.CBBonline.com 410.356.4876

2012 Maryland BankPAC

Contributors as of May 2012

Includes banks whose employees have made individual

contributions in 2012Baltimore County Savings Bank

Bank of Ocean City

Bay Bank, FSB

Calvin B. Taylor Banking Company

CNB

Community Bank of Tri-County

Farmers and Merchants Bank

First United Bank and Trust

Hamilton Bank

Harford Bank

Homewood Federal Savings Bank

Howard Bank

M&T Bank

Maryland Financial Bank

Monument Bank

New Windsor State Bank

OBA Bank

Old Line Bank

Provident State Bank

Queenstown Bank of Maryland

Sandy Spring Bank

Slavie Federal Savings Bank

SunTrust Bank

(Good Gov’t Mid-Atlantic PAC)

The Columbia Bank (Fulton PAC)

The Bank of Glen Burnie

The National Bank of Cambridge

The Peoples Bank

Woodsboro Bank

For more details on how your bank can participate in Maryland BankPAC, please contact Maryland BankPAC Treasurer Lynn Mitchell at 443-837-1603 or [email protected].

Jacobs Jr., writes an annual email letter and distributes PAC information to all management at vice president level and higher. He cites a “fine line” of sensitivity regarding the outreach effort and names a moderate figure for upper-management giving that he emphasizes is only a guideline.

With that in mind, is supporting the PAC worth the effort? “Absolutely,” he says. “As a result of participating in BankPAC, we have a daily seat at the table to provide input and educate elected officials on legislation affecting Maryland banks. … We don’t win all of them, we don’t lose all of them, but at least we have a seat at that table.”

Jacobs also cites what he sees as a great working relationship between the MBA and the ABA, whose PACs are affiliated.

It’s a widely-stated observation that for every letter-writer to Congress, there are 10 more people who share the same view but don’t write. Grant commends the national and state association’s websites and their letter-writing process, and urges employees to visit MBA and ABA web sites and craft a letter.

Finding your voiceJohn Scaldara, Jr., chairman, president

and CEO of The Columbia Bank, is also pleased with the MBA and ABA letter-writing campaigns. “I like the personal touch. I like to call them,” he says. The result: lawmakers respond.

Lawmakers, he says, “want to see that you’re organizing and providing broad-based support. To get your message heard, you have to have the money to effectively deliver [it].” The way the system works may not appeal to everyone, but it is political reality, he says.

He echoes the sentiment that the access that PACs provide is better than not participating in the process. The past three to five years, and the next decade, will be critical in terms of advocacy because the banking environment has the potential to change dramatically. He predicts extraordinary changes in the way banks interact with consumers that will be driven by the new Consumer Financial Protection Bureau. “Without a voice in that process [the industry incurs] greater risk,” he says. “The Maryland BankPAC and the dollars it raises give us the ability to step forward and participate in the process.” ■


"Continued professional development is an essential component of individual success and high performing banks. The Maryland Banking School is an outstanding educational source, providing a diversity of industry specific knowledge, along with peer networking opportunities. The interaction amongst students, faculty, and MBA staff creates an excellent environment for learning, while having fun and building relationships that often last a career and lifetime."

- Robert E. Kafafian, President & CEO, The Kafafian Group, Inc. and Faculty, Maryland Banking School

Maryland Banking School July 30—August 3, 2012

The Inn & Conference Center University of Maryland University College

For more information, visit www.mdbankers.com!

The Maryland Banking School Celebrating 37 Years of Developing Quality Bankers!


News & Notes

Members in the Community

The Columbia Bank presents Lynne Cueto, a customer of their Long Meadow Office in Hagerstown, with a $500 certificate of deposit. Lynne was one of the many customers who participated in The Columbia Bank’s America Saves Week Campaign, which ran from Feb. 21-29. During the campaign, The Columbia Bank opened a total of 119 new savings type accounts with over $1.4 million deposited.

Del Karfonta, executive vice president of The Columbia Bank, was selected as one of approximately 40 members of the 2012 Leadership Council for the Cystic Fibrosis Foundation. The foundation received a large number of nominations from across the country, with many outstanding candidates among them.

Their goal is to recognize the top volunteers in the country for their extraordinary contributions and the significant impact they have had on the foundation. The council provides guidance to the next generation of volunteers and assists with fundraising efforts for the foundation. Each member is approved by the foundation’s Nominating and Governance Committee and the Board of Trustees. Karfonta was chosen to represent the Maryland Chapter.

St. Casimirs Savings Bank Two Major Milestones

St. Casimirs Savings Bank announced the accomplishment of two major milestones for their bank. Chartered in 1911, the bank celebrated its 100th anniversary serving the citizens of eastern Baltimore City Harford County. Secondly, the bank was recently awarded the BauerFinancial Inc. Five-Star Award for the 89th consecutive quarter. BauerFinancial star ratings classify each

institution based upon a complex formula factoring in current and historical data. The first level of evaluation is the capital level of the institution followed by other relevant data including but not limited to: profitability, historical trends, loan delinquencies, repossessed assets, reserves, regulatory compliance and asset quality.

