An Early Look at the 2019 Acquire or Be Acquired Conference

Quickly:

  • Bank Director’s 2019 Acquire or Be Acquired Conference takes place next January 27 – 29 at the JW Marriott Phoenix Desert Ridge in Phoenix, AZ.  To register, click here.

WASHINGTON, DC — As the last few hours of July tick by, our team continues to build towards next winter(!) and the premier bank M&A event for CEOs, senior management and board members: Bank Director’s annual Acquire or Be Acquired Conference. This special event brings together key bank leaders from across the country to explore merger & acquisition strategies, consolidation trends and financial growth opportunities.

Earlier this year, we welcomed 1,200+ to the Arizona desert — and anticipate a similar audience when we return a week before next year’s Super Bowl. We’ve recently added a lot of new information on January’s program to BankDirector.com; if you’re interested to see what we’re planning, I invite you to take a look.

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In addition to Acquire or Be Acquired, I am really excited to host two conferences before we return to the desert.  On September 10-11 at the Four Seasons Hotel Chicago, we host our very popular Bank Board Training Forum.  This two-day program provides bank directors with the education and training needed to address the issues and challenges facing them in today’s ever competitive, highly regulated and rapidly evolving banking and financial services industry.

From November 5 – 7, at the Four Seasons Resort & Club Dallas at Las Colinas (a short hop from DFW airport), we convene Bank Director’s annual Bank Compensation & Talent Conference to focus on the recruitment, development and compensation of a bank’s most essential talent.  While in Dallas, leading advisers share their perspectives on building and supporting the best teams by providing first-hand information on the strategies and plans being used by successful banks today.

If you’re interested in any of these three exceptional programs, you can learn more here.

Whether They Want To or Not, Banks Need to Open Up

Apart from interest rates, the two biggest issues that bank executives seem to wrestle with are regulatory and compliance costs.  I sense another emerging challenge coming to shore; specifically, how to “open up” one’s business structure in terms of developing partnerships and permitting others to leverage their customer data and/or capabilities.

For bankers, this challenge comes with significant reputation and customer risk.

Now, it is hard to truly disrupt the concept of banking — and I shared this opinion from the stage at Bank Director’s annual Bank Executive & Board Compensation Conference this morning.  However, I did adjust some of my welcoming remarks based on the Consumer Finance Protection Bureau’s position that consumers can control their own financial data, including to let third parties help them manage their finances.  As I learned from Jo Ann Barefoot’s Fireside Chat with CFPB Director Richard Cordray at Money 2020, the CFPB “is not content to sit passively by as mere spectators watching these technologies develop.”  According to his prepared remarks:

Many exciting products we see… depend on consumers permitting companies to access their financial data from financial providers with whom the consumer does business. We recognize that such access can raise various issues, but we are gravely concerned by reports that some financial institutions are looking for ways to limit, or even shut off, access to financial data rather than exploring ways to make sure that such access, once granted, is safe and secure.

Since reading the CFPB’s position, Ms. Barefoot’s recap and the Wall Street Journal’s synopsis, I decided to talk with various bank executives and board members that are here with us at the Ritz-Carlton in Amelia Island about this stance.  As I note in this video, I sense both an ongoing struggle — and a sincere interest — to truly understand the role of technology.  For those I talked with, this is as much about “becoming sticky” to their customers as it is about embracing or defending themselves against “the new.”

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For more about this year’s conference, I invite you to take a look at BankDirector.com.  Also, a virtual high-five to the team here for a great first day.  You all rock!

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Evaluating Board Performance

New regulations, technological innovations and a highly competitive environment that leaves little room for error have placed unprecedented demands on the time and talents of bank boards and their individual directors.  As many who support the banking space can attest, a strong board begins with a set of enlightened governance policies and procedures that center on honesty, personal integrity and accountability.

At Bank Director, we coined the phrase “strong board, strong bank” in response to the mounting pressures placed on the banking community.  Over the years, we have introduced new research projects, conferences and magazine issues to provide exceptionally timely and relevant information to a hugely influential audience.

As I prepare to head down to Florida (and the Ritz-Carlton, Amelia Island) this weekend for our annual Bank Executive & Board Compensation conference, I am anticipating conversations about potential regulatory changes and current strategic challenges related to a bank’s growth and profitability.  Alongside my colleagues Michelle King and Amanda Wages, I also expect to field questions from the audience (depicted in the image above) about how high performing corporate boards employ evaluation tools that match the talents & experiences of their board members to an organization’s strategic goals.  FWIW, I anticipate such inquiries as many consultants and attorneys encourage such assessments — and the board performance self-evaluation tool we designed & offer to banks has earned a strong reputation for providing an independent review of a board’s effectiveness.

