Magazine article American Banker

Local Advisory Board Can Still Be a Valuable Asset

Magazine article American Banker

Local Advisory Board Can Still Be a Valuable Asset

Article excerpt

One casualty in many recent bank acquisitions has been the advisory board-long an asset in building business and boosting community presence.

What makes the disappearance of many such boards ironic is that most were created as a result of prior bank mergers. The scenario usually ran like this:

A local bank would be discussing selling out. But members of its board of directors recognized that would mean the end of their service. They would lose the status of being on the board and the chance to travel to bankers' conventions. But in most instances the most meaningful impact was the loss of the opportunity to meet periodically with other business leaders to learn what was really happening in their communities. Those intangible benefits far outweighed the $100 they received for attending each meeting.

And the acquiring banks also faced a potential loss as directors left the fold. The directors serve as ambassadors in the community, adding stature to the banks they serve. In addition, they act as key business developers for their institutions. And calling upon their skills as businessmen or professionals, they can serve as sounding boards and counselors.

So advisory boards were set up to keep former directors as part of the bank family, even though they would no longer have a policymaking role.

Such boards were developed by community banks as well as by larger acquiring banks. Smaller banks usually did so if they acquired a bank in a nearby town or established a branch far from their home community.

But what do advisory boards really accomplish?

First, in their customary quarterly meetings, the top bank people would inform the advisers on bank policies and operations, and local economic conditions.

Bank advisory directors, like the full-fledged directors, report that the information they glean from the meetings is they best part of the job. …

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