2012 Influential Marylanders Honorees

This year the Daily Record hosted its annual Influential Marylanders event on March 29 at The Grand Lodge in Cockeysville. The Daily Record created the award in 2006 to honor people who have made significant, statewide impacts in nine key segments of the state’s civic, commercial and professional activity: civic leadership, communications, education, finance, health care, law, philanthropy, real estate and technology. A tenth category, freestyle, include those honored for their influence in other areas.The MBA congratulates the following three members who were honorees in the following categories: FinanceAndrew Bertamini, Wells Fargo Bank, N.A.Mary Ann Scully, Howard BankLawSheila Sachs, Gordon Feinblatt LLC

Sandy Spring Bancorp Named to Forbes List

Sandy Spring Bancorp, Inc. was again named to Forbes magazine’s “Most Trustworthy Companies.” “To have Sandy Spring Bancorp be one of approximately 15 companies to make the Forbes Top 100 Most Trustworthy Companies list again is truly gratifying,” said Daniel J. Schrider, president and CEO. “The strength of our company can be found in its core values of relationship, integrity, community, drive for performance and teamwork, principles that have been our foundation for almost 150 years. We are privileged to be listed among such outstanding companies across the nation and offer congratulations to our fellow honorees.”

Computer Services, Inc. Recognized

MSPmentor recognized Computer Services, Inc. (CSI) as one of the 10 largest managed service providers in its annual Top 100 Global Managed Service Providers List, based on the results of MSPmentor’s fifth annual survey, which ran October 2011 through December 2011. CSI is a leading full-service bank technology provider for comprehensive data processing and Internet banking solutions. To read more or for more information on CSI, visit www.csiweb.com.

From left: Cynthia DuRant, community affairs specialist, FDIC; Lou Giustini, president of the Hagerstown Trust Division of The Columbia Bank; Lynne Cueto; and Shanda Smith, vice president and divisional manager of the Hagerstown Trust Division of The Columbia Bank.

Del Karfonta


Severn Savings Bank Empowers High School Students

Severn Savings Bank kicked off their new initiative at Annapolis High School in April to bring financial literacy education to high school students across Anne Arundel County by providing them with access to the EverFi Financial Literacy Platform. This web-based program uses the latest in new media technologies – video, animations, 3-D gaming, avatars and social networking – to bring complex financial concepts to life for today’s digital generation. Through the EverFi platform, students will become certified in over 600 topics in financial education, allowing them to become more informed, responsible citizens. Severn Savings Bank partnered with EverFi to bring the interactive financial management program to these high school students at no cost to the schools. The 10-unit course offers six hours of programming aimed at teaching, assessing and certifying students in a variety of financial topics including credit scores, insurance, credit cards, student loans, mortgages, taxes, stocks, savings, 401Ks and other critical concepts that map to national financial literacy standards. The platform uniquely tracks the progress and score of every student and provides students who successfully complete the course with Certification in Financial Literacy, a valuable mark of distinction on college applications and resumes. EverFi is a preferred provider of the Maryland Bankers Association. If you would like to learn more about EverFi and how your bank can get involved, contact MBA’s Joanna Weinreich at [email protected] or (443) 837-1608.

SNL’s 2011 Ranking of Top 100 Community Banks

Congratulations to member banks Eagle Bancorp Inc and Old Line Bank, which were ranked in the top 100 of SNL’s 2011 best-performing community banks between $500 million and $5 billion in assets. CFG Community Bank Opens New, Full-Service Branch

CFG Community Bank opened a new branch in the Lutherville-Timonium area. A ribbon-cutting event was held on May 9 with a grand opening event held May 12 for area residents and surrounding businesses. The event had a complimentary BBQ for the first 200 guests, activities for children and families, and provided current and prospective customers the opportunity to tour the bank and get a sneak peak of its product offerings and special promotions. Attendees were encouraged to bring their spare change to the event to participate in CFG Community Bank’s Coin Pond Challenge. The bank’s free coin counter turns loose change into dollars, and customers who used the machine during the event had the opportunity to donate a portion of that money to Maryland Food Bank’s School Pantry Program, or open a savings account at the bank; CFG Community Bank matched 10 percent of the total donation (up to $25), which ran through the end of May.

CFG Community Bank’s ribbon cutting event at its new Lutherville Branch.

From left: Annapolis High School principal Donald Lilley; EverFi COO Jon Chapman; school board member Eugene Peterson; Anne Arundel teacher specialist for business education Dorothy Brown; Severn Savings Bank’s Community Reinvestment Officer Kevin Carter; branch manager Vanessa Donaldson; senior vice president JD Zachry; and the MBA’s Joanna Weinreich.