To be sure, the banking industry seems to be doing well based on a variety of measures — profitability is high, credit quality is much improved and tangible capital ratios are stronger than ever. However, such financial measures don’t necessarily reflect the challenges facing many banks and their boards.  So in advance of our annual event, I asked our research team to roll up the results from twenty-two bank boards — all randomly selected — that completed a performance survey this year.

While tempting to look at individual board results and draw conclusions, anonymously lumping this group together allows some interesting patterns to emerge given more then 200 individual responses:

  • 50% recognize a need for more diversity on the board;
  • 55% say they need more expertise/knowledge in technology on the board, and 44% indicate a need for more training on IT issues;
  • 51% are dissatisfied with some aspect of the bank’s succession plan, for the CEO and/or the board; and
  • 56% are certain they have the M&A experience to meet the bank’s growth goals (44% say no or are unsure).

While these four points caught my eye, I asked our Director of Research, Emily McCormick, what stands out to her. In her words:

“Many boards lack a consensus on their succession plan, meaning that they’re often not on the same page regarding the depth of that plan. That, to me, is a red flag.”

Anecdotally, many bank CEOs — and board members — that I’ve talked with in person know they need new skills, particularly in technology, and recognize a need for diversity. But as we find, few want to add additional board members.  A fact to keep in mind next week as we explore how to build and support the best teams based on the strategies and tactics being used by successful companies today.

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We designed our Bank Service offerings to help board members and senior executives develop strategies to help their bank grow, while demonstrating excellence in corporate governance that shareholders and customers deserve and today’s regulators demand.  To learn more, click here.

What Does a Board Member Get Paid?

The banking industry seems to be doing well based on a variety of measures — profitability is high, credit quality is much improved and tangible capital ratios are stronger than ever. However, such financial measures don’t necessarily reflect the challenges facing many institutions to attract, compensate and retain standout executives and talented board members.  So, in advance of Bank Director’s 12th annual Bank Executive & Board Compensation Conference (held October 25 + 26 at the Ritz-Carlton Amelia Island), I thought to share this snapshot on what a bank pays, on average, to its board members.

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This information comes from our 2016 Compensation Survey, sponsored by Compensation Advisors, a member of Meyer-Chatfield Group.  This annual research report, now available for free on BankDirector.com, examines trends in executive and board compensation, including the compensation related issues faced by boards and senior executives.

This survey tracks salary data for CEOs, chairmen and independent directors & was completed online by 262 directors, chief executive officers, human resources officers and other senior executives from U.S. banks in March 2016. Supplemental data on CEO and board compensation came from the proxy statements of 105 publicly traded institutions for fiscal year 2015.

This Week in Pictures (and Videos)

As I wrap up the week, let me take a look back at Bank Director’s annual Bank Executive & Board Compensation conference vis-a-vis video recaps and a gallery of pictures from the Swissotel Hotel in Chicago.

Video Recaps

If you’re curious for a <90 second summary of our time in the Windy City, take a read at what I wrote on Monday (Does Anyone Want To Work At A Bank?) or Tuesday (Trending at #BDComp14) and check out these two videos. The first, of our talented editor Jack Milligan; the second, my two cents.

Picture Time

Aloha Friday!

A 90 Second Look at the ‘Innovation Requirement’ Facing Banks Today

While the larger banks in the U.S. continue to increase in size, many community banks are fighting for survival in today’s regulatory and low-interest rate environment.  Here is one key takeaway from yesterday’s Bank Executive & Board Compensation Conference.

Up next?  Pictures on Friday from the conference.

Trending at #BDComp14

This January, at Acquire or Be Acquired, I wrote that most successful banks have a clear understanding and focus of their market, strengths and opportunities.  So one big takeaway that builds on this idea from our annual Bank Executive & Board Compensation conference (#BDComp14 via @BankDirector): it is time for a bank’s compensation committee and HR officer to reassess their viability of their performance plans and incentive programs.

