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Engaging Your Board with a New Bank Logo

November 11, 2016

Authors

Robert Klingler

Engaging Your Board with a New Bank Logo

November 11, 2016

by: Robert Klingler

From time to time we hear from bank senior management that their board doesn’t seem engaged, or that they can’t get a sustained conversation out of their board.  Instead, board meetings consist of routine review of management reports, with motions, seconds, and unanimous adoptions of management recommendations without any meaningful discussion.  Years of bank board meetings can go by without a single dissenting vote recorded in the bank’s board minutes.  Regulators may being to question, perhaps correctly, that the board has merely become a rubber stamp for management, and that the board is merely “going through the motions” at each board meeting.

Over time, we have found one topic for which no board member can remain silent, and everyone (and I mean everyone) has an opinion.

What color should the bank’s new logo be?

Branch lobby carpet colors can also be quite effective, as can capitalization (grammar, not

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Considering a Sale of the Bank? Don’t Forget the Board’s Due Diligence

July 12, 2016

Authors

Jim McAlpin and Michael Shumaker

Considering a Sale of the Bank? Don’t Forget the Board’s Due Diligence

July 12, 2016

by: Jim McAlpin and Michael Shumaker

In today’s competitive environment, some bank directors may view an acquisition offer from another financial institution as a relief. With directors facing questions of how to gain scale in the face of heightened regulatory scrutiny, increased investor expectations, and general concerns about the future prospects of community banks, a bona fide offer to purchase the bank can change even the most entrenched positions around the board table.

So, how should directors evaluate an offer to sell the bank? A good starting place is to consider the institution’s strategic plan to identify the most meaningful aspects of the offer to the bank’s shareholders. The board can also use the strategic plan to provide a baseline for the institution’s future prospects on an independent basis. With the help of a financial advisor, the board can evaluate the institution’s projected performance should it remain independent and determine what premium to shareholders the purchase

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How to Get the Most out of Annual Board Reviews

January 12, 2016

Authors

Jim McAlpin and Michael Shumaker

How to Get the Most out of Annual Board Reviews

January 12, 2016

by: Jim McAlpin and Michael Shumaker

There has never been a more challenging time to be a bank director. The combination of today’s hugely competitive banking market, increased regulatory burden and rapid technological developments have raised the bar for director oversight and performance. In response, an increasing number of community banks have begun to assess the performance of directors on an annual basis.

Evaluation of board performance is done in many ways, and ranges from an assessment by the board of its performance as a whole to peer-to-peer evaluation of individual directors. Public company boards are increasingly being encouraged by institutional investors and proxy advisory firms to conduct meaningful assessments of individual director performance. The pace of turnover and change on most bank boards is slow, and more often the result of mandatory retirement age limits than focus by the board on individual director performance. This may be untenable, however, as the pace of external change

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The Link Between Board Diversity and Smart Business

August 19, 2015

Authors

Jim McAlpin and Michael Shumaker

The Link Between Board Diversity and Smart Business

August 19, 2015

by: Jim McAlpin and Michael Shumaker

Our time is one of rapid technological and social change. The baby boom generation is giving way to a more diverse, technology-focused population of bank customers. In conjunction with the lingering effects of the Great Recession, these changes have worked to disrupt what had been a relatively stable formula for a successful community bank.

Corporate America has looked to improve diversity in the boardroom as a step towards bringing companies closer to their customers. However, even among the largest corporations, diversity in the boardroom is still aspirational. As of 2014, men still compose nearly 82 percent of all directors of S&P 500 companies, and approximately 80 percent of all S&P 500 directors are white. By point of comparison, these figures roughly correspond to the percentages of women and minorities currently serving in Congress. Large financial institutions tend to do a bit better, with Wells Fargo, Bank of America and Citigroup

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Partners McAlpin and Moeling Provide Board Advice to ABA

April 9, 2015

Authors

Bryan Cave

Partners McAlpin and Moeling Provide Board Advice to ABA

April 9, 2015

by: Bryan Cave

Jim McAlpin and Walt Moeling recently sat down with the American Bankers Association to address bank board practices, which formed the basis for an article in the ABA’s Directors and Trustees Digest for March 2015.

Some of the best practice recommendations were:

  • fostering a meaningful agenda;
  • making the committees work is the foundation of the board’s oversight role;
  • use directors in the examination process; and
  • make use of special-purpose board meetings.

The complete article is available here.