“Proud to be a Maryland Banker” Pins – Wear it proudly! Order for employees at your institution today!

For more information, contact the MBA at 410-269-5977.

(Can also be customized for your institution.)


News & Notes continued from page 19

MBA and its Members Take on Capitol Hill

On March 19-21, MBA, bankers and state counterparts from across the country traveled to Washington D.C. for the ABA’s annual Government Relations Summit. MBA and member bankers took on Capitol Hill by meeting with all 10 members of Maryland’s Congressional Delegation and/or their bank policy staff regarding our position on the issues facing the banking industry. And, on April 25-27, MBA, bankers and state counterparts joined the Independent Community Bankers of America (ICBA) for its annual Washington Policy Summit on Capitol Hill to meet with regulatory agencies and Maryland’s Congressional offices to advocate pertinent federal issues affecting the financial industry, specifically community banks.

Members on the Move

Raymond W. “Chick” Hamm, Jr. was promoted to PNC’s executive vice president, assuming additional responsibilities for overseeing and growing PNC’s commercial banking operations on the Eastern Shore and Southern Maryland. He also will continue in his current role as market executive for Harford and Cecil counties.

PNC named Laura Gamble as its regional president for the greater Maryland region, including the Baltimore area. Gamble is well known in Baltimore banking circles from her years as Maryland regional president for Bank of America. Gamble succeeds Lou Cestello at PNC. Cestello was elevated to regional

president where he will oversee Pittsburgh-based PNC’s branches in the Southeast. Both Cestello and Gamble will be based in Baltimore.

PNC named Bryan McDonald as manager of its Green Branch in Locust Point. McDonald has been in banking for four years, and with PNC Bank since 2008. His background includes more than a decade in customer service, management, and finance and lending.

Mike Hough was promoted to CEO of Susquehanna Bank’s Maryland division. In his new position, Hough oversee operations in Maryland, West Virginia and Bedford, Fulton and Franklin counties in Pennsylvania. He will also be responsible for all of Susquehanna’s large commercial real estate deals in Maryland, West

Virginia, New Jersey and Pennsylvania.

Bryan McDonald

Raymond W. “Chick” Hamm, Jr.

Mike Hough

Maryland Banking Directory Online Edition

The MBA announced in February an improved member benefit for its members – the Maryland Banking Directory online edition. The new format includes added benefits, such as:• More up-to-date information – MBA information will be

updated in real time and banking institution information updated quarterly, rather than annually.

• Available to all MBA members and its employees, without the expense to members of purchasing additional copies of the printed version.

The online version of the popular directory also includes the same valuable information found in the print format, including:• MBA member, board and staff information• MBA council and committee information• Listings of banking institutions • Information on other financial trade associations • Information on government and regulatory agencies• Information on Maryland elected officials

Visit MBA’s website at www.mdbankers.com to view the new online Maryland Banking Directory (which can be found under Communications/Publications on the website), where you will find increased value in this new format.

Welcome New MembersCharter Member

Congressional Bankwww.congressionalbank.com

Associate Member

Thomas Compliance Associates (TCA) help their clients manage their compliance operations in the most efficient, cost-effective manner possible. Their associates are professionals who understand the interaction of compliance, operations, marketing and customer service, and how those interactions affect the bottom line. They know the business of compliance. The core of TCA’s success is a unique ability to connect with its clients, who in turn benefit from TCA’s connection with the financial industry and its regulators. For more information on TCA, contact James Dray at [email protected] or 773-491-4522.


Making Maryland Banks Stronger and More Successful

We’ve walked in your shoes…We are veteran bankers with innovative solutions to community bankers’ real world challenges.

“ The SRA team came in and understood our issues immediately. There was no learning curve whatsover. As a result, they were able to complete our project efficiently and ahead of schedule.”

James E. PlackPresident & CEO

American Bank, Bethesda, MD

• M&ADUEDILIGENCEANDINTEGRATIONSUPPORT• STRATEGICANDCAPITALPLANNING• ENTERPRISERISKMANAGEMENT• LOANREVIEWANDINTERNALAUDIT• LOANANDCAPITALSTRESSTESTING

ROBERTL.MORRISON,JR.MANAGING DIRECTOR

[email protected]


SPECIAL EVENTS

2012

July 30- Maryland Banking SchoolAugust 3

November 9 Bank Next

2013

January 4 First Friday Economic Outlook Forum

November 14 Deposit Documentation – Baltimore (PBS)

November 15 Deposit Documentation – Easton (PBS)

Executive Management & Directors

August 19-22 Senior Management Seminar (GSB)

November 28 FDIC Directors College– Baltimore

November 29 FDIC Directors College – Cambridge

Finance

July 3 Analyzing Bank Performance (AIB)

September Financial Managers School (GSB) 23-28

General Banking

July 9 Economics for Bankers (AIB)

Principles of Banking (AIB)

July 16 Money and Banking (AIB)

Law & Banking: Applications (AIB)

July 23 Law & Banking: Principles (AIB)

Supervisor Certificate (AIB)

For detailed and updated information on all professional development programs, visit the Calendar section of the MBA’s website at www.mdbankers.com.

