ABA Banking Journal - July 2011 - (Page 18)
PaSS THe aSPiRin
The BAnkeR-TO-BAnkeR exChAnGe
The Headache: Coping with the mushrooming compliance burden
At a recent gathering of community bankers, the issue of the seemingly unstoppable growth in compliance burden dominated discussion after discussion. Two bankers had especially interesting approaches and we asked the executives to share them with Aspirin readers. To share your own ideas on this, or on Headache 2, email Executive Editor Steve Cocheo at email@example.com. Also feel free to suggest new topics.
Remedy 1: Set up a compliance committee Pedro Bryant, President and CEO, Metro Bank, $35.3 million-assets, Louisville, Ky. We use a Compliance Committee approach that keeps up with issues across the whole spectrum that we have to watch. The committee gives me a monthly report on what’s going on and what’s coming up. Quarterly, the committee reports to our board. To help us gauge compliance risk, we use an outside firm that conducts an annual compliance review. We also farm out Internal Audit to this firm. The company comes back three times a year to test our internal controls. We try to prioritize, even within our committee approach. For instance, we make many business loans, so Regulation B can be a potential risk issue for us. I find that this approach works well when you have a staff departure. When the compliance person leaves, for instance, you have a transition, rather than an abrupt break. We’re a smaller bank, and we were actually advised to take this committee approach by our federal examiners. Remedy 2: Spread the burden around Gregg Vandaveer, president and CEO, Sooner State Bank, $150.1 million-assets,Tuttle, Okla. Good compliance people are hard to come by, especially for community banks. I think part of the solution is to spread some parts of compliance around. For instance, community
banks should start training tellers and other frontline employees to handle some of the basic compliance functions, beyond the ones they fulfill already. By statute, a bank is required to have a designated compliance officer. We have one, who is our cashier. Reporting to the cashier are the heads of two major areas, Loans and Deposits. In addition to running these functions, they oversee compliance in their units’ business activities. The cashier oversees their efforts. However, as far as I’m concerned, with my bank taking this approach, ultimately, the buck stops here. Ultimately, I am the “designated compliance officer.”
The Headache 2: Young bankers moving on or up
What advice would you give a young banker, of a few years experience, regarding resumes and other issues relating to moving up internally or finding a job with another financial organization?
Remedy: Get your head straight first Ed O’Leary, banking consultant and “Talking Credit” blogger at www.ababj.com I look at this through the eyes of a young lender. The banker should know why he or she wants to make a move. Is the career path blocked? Are formal learning opportunities truncated? More specifically, are formal training opportunities as distinguished from learning opportunities deficient? One can learn from keeping one’s ears open in the loan committee, for instance,
but there’s something very useful and ultimately formative about the discipline of a formal training program. Lenders who started out at small banks will not very likely end their careers with small institutions. As banks grow organically and by acquisition, the more formality in the development process the better in the career sense. That should be one of the primary goals of any young lender— to be trained in the formal processes of extending credit. When a lender is beyond the formal training stage of his or her career, the most important thing is to find the institution that has the best community reputation among its customers. Don’t be influenced by the amount of credit authority one has—it’s not very important beyond a transitory psychic value. Look for a bank that has a good reputation and scale to be credible with training and lending in a sophisticated sense—those factors should be paramount. A move for a 10% or 15% boost to salary isn’t an adequate reason to look if the other factors of a personal development nature are present where you already work. Maybe you are looking because a merger is in the offing: Production people are seldom at risk in a bank merger. Be a producer and build one’s reputation that way and that’s the ticket to the gold watch. A variety of line and staff assignments are useful but be careful that one always maintains the “aura” of being a line person. Staffs have redundant incumbents. But there’s always room for one more solid producer.
18 | ABA BANKING JOURNAL | july 2011
Table of Contents for the Digital Edition of ABA Banking Journal - July 2011
ABA Banking Journal - July 2011
Inside family banks
Pass the Aspirin
New gold standard?
Still on their guard
First Person: Special Edition
ABA Banking Journal - July 2011