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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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Planning for Strategic Planning Session

June 27, 2017

Authors

Robert Klingler

Planning for Strategic Planning Session

June 27, 2017

by: Robert Klingler

the-bank-accountWhile I continued on a family vacation (which was totally worthwhile), Jonathan and Jim McAlpin recorded an episode of The Bank Account looking at planning a strategic planning session for your bank.  Jonathan and Jim cover a wide array of topics based on their collective experience in assisting dozens of banks with their strategic planning.

Among the multitude of topics covered include:

  • thinking about shareholder interests in strategic planning;
  • what the “new normal” means for community banks;
  • how frequently strategic planning sessions should occur;
  • the importance of efficiency ratio analysis;
  • the length of a “good” strategic plan;
  • board composition; and
  • the need to address whether or not to pursue the sale of the bank with the board.
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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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Ownership Succession for Family-Owned Banks: Building the Right Estate Plan

April 28, 2015

Authors

Kimberly Civins and Michael Shumaker

Ownership Succession for Family-Owned Banks: Building the Right Estate Plan

April 28, 2015

by: Kimberly Civins and Michael Shumaker

For a number of community banks, the management and ownership of the institution is truly a family affair. For banks that are primarily controlled by a single investor or family, these concentrated ownership structures can also bring about significant bank regulatory issues upon a transfer of shares to the next generation.

Unfortunately, these regulatory issues do not just apply to families or individuals that own more than 50 percent of a financial institution or its parent holding company. Due to certain presumptions under the Bank Holding Company Act and the Change in Bank Control Act, estate plans relating to the ownership of as little as 5 percent of the voting stock of a financial institution may be subject to regulatory scrutiny under certain circumstances. Under these statutes, “control” of a financial institution is deemed to occur if an individual or family group owns or votes 25 percent or more of

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Keys to Success in the FDIC’s Definition of Community Bank

July 10, 2013

Authors

Dan Wheeler and Jonathan Hightower

Keys to Success in the FDIC’s Definition of Community Bank

July 10, 2013

by: Dan Wheeler and Jonathan Hightower

In a recent strategic planning meeting, a bank chairman opined that “community banking is dead.” He is not the only banker and his is not the only bank grappling with this concern. After that meeting, we solicited the input of many of our peers in the industry. Were increasing expenses and shrinking margins killing community banks? Was the ever-quickening pace of technology too much for community banks to overcome? Were the building regulatory demands insurmountable for community banks? As we asked our peers these questions, many of them gave multi-faceted answers based on different assumptions of exactly what was meant by “community bank.” 

Around the same time, the FDIC proposed its own definition of “community bank” as a part of its Community Banking Study, which was published in December 2012. This study not only defends the viability of community banks but also

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The Bank Director’s Approach to M&A: Stay Out of Hot Water

November 30, 2012

Authors

Jonathan Hightower

The Bank Director’s Approach to M&A: Stay Out of Hot Water

November 30, 2012

by: Jonathan Hightower

In today’s environment, many bank directors are faced with difficult strategic decisions regarding the future of their organizations. We have been involved in many great board discussions of whether it is best for the bank to continue to grind away at its business plan in this slow growth environment or to look for a business combination opportunity that will accelerate growth. There is rarely a clear answer in these discussions, but some guidelines are helpful: All directors must respect the conclusion of the full board of directors and follow the appropriate process established by the board with respect to merger opportunities.

Over the years, we have seen a number of instances in which one or more bank directors conduct merger discussions with potential partners without bringing the opportunity to the full board of directors immediately. In many cases, these directors are acting

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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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Boards and Strategic Planning in a Challenging Environment

September 10, 2009

Authors

Walt Moeling

Boards and Strategic Planning in a Challenging Environment

September 10, 2009

by: Walt Moeling

Short-Term Planning for Recovery and Survival

(This post was authored by Walt Moeling and Dustin Hall.  A version of this post originally appeared in the August 2009 issue of the ABA’s Community Banker magazine.)

The grim economic prognoses we continue to hear about have an immediate impact in the bank board room. Boards must think about short-term planning for recovery and survival because virtually no bank is wholly immune from the current recession.  Although the problems may have started with residential real estate in the Sunbelt, they have gone much beyond that now, impacting banks throughout the country.

As a director you must plan for both long-term and short-term.  Long-term planning is tremendously important, and we hope to make it to the “long-term,” but short-term planning is critical today.

Short-term planning in this context deals with the reality of today’s marketplace.  The focus is

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