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Why Your Board Should Stop Approving Individual Loans

September 12, 2017

Authors

Jim McAlpin, Ken Achenbach and Jonathan Hightower

Why Your Board Should Stop Approving Individual Loans

September 12, 2017

by: Jim McAlpin, Ken Achenbach and Jonathan Hightower

In this the new era of banking, our clients are continually looking for ways to enhance efficiency and effectiveness at all levels of their organizations. This line of thinking has led to the revolution of the bank branch and the adoption of many new technologies aimed at serving customers and automating or otherwise increasing process efficiency. Perhaps most importantly, however, banks have begun to focus on optimizing their governance structures and practices, particularly at the board level.

(A print version of this post if you’d like to print or share with others is available here.)

As we discuss this topic with our clients, the conversation quickly turns to the role and function of the bank’s director loan or credit committee, which we refer to herein as the “Loan Committee.” We continue to believe that

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The Sanity of Bank Directors

September 1, 2017

Authors

Robert Klingler

The Sanity of Bank Directors

September 1, 2017

by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I address two items of significant interest in our office: (a) a recent Wall Street Journal opinion piece on the sanity of bank directors, and (b) the start the of college football season (not necessarily in that order).

When starting the podcast, we expected the podcast would offer listeners an opportunity to hear the conversations we have around the office on a wide variety of topics.

Today, that includes a topic that represents a significant part of our fall conversations, college football, with a particular focus on the SEC.  As

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Counterpoint: Why Sane People Serve as Bank Directors

August 31, 2017

Authors

Jonathan Hightower

Counterpoint: Why Sane People Serve as Bank Directors

August 31, 2017

by: Jonathan Hightower

Bank directors have played a crucial role in the turnaround of the banking industry, an accomplishment that deserves recognition in light of the fact that it has been done under tremendous regulatory burden and tepid economic growth.  Given that, why do we continue to question why the country’s most respected business people would be willing to serve as bank directors?  Respected attorney and industry commentator Thomas Vartanian recently asked in an opinion piece in The Wall Street Journal, “Why would anyone sane be a bank director?”  Well, sane people are serving as bank directors every day, and in doing so they are benefiting the economy without exposing themselves to undue risk.

(A print version of this post if you’d like to print or share with others is available here.)

The

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Do you have an ATM-oriented board in an increasingly iPhone-oriented world?

July 13, 2017

Authors

Jim McAlpin

Do you have an ATM-oriented board in an increasingly iPhone-oriented world?

July 13, 2017

by: Jim McAlpin

In the run up to the Fourth of July holiday, you may have missed that June 27 was the 50th anniversary of the first ATM and June 29 was the 10th anniversary of the first iPhone.  I was struck by the coincidence of these two anniversaries occurring in the same week.  It also caused me to revisit in my mind a concern that has been growing for some time.

During several recent bank board retreats and strategic planning sessions, I’ve witnessed the challenging dynamics that occur when leaders begin the process of “board refreshment.”  Board refreshment is the current euphemism being used by consultants (and by the proxy advisory firms) to refer to the need for a closer match between the strategic goals of banks and the skill

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Changes in Georgia’s Law on Director Duties

June 30, 2017

Authors

Michael Carey

Changes in Georgia’s Law on Director Duties

June 30, 2017

by: Michael Carey

On July 1, 2017, significant amendments to the director and officer liability provisions of Georgia’s Financial Institution Code and Business Corporation Code will take effect.  These amendments, adopted as House Bill 192 during the 2017 General Assembly session and signed into law by Governor Deal in May, enhance the protections available to directors and officers of Georgia banks when they are sued for violating their duty of care to the bank.  The amendments also apply to directors and officers of Georgia corporations, including bank holding companies.

First and foremost, House Bill 192 creates a statutory presumption, codified at O.C.G.A. § 7-1-490(c) for banks and at O.C.G.A. §§ 14-2-830(c) and 14-2-842(c) for corporations, that a director or officer’s decision-making process was done in good faith and that the director

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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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