Bank Director's study reveals various barriers to effective
boards, including dominant stakeholders and a lack of diverse
viewpoints. Board responsibilities, engagement and risk oversight
are also reviewed.
NASHVILLE, Tenn., July 30,
2024 /PRNewswire/ -- Bank Director, the leading
information resource for directors and officers of financial
institutions nationwide, released its 2024 Governance Best
Practices Survey Results, sponsored by the law firm Bradley
Arant Boult Cummings LLP. Survey findings reveal that about
one-fifth of respondents report the outsized influence of a
dominant executive or director in the boardroom.
Bank regulators have pointed to these so-called "dominant
policymakers" as a governance gap. A bank's board has an essential
role in the success of an institution, but a dominant CEO or board
member could have a negative impact on the safety and soundness of
a bank's operations. In proposed guidelines issued by the Federal
Deposit Insurance Corp. in October
2023, "dominant policymakers" could inhibit directors'
independent judgment and lead to the mismanagement of the
institution. Further, a possible "power vacuum" could result should
the dominant individual step down.
"While the FDIC's proposed guidelines would apply to a limited
number of banks over $10 billion in
assets, the agency has posed this as a safety and soundness concern
that it can apply as deemed appropriate," says Emily McCormick, vice president of editorial and
research at Bank Director. "While most of the board members in our
survey don't report such a dominant individual at their own
institutions, a number do — and anecdotally, we've seen the
adverse consequences play out at some failed and distressed
banks."
In the survey, respondents pointed to other shortfalls in
their boardrooms. These include a lack of diverse viewpoints or
backgrounds (21%) and a lack of long-term vision (20%). Only
one-third of respondents perceived no deficiencies in their board's
culture.
"Bank Director's 2024 Governance Best Practices Survey validates
that the board time commitment is growing because our directors are
focused on their current responsibilities, which is creating a gap
for one-fifth of bank boards that do not have a long-term vision
for the institution," says Robert
Maddox, a partner at Bradley. "This may be a stressful environment,
but just surviving is not a successful strategy."
In addition to addressing director engagement and independence,
the survey examines how boards oversee risk, and the skills and
diverse backgrounds reflected in bank boardrooms today. Almost half
say their board has three or more members who they would
characterize as diverse, based on gender, race or ethnicity. And
56% consider these characteristics when evaluating director
candidates.
The 2024 Governance Best Practices Survey Results include
the views of 178 independent directors, chairs and CEOs of U.S.
banks below $100 billion in assets.
The majority of responses reflect banks under $10 billion.
View the Full Survey Findings
About Bank Director
Bank Director reaches the leaders
of the institutions that comprise America's banking industry. Since
1991, Bank Director has provided board-level research, peer
insights and in-depth executive and board services. Built for
banks, Bank Director extends into and beyond the boardroom by
providing timely and relevant information through Bank
Director magazine, board training services and the financial
industry's premier event, Acquire or Be Acquired. For more
information, please visit BankDirector.com.
Bradley Arant Boult Cummings LLP
Founded in 1870,
Bradley is a national law firm
with a reputation for skilled legal work, exceptional client
service, and impeccable integrity. Attorneys in Bradley's Banking & Financial Services
Practice Group serve as counsel for a broad range of banks, lenders
and financial institutions across the
United States. As part of its nationwide practice, the team
(which includes more than 80 members) advises banks, mortgage
servicers, lenders, credit unions and other consumer finance
companies across a broad spectrum of legal issues, including
litigation, regulatory compliance, governmental investigations and
enforcement actions, risk assessments, and multi-state settlements.
The firm's unique, cross-disciplinary team has a national
reputation as a leader in the consumer finance industry with a
particular focus on mortgage origination and servicing compliance,
enforcement, and litigation. For more information, please visit
www.bradley.com.
For more information, please contact Bank Director's Director
of Marketing, Deahna Welcher, at
dwelcher@bankdirector.com.
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SOURCE Bank Director