January 8, 2025 • 20 mins
From AI and crypto to complex regulatory challenges and increasingly diverse markets, bank executives face increasingly complex strategic decisions — and so do bank boards as they set and oversee the strategic direction for their banks. And yet, the average age of bank directors is 76, and many do not have expertise in these critical challenges affecting banks.
On the latest episode of the ABA Banking Journal Podcast, veteran bank board members and executives Jenn Docherty and Virginia Varela discuss how bank boards can position their banks for success in a challenging environment. They discuss the importance of sourcing diverse expertise and how board members can start and lead difficult conversations about where their banks need to go, creating space for new ideas and giving management more flexibility — and more incentives — to innovate.
Docherty and Varela will discuss these topics and more at the ABA Conference for Community Bankers, Feb. 16-18 in Phoenix.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jenn Docherty (00:00):
The average age of bank board members is 76.
(00:04):
And you have some board members whoare very, very strong contributors,
but you have others who just aren'tconnected with some of the challenges
that banks are facing today.
And those can be very difficultconversations and being willing
to have those conversations,I think is the first step.
Evan Sparks (00:22):
From the American Bankers Association.
This is the ABA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and I'm delighted tobe joined by two distinguished leaders
in banking for a conversation on bankinggovernance and how boards can handle
some of the tricky challenges that arefacing those in positions of leadership
in the banking industry in the, inthis year and in the years ahead.
(00:46):
So first we have Virginia Varela.
Virginia is Head of CommunityBanking at SoFi, and she's also
a Director at Bank on Women and apast board member at several banks.
She, and then we also have Jenn Docherty.
Jenn is Chair of Bank on Women, Directorof Performance Trust and Sunrise Banks.
And and so both obviouslyexperts on issues of governance
(01:08):
in the community banking space.
So, welcome to the show.
Jenn Docherty (01:12):
Thank you, Evan.
Happy to be here.
Thank you.
Evan Sparks (01:14):
So I'd love it if we could just get started with a little
more about your personal backgrounds.
I know I introduced, introducedwhat you're currently doing, but
Virginia, if you can tell us a littlebit more about your background in
banking and your role in in thegut, particularly in the governance
side of at banks during your career.
Virginia Varela (01:31):
Sure.
And thank you for having us.
I've been serving in thebanking industry for decades.
So I have a lot of background andseeing a lot happen over the years.
I was a president and CEO of a communitybank in Northern California called Golden
Pacific Bank where I was on the board.
And that bank in 2022was acquired by SoFi.
(01:55):
And With SoFi, I was kept on and I becamean officer of SoFi and I'm currently
head of community banking at SoFi.
So I've seen a lot of changesbetween the community banking world
and the approach from a FinTechthat acquired and became a bank.
I've also served on the boardsas CEO or COO of three other
(02:21):
community banks in California.
And my background is mainly going tobanks and turning them around for success.
So I've been involved in fourdifferent sales of banks.
And during that period, maneuveredwith the board through the sales.
So that was very challenging.
I was also on the federal homeloan bank board, which was
(02:44):
a corporate board position.
And served on as lead of the technologycommittee and the membership committee.
And prior to these years inbanking in the private industry,
I've also was a bank regulator.
So I started my career manyyears ago in the 1980s.
(03:05):
And I served on I served as examinerall the way to lead positions with
several different regulatory agencies,including the Federal Home Loan Bank
the Office of Comptroller Currency,Office of Threat Supervision.
And the Federal Reserve.
So I have a very long andinteresting background.
(03:29):
I also have been on boards ofseveral associations for bankers,
and I'm currently a board memberof California Bankers Association.
And also friends of traditional banking.
Evan Sparks (03:41):
Oh, great.
And and Jenn, I know you, you, you'reno stranger to ABA and our audiences,
having spoken at our events before.
But if for those of you who don'tknow your background, could you
introduce yourself a little more?
Jenn Docherty (03:51):
Sure, Evan.
And thanks again forhaving us this morning.
So I have sort of a complimentaryexperience in the banking
community to what Virginia brings.
I have never worked at or for a bank.
Although I've sat on the board ofSunrise Banks for the last couple of
years, my career, and I won't countthe decades anymore than Virginia wants
to, but my career really has come up onthe legal and financial advisory side.
(04:17):
So I started out my career doing legalwork as a legal advisor for primarily
bank strategic initiatives, M& A, capitalraising, and bank regulatory work.
Shortly after 9 11, I moved overto Sandler who had been a long time
client and spent the better partof 20 plus years there, helping
to build a capital raising group.
(04:39):
Recently, I moved over to PerformanceTrust to become the Chief Legal Officer.
The entire career though, really hasbeen advising boards on the critical
decisions that they have to make.
And so it's been interesting for mesitting on a board now having spent
the majority of my career advisingboards particularly, and I know we're
(04:59):
going to talk about this, but withsome of the novel challenges a lot
has changed in a very short period oftime for community banks, especially.
Evan Sparks (05:07):
Yeah, absolutely.
And I mean, we're here,we're in this environment.
I mean, we have someone who'sworking at a FinTech and bringing
that disruptive perspective.
Virginia, I'm just curious if you couldkind of help us understand, help our
listeners understand a little bit whatare some of the challenges that you're
seeing and that board members at communitybanks need to be aware of and keeping in
(05:30):
mind as they evaluate what's the futurefor this institution, what's the, what's
the path forward for how we're goingto serve our community and customers.
Virginia Varela (05:40):
There's so many different dynamics and the
banking world has changed so much.
And I'll let Jenn talk about theenvironmental, social and governance
issues because she's more, has moreexpertise in that area, but I'll
tell you what's really of concern.
