Western Independent Banker - May/June 2009 - (Page 24)

Now, it is important for us as an industry to guide lender incentive pay toward different behavior, tying cash and other lender incentives not just to quantity, but also to loan quality, deposit generation, and relationship building. Implement Bankwide Performance Measure: Because Our Lenders Aren’t Just Lenders Anymore Here’s the good news: We know that lenders will accomplish what we incent them to do. The next step is to create the right matrix of goals and objectives for your individual lending executives, from the CLO to each individual lender. That will start righting the ship, both at your organization and in the industry at large. In an ideal world, the incentive compensation package for all lending executives should include measures related to bankwide goals and targets (see Table 1), including net interest income, provision for loan loss, non-interest income, credit risk, liquidity, interest rate sensitivity, economic risk, business development, and employee training. Obviously, the simpler you can make the formula, the easier it is to administer. The measures in Table 1 are comprehensive, so consider them each carefully in terms of your own organization, market, and staff, and go in realizing that you won’t use them all. But the bottom line: any incentive program should incorporate components that revolve around credit quality, margin and deposit generation. Geri Forehand is a certified professional consultant to management and serves a s Br intech’s director of strateg ic services. In his 30 years of financial services experience, he has worked both as a banker and a consultant to banks, focusing on strategic planning, executive compensation, and board a n d m a n age m e nt a s s e s s m e nt . He can be reached at 800-929-2746 or GForehand@Brintech.com. Doing It Right… Doing It Smart Let us help you manage your credit risk with nationwide services. • Credit Risk Analysis • Credit Risk Assessment • Internal Controls • Loan Portfolio Reviews • Review AHMAD ASSOCIATES LTD AAL 8230 Old Courthouse Rd., Suite 210, Vienna, VA 22182 www.AALCPAs.com Tel: 703-893-9644 • Fax: 703-893-0069 E-mail: AAL@AALCPAs.com CONNECT with industry and regulatory EXPERTS for the most up-to-date news, insight and INNOVATIVE SOLUTIONS to the challenges of today and OPPORTUNITIES of tomorrow. CFO, Investments & Operational Risk Conference Building Connections: Finding Solutions to Today’s Challenges 24 www.wib.org Western Independent Banker http://www.aalcpas.com http://www.wib.org http://www.wib.org

Table of Contents Feed for the Digital Edition of Western Independent Banker - May/June 2009

Western Independent Banker - May/June 2009 Contents A Message from the Chairman How to Keep Employees Happy … On a Shoestring Budget Keeping Good Employees in Today’s Marketplace Asset Appreciation: Front Line Employees Hold the Secret to Balancing Customer Loyalty and Profitability Great Places to Work – WIB Member Banks Why Real, Live Bankers Still Matter Getting the Best Results from an Executive Search Best Practices in Lender Incentive Programs The Enlightened Control Freak: How to Lead So Your Team Will Love, Follow and Work Like Crazy for You Even in These Wild and Tough Economic Times The Frightened Leader Don’t Train – Educate! WIB Service Corporation Report WIB Calendar New Members Advertiser.com Index of Advertisers

Western Independent Banker - May/June 2009

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