Bank Director, The

Northwestern Financial Review, Jun 1-Jun 14, 2008 by Wheeler, Liz

Modest reward, serious risk for those unique folks who guide and promote community banks

Community bank directors may be the "unsung" heroes of any local economy. They share their business experience, encourage their president, and advocate for their bank usually in exchange for a meager stipend and serious liability. NorthWestern Financial Review visited with a few bank directors to gain some insight into these unique and daring folks.

Suzanne Fleury is a director at First National Bank and Trust Company of Iron Mountain, Mich. Fleury is one of 11 directors at the $225 million bank, located in the Upper Peninsula. An attorney who serves on several boards. Fleury said First National is "my favorite board because it so involves a business perspective in the community; it expands your knowledge base," she said. "You can exchange ideas and know what's going on in the community." Fleury. one of 10 outside directors on the bank board, said the industry jargon took some getting used to. "It takes at least a year just to learn the acronyms and the language of banking; after that you're fairly comfortable."

First National Bank is widely held with the largest shareholder owning less than 10 percent of the bank's stock. Each director is elected to a three-year term and each year three directors come up for re-election. Bank President David Kashian described the obligations of his directors: "They let officers know what's going on in the community, and act as cheerleader in the community for the bank's cause." Furthermore, Kashian said the board provides "oversight of bank operations to make sure it's being operated in a safe and sound manner. They make sure stockholders are fairly represented; they make sure investment is being maximized. They provide the CEO with strategic direction."

First National Bank is unusual in that it conducts two board meetings a month; the first is devoted to the consideration of financial information. The second is more strategic planning. "They talk more, and I listen." Kashian said. Each director is required to serve on at least one active committee.

John Jamar, president and CEO of a broadband communications company, has been on First National Bank's board for more than a decade. "I was eager to learn about banking," he said about joining the board. Jamar said he was concerned when he joined the board that his relationship with the president might suffer.

"I was concerned that my camaraderie with the CEO might someday end, and it did. I was one of the two who accepted the resignation of the past CEO. I was very disappointed." Ironically, the flip side of that is also one of Jamar's favorite parts of serving on the board. "Dave [Kashian] was an excellent banker and has become even more effective as a leader and a manager now that he has the top spot."

Beacon Bank has three locations in suburban Minneapolis and two in Duluth, Minn. Like First National, the $270 million bank re-elects one-third of its six outside directors each year. To be a member of the board, Beacon Bank requires its directors to undergo training annually and they are required to do all their banking at Beacon. "They have to be financially secure so we are not concerned with there being a problem with them at some point in the future. Individuals have to be well-respected in the community, have strong financial discipline, be willing to refer business and network for the bank." President/CEO Bob Weiss said.

Roger Wedin of Oneida Realty Company of Duluth is vice-chairman of Beacon Bank's board. Joining the board was a "two-way street - an opportunity to learn about business from the banking perspective, and I hope some of my perspective would be valuable to the bank."

Wedin appreciates the financial investment the bank makes in the community, such as funding a sports center to replace a hockey arena that burned. Even Beacon Bank's strategic planning retreat contributes to the community. "Last year, we gathered at a church in Shorewood and filled food packages being sent to Third World countries that will feed tens of thousands. It's a real vision of Beacon Bank's value system - giving back to the community is important."

"Becoming a bank director has provided me an opportunity to work with a group of bankers for whom I have a great deal of respect," said Sara Noah, a human resources consultant and another Beacon board member. "Also, it was partly a professional decision. I have worked as a human resource consultant with many banks over the years. I feel that my professional skills have been enhanced as a result of my experience as a director."

Noah, whose father was a banker, cautions that a prospective director "needs to have more than a casual understanding of the regulatory environment and compliance issues as well as the financial aspects."

Both First National Bank's and Beacon Bank's boards have mandatory retirement, ages; First National's is 72, while Beacon's is 70. "My experience has led me to realize that when people reach that age. they typically aren't as interested as much in the day-to-day activity of the bank and more interested in their retirement activities," Weiss said.