Be Skeptical, Diligent and Courageous

While much of Nashville took a snow day, I had the pleasure of spending time with bankers from across the country (who beat this morning’s storm) at the historic Hermitage Hotel for Bank Director’s annual Bank Board Training Forum.  Admittedly, I sometimes take for granted that a board of directors is responsible for monitoring financial performance, management’s performance, compliance issues and risk management.  A program like the one we’ve put together reinforces that the strategic side of running a business really requires a well-functioning, informed and courageous board of directors and men and women who are not afraid to be skeptical, diligent and courageous. So who’s with us in Music City? The demographics are as follows:

Training-Demographic-slide

Key takeaways

A number of presentations noted that financial institutions face a number of risks.  These range from economic factors to regulatory changes, shrinking margins to fee restrictions.  Knowing the extraordinary need for information about our increasingly complex industry, these takeaways stood out in terms of growing an institution:

  • Bank profits have increased significantly post-crisis as problem assets continue to decline.
  • A “combine-and-grow” mindset has driven an uptick in strategic mergers.
  • Efficiency and productivity are both key elements in positioning a bank to grow.
  • One specific common denominator among organic growth banks is a robust and diverse lending platform along with a proven credit culture and process.

When it comes to corporate governance (a term that refers to the structures & processes for the direction and control of a company) and the role of the board, I noticed that bank boards are increasingly independent and active.  In addition, it became clear that as technology changes, proactive input from directors has become even more important.  Finally, in terms of audit committee issues, it bears repeating that audit committee members are required to understand a broad range of highly technical financial, audit and risk management issues.  I was surprised to hear that a typical pitfall of the audit committee is not addressing complex accounting issues… which aligns with the point that board members need to know banking — “not just your bank.”

Now, even if we get more snow & ice, the lights will be on again tomorrow here in Nashville where we continue to cover board-specific issues.  I’ll be checking back in after we wrap up the program and invite you to connect via twitter (@aldominick) or via LinkedIn.

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