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Board Oversight of the Compliance Function: Coaching Fundamentals

January 7, 2013

Authors

Bryan Cave

Board Oversight of the Compliance Function: Coaching Fundamentals

January 7, 2013

by: Bryan Cave

Despite all that has been made of Dodd-Frank, the new Consumer Financial Protection Bureau, and the increased focus on consumer compliance throughout the banking industry, we think that the fundamental formula for effective board oversight of the compliance function has not materially changed. We encourage directors to take stock to make sure their bank’s program is adequate. In this season of great contests on the gridiron, we would emphasize that blocking and tackling—and defense generally—remain the keys to success in this area. Be a good coach and make sure that these fundamentals are practiced at your bank.

Bank Regulatory Expectations

We start with the black-letter guidance and then read between the lines based on our experience and judgment. Each of the prudential bank regulators has outlined its expectations for board oversight of the compliance function. Although it’s stated

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FDIC Files Second D&O Lawsuit in Florida

December 4, 2012

Authors

Bard Brockman

FDIC Files Second D&O Lawsuit in Florida

December 4, 2012

by: Bard Brockman

Despite having more than its fair share of failed banks, Florida has not been a hotbed of D&O litigation. On November 9th, the FDIC filed only its second lawsuit against former directors of a failed banking institution. The defendants here are former directors of Century Bank, FSB (Sarasota, FL), which was placed into receivership in mid-November 2009.  A copy of the FDIC’s complaint is available here.

 The FDIC’s complaint is consistent with most of its prior D&O lawsuits, with typical allegations of negligent overconcentration in ADC and CRE, as well as various failures to follow the Bank’s loan policy or to exercise safe and sound banking practices. What makes this complaint a little different is that it focuses on ten specific loan transactions which were approved after it was apparent that the Bank was in “dire financial condition” and not meeting regulatory capital requirements. 

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Strategic Planning for Bank Boards: Proactive Governance in the New Regulatory Environment

October 31, 2012

Authors

Jim McAlpin and Walt Moeling

Strategic Planning for Bank Boards: Proactive Governance in the New Regulatory Environment

October 31, 2012

by: Jim McAlpin and Walt Moeling

Sweeping new regulations and unprecedented scrutiny of the banking industry have combined to place a greater emphasis on the role of boards of directors in the leadership of banks. Although the board’s primary responsibilities have not changed – to maximize shareholder value and to hire, compensate and supervise qualified management – there is now a greater need to address these responsibilities within the context of a well-considered strategic plan. Many bank boards primarily employ a month-to-month approach to the oversight of their institutions, which can result in heavy reliance on bank management to chart the strategic course of the bank. It is valuable for a board occasionally to set time aside to take stock of the bank’s strengths, weaknesses and opportunities, and then proactively engage in a process of determining the strategic goals and direction for the bank. This gives the board a frame of reference within which

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Revisions to North Carolina Banking Code Affect Board Responsibility for Loan Approvals

July 24, 2012

Authors

Michael Shumaker

Revisions to North Carolina Banking Code Affect Board Responsibility for Loan Approvals

July 24, 2012

by: Michael Shumaker

The board of directors and its loan committee play critical roles in formulating and supervising a bank’s risk management policies, particularly with regard to a bank’s lending function. However, as we have recently noted, while all bank directors must be involved in the loan approval process and take seriously their significant responsibilities as bank directors, there continues to be debate regarding the role of bank directors in the review and approval of loans.

Until the revision of the North Carolina Banking Code (previously codified at Chapter 53 of the General Statutes of North Carolina), which was signed into law on June 21, 2012, Section 53-78 required the board’s loan committee, or other designated committee, to “approve or disapprove all such loans and investments as may be required…” Although this statute provided a “black and white” interpretation of the responsibility of the board of directors in

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Best Practices for Bank Boards – Part 4

July 23, 2012

Authors

Jim McAlpin

Best Practices for Bank Boards – Part 4

July 23, 2012

by: Jim McAlpin

(A PDF version will all of the Best Practices for Bank Boards has been added to our White Papers.)

I frequently speak to groups of bank CEOs and directors at state and national conferences. One of my favorite topics is “best practices for bank boards.” The audience reaction always confirms my belief that bank boards of directors all face the same fundamental challenges, regardless of the size or geographic location of the bank and the shareholder base which they serve. Boards of directors are groups of people, and every group of people develops its own set of shared expectations and priorities. It can be helpful for a bank board to occasionally take the time to reflect on its approach to self governance and decision making, especially when this is done by examining the experience and success of other boards of directors in the

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