Best Banking Reads of 2014

What a year it’s been for the banking industry! From threats from outside the industry by Apple and Wal-Mart, to questions on whether Colorado and Washington banks should work with legal marijuana businesses, to regulatory shenanigans at the New York Fed, 2014 has been memorable. As the holidays approach and I think back on the year that was, I thought I’d take a few minutes to share some of the banking-related stories I enjoyed in 2014.

Regulations

  • Banks given the go-ahead on working with marijuana businesses: Marijuana may be legal in some states, but that doesn’t mean banks are ready to work with marijuana businesses.
  • How to Punish a Bank: This is from National Public Radio’s Planet Money, so it’s more of a listen than a read, but delves into the problems of effectively punishing the big banks.
  • Bank of America Adds a Mortgage Settlement to Its Collection: Bloomberg’s Matt Levine (also cited in the NPR segment) provides the data on (at the time) Bank of America’s $68 billion in mortgage settlements, and asks how effective these penalties and fines are when they become business-as-usual.
  • Inside the Emerald City: Jack Milligan, editor of Bank Director, delved into the culture of the NY Fed following concerns that regulators got just a bit too cozy with the big banks they oversee.

NonBank Competition

Continue reading

Big Disparities in Bank CEO Pay

As discussed in my prior blog post, the 2014 Compensation Survey finds that bank boards are earning more and lending is a big focus for executive hires. But the survey also delves more into CEO pay this year, and while the disparities in pay for the largest and smallest banks should be expected, it’s still jarring to see.

CEOpayBySize

For the industry overall, the median compensation amounts for bank CEOs total:

Salary: $241,600
Cash incentive: $44,600
Potential cash incentive: $57,600
Equity grants: $50,000
Benefits & perks: $21,231

Ninety-nine percent report that the CEO receives a salary, while 41 percent report that the CEO receives equity grants. Half report a cash incentive, and more than two-thirds say that the CEO receives some benefits & perks.

You’ll find more details on bank executive pay within the 2014 Compensation Survey.

Financial Research: Is a Focus on Growth Yielding Higher Board Pay?

GrapesUnsplashBank Director just released the results of its 2014 Compensation Survey, sponsored by Meyer-Chatfield Compensation Advisors, and the results may reveal some good news for the banking industry, as evidenced by two key trends:

Lending is fueling more executive hires than compliance or risk, with boards focusing more time on loans. Loan officers are in strong demand at banks of all sizes, with more banks citing growth than regulations as the driving force behind change at the executive level. 

Bank boards are earning more. After getting their regulatory ducks in a row, a renewed focus on profitability may have translated into increased pay and benefits for bank directors. With median fees set at $750 per board meeting and median annual retainers at $20,000, bank directors are seeing a modest income for their service. However, the view isn’t as rosy for small banks: Almost half of boards at banks with less than $500 million in assets haven’t increased pay since at least 2010, and director pay is significantly lower at these institutions.

You’ll find the complete results to the survey, including median pay data for CEOs and boards, HERE.

Infograph06162014_Comp2014

Financial Research: PayDay Loans, Compensation

From The Pew Charitable Trusts: while payday lenders claim that their loans allow borrowers to avoid checking overdrafts, many end up paying more:

Continue reading

How Low is Too Low?

Bank Director and Meyer Chatfield Compensation Advisors released results to their compensation survey last week, and I was struck by the fact that community bank directors are working harder – yet paid less – than their big bank counterparts. Amidst news that JP Morgan’s Jamie Dimon, at $23.1 million, is America’s highest-paid banker – in the midst of an uncertain economy and public perception that the rich get richer, and bankers are the richest of the lot – low director pay to the average American may prompt them to play the world’s saddest song on the world’s smallest violin. But how high is too high – and more important too community bankers, how low is too low?

It’s risky to be a director. Everyone – from shareholders to regulators to the general public – has their eye on the banking industry these days, and the government increasingly wants community banks to play in the same sandbox as the big banks, despite a lack of resources. Per Meyer Chatfield’s Flynt Gallagher, community bank directors work longer hours to make up “for limited resources to fulfill fiduciary and oversight duties, while at the same time trying to meet shareholder expectations and ensure regulatory compliance.” Add into that the risk and liability of potential FDIC lawsuits should the bank fail – it’s something that a potential director will take into account. In fact, liability and potential growth are more important to the board members surveyed than the compensation and benefits package.

So, community bankers – how low is too low?

——————-

Concerned about risk? This one-day risk event might be just up your alley.

Need insight on FDIC lawsuits? Some lessons learned from legal experts.