Sometimes, saying hello is easier than saying goodbye… at least, that’s what I felt (and wound up sharing) as I took to the stage to wrap up today’s Bank Executive & Board Compensation Conference at the always awesome JW Marriott in Chicago.
(1) Leading up to the conference, our editor (Jack Milligan) and I heard from board members and executives that they continue to struggle with measuring executive performance and retaining key talent. At the same time, the two of us see the environment that banks operate in today demands productivity, proficiency with technology and the ability to sell. So for this, our 9th annual event, we took care to focus on compensation trends, talent attraction and retention strategies. In addition, we made sure to include sessions that look at how the next few years’ merger activity might influence incentive compensation plans and performance-based pay structures. All told, over 110 banks from 38 states were represented in the audience — each, it seemed, engaged in conversations about how their particular bank might shape its workforce to meet the demands of tomorrow.
(2) Next year, we will almost certainly include breakouts and/or general sessions on nominating/governance committee issues. We may also take a deeper look at “millennials” in the work force. But this year, I found several presentations geared to critical questions facing boards and management that tied in to immediate growth opportunities. For example, Steve Hovde posed questions like:
- Is adequate organic growth even available today?
- In today’s hyper-competitive loan market, can sufficient loan growth and loan yields be achieved?
- Are branches in urban markets more important than rural markets?
- How many employees must we hire to achieve organic loan growth objectives?
- Are we better off deepening penetration of existing markets or expanding physical premises into neighboring markets or both?
- What steps can we take to enhance Web and Mobile platforms?
While larger banks continue to increase in size, many smaller community banks are fighting for survival in today’s regulatory and low-interest rate environment. These questions, when juxtaposed with compensation trends and strategies, were certainly on the minds of many in attendance.
(3) As I walked off the stage today, it was hard not to see banking’s business model being significantly challenged in today’s interest rate environment. With deposit costs near zero and fierce competition for loans driving down yields, many smaller banks appear to be running on fumes. For many, organic loan growth is almost nonexistent, and strategic M&A is the only other way to amass scale today. For this reason, some say that banking’s business model is broken, but I’m not sure I agree. I posed this question to a panel of CEOs to wrap up yesterday’s program and am curious to hear from readers of About That Ratio. Is our model broken? If it is, can it be fixed — or what will replace it? Feel free to comment below or via a DM on Twitter (@aldominick)