Magazine article American Banker

Musical Chairs for the Board Chairmanship?

Magazine article American Banker

Musical Chairs for the Board Chairmanship?

Article excerpt

The chairman of a community bank is likely to hold the job a pretty long time-often for a generation. But California's SGV Bancorp gets a new one every two years.

The West Covina thrift has long rotated its chairmanship. Last month it elected Benjamin S. Wong to the post for the next two years; Mr. Wong, a West Covina city councilman and who owns a restaurant owner, succeeds accountant Royce Stutzman, who will still be a director.

SGV's policy is an anomaly in an industry that prefers consistency and stability.

"It's not unheard of, but it is fairly unusual," said George Freibert, chairman of Professional Bank Services, a Louisville, Ky., consulting firm. "Rotating the chairmanship may have the appearance to some of dissension or lack of stabilization on the board."

SGV, parent of $370 million-asset First Federal Savings and Loan Association of San Gabriel Valley, has used an informal revolving-door policy in choosing chairmen of its five-member board since 1992. The policy was initiated by Irven G. Reynolds, who served the first two-year term and "just felt that it would be nice to move it around."

"I don't see anything wrong with rotating the chairmanship," he said.

He said having a new chairman every two years doesn't make the board or management "unstable," and serves to strengthen directors' ties to the thrift.

"It gives each member something to look forward to," he said.

Mr. Wong said the thrift will likely continue the tradition.

"It really is a board of equals," he said. "The rotation of the chairmanship reinforces that equal status that we all feel for each other. …

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