As community banks, we aim to fulfill our namesake by being a part of, and representing, our communities. Sometimes, however, it is difficult to see that there may be a gap between our banks and the communities that we serve. The NFL had a similar issue before 2003 when they realized the disparity of the demographic between their players and head coaches. There were only two African-American head coaches at the time, out of the NFL’s 32 teams. “The Rooney Rule” changed that.
Tag: Board Governance
Recently, we got together with four high-powered bank CEOs, Jill Castilla from Citizens of Edmond, Ken Burgess from First Capital Bank of Texas, Jeff Schmid from Mutual Omaha Bank, and our own John Corbett from CenterState Bank to ask what do they want out of their board members. What follows are their best ideas of the ten things bank directors can keep in mind to add value to the governance process:
For years, regulators have talked about enterprise risk management (“ERM”). One component of every bank’s ERM is the concept of a clear credible challenge by the board of directors to the senior management of the bank. While there has not been clear guidance in this area, one area where boards can exercise credible challenge is on the subject of strategic direction and assessing management bias.
If you want an eye-opening experience, at your next bank board meeting ask your board three questions: 1) What is your bank’s long-term strategy; 2) What is the current value proposition; and 3) What are the major changes that are currently taking place in the banking industry? Chances are you will be disappointed. Your bank is not alone, as we routinely ask the above questions to bank boards during strategic planning sessions all across the country and find the answers lacking.
The FDIC holds bank board of directors accountable for their actions, as they should. Every action and every lack of action, absent of some specific fraudulent circumstances, is the result of board oversight, governance and cultural tone. For that matter, so is the bank’s relevance to various stakeholders. Boards that are rubber stamps are not doing anyone any favors, particularly management and shareholders.