Maryland Bankers AssociationProfess ional Development Calendar

July 30 General Accounting (AIB)

August 12-24 Graduate School of Banking (GSB)

August 13 Principles of Banking (AIB)

Lending

July 9 Introduction to Mortgage Lending (AIB)

July 16 Consumer Lending (AIB)

August 6 Analyzing Financial Statements (AIB)

Marketing

July 23 Marketing Financial Services (AIB)

Security & Technology

October 28 - Bank Technology Management November 2 School (GSB)

Trust

July 3 Introduction to Trust Products and Services (AIB)

August 13 Basic Administrative Duties of a Trustee (AIB)

SEMINARS, WEBINARS, SCHOOLS, AND ONLINE TRAINING Compliance

July 10 Regulation E Error Resolution Procedures Webinar (PBS)

August 13 ABA Online Review for the CRCM Exam

August 23-24 Anti-Money Laundering and Bank Secrecy Act School (PBS)

September 20 2012 Mortgage Update B to Z (PBS)

November 6-7 Compliance with Federal Lending Regulations (PBS)

November 8 Mastering HMDA (PBS) – Save the Date!

A Local ABA Training Provider

Maryland Bank Services, Inc. Offering business solutions,services and products for MBA member banks. BOLI & Compensation Plans Business Continuity Checks & Marketing Solutions CRA Solutions Document Destruction Energy Consulting Financial Literacy Identity Theft Solutions

For more information on Maryland Bank Services

Preferred Providers, call Joanna Weinreich at 443-837-1608.

Insurance Investment Services Loan Loss Prevention On Hold Services Overdraft Protection Services Printing, Supplies &

Promotional Items Voice & Data Connectivity

Maryland Bank Services, Inc. Offering business solutions, services and products for MBA member banks.

•Board Portals *•BOLI & Compensation Plans•Business Continuity•Checks & Marketing Solutions•Compliance Services *•CRA Solutions •Document Destruction•Energy Consulting• Financial Literacy

• Identity Theft Solutions• Insurance• Investment Services• Loan Loss Prevention•On Hold Services•Printing, Supplies

& Promotional Items•Voice & Data Connectivity

For more information on Maryland Bank ServicesPreferred Providers, call Joanna Weinreich at 443-837-1608.

Maryland Bank Services, Inc. Offering business solutions,services and products for MBA member banks. BOLI & Compensation Plans Business Continuity Checks & Marketing Solutions CRA Solutions Document Destruction Energy Consulting Financial Literacy Identity Theft Solutions

For more information on Maryland Bank Services

Preferred Providers, call Joanna Weinreich at 443-837-1608.

Insurance Investment Services Loan Loss Prevention On Hold Services Overdraft Protection Services Printing, Supplies &

Promotional Items Voice & Data Connectivity

* launching in the summer of 2012

You’re invited to

participate in BankNext,

the Capitol Region’s

premier exposition

focused on emerging

opportunities and

innovative solutions for

the banking industry.

On Friday November 9th

join hundreds of attendees

from across the region for

the must-attend event of

the fall.

At BankNext, attendees

will experience an action-

packed day complete

with thought-provoking

educational sessions,

interactive panels, leading-

edge exhibits, networking,

raffle prizes and more!

Suggested

attendees include

bank executives,

management & key

staff involved in:

Operations

Technology

Lending

Retail Banking

Marketing

Human Resources

Security

Compliance

& Risk Management

Presented by

Friday, November 9, 2012BWI Airport Marriott, Baltimore, Maryland

Early Sponsorship and Exhibiting rates available!

For more information contact us at 617-896-5344

[email protected]

www.baNkNextexpo.com

register today!

#1 Dixon Hughes Goodman Financial Institution Services Group

20+ Banking Partners

125+ Banking Professionals

150+ Bank Clients

We have come to expect Dixon Hughes Goodman’s significant technical proficiency, but we truly value their understanding and responsiveness in navigating the complexities and challenges of today’s banking industry.

—John M. Mendez, President & CEO, First Community Bancshares, Inc.

““

CPAs and Advisors throughout the Southern U.S.www.dhgllp.com/banking | [email protected] | 877.999.9343

maryland banker 3q 2012

Documents

bertaminiregional president

president leadership

senior vice president

maryland bank services

suntrust bank

pnc bank

bankerharford bank

bank of americaj