Today’s agenda covered a lot of ground; namely, how economic, technological and demographic trends are reshaping the financial community. With nearly 300 attendees with us in Chicago, I heard a lot of interesting comments and questions made throughout the day. Three that stood out to me from our “on-the-record” presentations:

  • The Fed’s policies are forcing banks to ask tough questions: When will rates rise? Should I make fixed rate loans in the 4% range? How will this play out? How does it affect my stock value? (Steve Hovde, the CEO of the Hovde Group)
  • It is not what you do for people that they remember; it is how you make them feel. (Scott Dueser, the Chairman & CEO of First Financial Bankshares)
  • When it comes to Dodd-Frank, I thought we’d be through it all, but its still going full force (Susan O’Donnell, a Partner at Meridian Compensation Partners)

Trending topics
Overall, the issues I took note of were, in no particular order: loan growth is now paramount to profitability; with cybersecurity risks growing, protection is becoming more and more costly (especially in terms of time & resources); standardized loan products are reducing competitive advantages of community banks (naturally impacting compensation plan participants); if compensation plans are overly complicated, step back and ask if your are trying to solve for something else; culture and performance is what it’s all about.

More to come from Chicago tomorrow…

Does Anyone Want To Work At A Bank?

Admittedly, the question driving today’s title is not the easiest to answer.  Without the training programs once offered, without the cache of an Apple and without the stability of a career path, you might wonder why any smart, ambitious and talented professional would take a job in banking.  Surprised I’d write this from Chicago and Bank Director’s annual Bank Executive & Board Compensation conference?  Read on.  

A sunny day in Chicago
A sunny day in Chicago

As I start to write today’s piece, it strikes me that without the help of LinkedIn, I don’t immediately know a single person my age (37) that works for a traditional bank — let alone operates at an executive level.  This is a HUGE problem for the future when one considers the growing divide in public perceptions of banks with the actual business operations in place.  Look, I’m not throwing stones.  Heck, I would have loved to get into a management training program when I graduated from W&L in 1999.  Its just that almost every big bank that historically trained the “next generation” of bankers had shelved their programs.

While I don’t work directly for a financial institution, I am lucky to spend days like today finding inspiration from bank executives, board members and services providers.  Mostly, these are people who see the banking space as one that does need change, but does not deserve dismissal.  So as the Swissotel starts to fill with “traditional bankers,” I anticipate three big themes; namely, the recruitment, development and compensation of a leadership team and the workforce of the future.

In Terms of Recruitment…

If you subscribe to the idea that “tone from the top” is key for building a culture of success, take heed of our editor’s opinion.  Jack Milligan recently blogged on “The Bank Spot” that “the #1 best practice for a bank’s board of directors is to hire a high performance CEO.”  In his words:

Of all the things that boards do, this might be the most obvious – and yet it’s also the most important. A good CEO works closely with the board to develop a strategy that fits the bank’s market and has the potential to create a high level of profitability. They bring in good talent and do a good job of motivating and leading them. And they have the ability to execute the strategic plan and deliver what they said they will deliver. Having a high performance CEO doesn’t guarantee success, but I think it will be very hard to be a high performing bank without one.

In Terms of Development…

In my mind, having the right leader in place dramatically improves the attractiveness of an institution to potential employees.  Here, I look at what bankers like Ron Samuels and Kent Cleaver are doing in Nashville at Avenue Bank and Mike Fitzgerald at Bank of Georgetown in Washington, D.C.  Creating a culture where one is pushed to contribute to the bank’s growth seems obvious.  But I can tell you, putting people above products and financial profits isn’t always the easiest thing to do (right as it may be).  Developing talented executives takes both patience and confidence.  Indeed, one must be comfortable doing more than simply empowering others to be a team player.  Here, a passage from L. David Marquet’s (a retired Captain in the U.S. Navy) “Turn the Ship Around” bears quotation.  The premise: don’t empower, emancipate.

Emancipation is fundamentally different from empowerment.  With emancipation, we are recognizing the inherent genius, energy and creativity in all people, and allowing those talents to emerge.  We realize that we don’t have the power to give these talents to others, or ’empower’ them to use them, only the power to prevent them from coming out.

It might be easy in a highly regulated environment to see this logic and find excuses to it not applying to banking.  But if a submarine captain can transform one of the worst performing boats into one of the most combat-effective submarines, perhaps these words might be re-read.

In Terms of Compensation…

Not to throw a wet blanket on the last two points, but as our team found in a recent survey, bank boards recognize the need to tie compensation to the performance of the bank in the long term, yet they continue to struggle with how to get the pieces in place to attract and reward the best leaders to meet the institution’s strategic goals.  So I find it particularly interesting that less than half of the banks we surveyed tie CEO pay to the strategic plan or corporate goals, and more than one-quarter of respondents say that CEO compensation is not linked to the performance of the bank.

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I’m checking back in tomorrow from the conference.  If you’re on Twitter and interested in the conversation, feel free to follow @BankDirector, @AlDominick and #BDComp14.