I think at every bank board, or itshould be of concern is economic
(06:03):
I mean, the global economy isfacing so many uncertainties.
There's geopolitical tensions,inflation, you know, you have supply
chain disruptions that can affect everybank, regardless of size and geography.
(06:24):
And you have I'm, I've,I've seen this firsthand.
You've got cyber security and.
Data privacy concerns that are such thatI've never seen in my career before and
things are going much more electronic.
So you have issues like whatwill the AI world look like
(06:44):
to a community banker today?
What's your strategy around crypto?
Technology around technology advancements.
I mean board members today are facingchallenges that I've never seen before
that are really uncharted waters.
So I think that's, it's reallyimportant to stay abreast of that.
(07:05):
Even this year I've been talking withseveral different of my colleagues
and we, we don't know what's ahead.
As far as regulatory changes and theworld with the new administration
is it true that it's going to beeasier to do merger and acquisitions?
How will they how will it beimpacting any kind of regulatory
(07:28):
changes with the payment systems,with loan processing, with privacy?
I mean, it's very, a verycomplicated world today.
So I think you have to really lookat being really up on a game in a
way that you never had to before.
And the one last thing I'd like to talkabout is the shareholder expectations.
(07:51):
I've seen shareholders callboard members directly.
Your feet are being held to the firein a way that I've never seen before.
I mean if there's a disaster inyour area, even a natural disaster,
like, you know Hawaii had You know,a volcano or something like that.
It's going to affect and comeup at a bank board meeting.
(08:15):
Shareholders will call andthey'll be expecting you to have
a plan, a disaster recovery plan.
They'll be expecting you to keepkeep the stock price up or have a
explanation for why it's gone down.
And I don't think you canjust sit back and expect the
shareholders to go with any pricing.
They're going to want to see.
(08:37):
Profitability and they'regoing to want to see a plan.
So the world is changing.
It's, it's a, it's funny cause I,I, with Bank On Women, some women
have come and they really want theboard position, but it's a hard job.
Evan Sparks (08:56):
Yeah.
And, and, and let's, let's like turn tosome of those, those some of those, you
know responsible business issues thatyou alluded to earlier, Jenn, you know,
I know that's something that is kind ofa hot potato in, Washington these days,
a hot potato and a lot of boardrooms.
How are, how are you seeing board memberstackle ESG issues, DEI any of the kind
(09:18):
of responsible business issues that arefacing directors at the strategic level?
Jenn Docherty (09:23):
Yeah, it's a great question, Evan.
And I would say the banking industry byand large is I don't know if agnostic is
the right word, but the banking industryis driven by the fundamentals of banking,
especially community banks, which is whatdo I need to do to better serve my market?
And so, you know, if you think about it,ESG, D&I, these are all kind of flash
(09:44):
point acronyms, but the fact is communitybanking has really always been, I mean,
DNA is, is taking care of the community.
That's ESG, you know, said differently.
So I don't think the fundamentalsof Banking have changed.
What has changed are the thingsthat Virginia just mentioned.
(10:05):
The complexities of the technology,the complexities on the regulatory
side, complexities just of earnings.
You know, we've had a really challengingyield curve environment coupled with
costs, Of technology and regulatorycompliance that have made just
making money a lot more difficult.
(10:26):
At the same time, you have arapidly evolving demographic
base of most communities.
And so what we're finding is that banksare being drawn more to diverse leadership
teams because it serves the businessof banking, not because D&I or ESG is
something that's in the news, good or bad.
But simply because that's whatit takes to be successful.
(10:49):
So all the skill sets thatVirginia mentioned are
critical in the boardroom now.
Board members historically weresourced through friends and family.
You know, you have, there's a great studythat was done by a former economist at
the Federal Reserve who found that 62percent of men on the same bank board
had a social connection with other men.
That was a wonderful recipefor generating revenue.
(11:12):
When all you had to care aboutwas sourcing loans and deposit
opportunities in your market.
But the needs of a, of a bank board nowreally involves technological expertise,
regulatory expertise, financial expertise.
And so the shift we have seen frombanks is really moving towards more
diverse leadership teams to be able toaddress those sorts of novel challenges.
(11:35):
You have.
Women starting businesses at the rate oftwo to one small businesses of men now.
So you've got to be tied intothose ecosystems in your community
in order to really support thatlevel of business development.
So I would say it's less about theacronyms themselves and more about
what it takes to fundamentallybe successful in banking.
(11:55):
Which hasn't changed.
It's just the level ofcomplexity around doing that has.
Evan Sparks (12:01):
So I'm curious if you have any, if either of you have any tips on
or successful experiences with how tostructure your boards in terms of, you
know, you talked about kind of new waysof sourcing board members of bringing,
bringing in new talent, how are successfulboards that are able to navigate
all these challenges with agility,structuring themselves and building
(12:21):
pipelines that that ensure their success.
Jenn Docherty (12:24):
Sure.
So, I guess the first thing, Evan,is just starting with a gap analysis,
and I think the ABA has some wonderfulresources for boards who are thinking
about this, but starting with anunderstanding of what skill sets you
have on the board currently and whatyou need for the future of the bank.
Who's going to help you setthe right strategic direction?
(12:45):
It also starts with a willingness tolook outside those you know already.
The biggest challenge we hearvery, very often, I'd love
to put a woman on the board.
I'd love to put a technologyexpert on the board.
I just don't know of anyone.
And that is often a true statement.
It doesn't mean those peopledon't exist in your community.
(13:06):
So it starts with a willingness to lookoutside of your conventional friends
and family resources to identify those.
So successful banks are doing that.
They are asking a broader audience.
I mean, bank on women.
Is the nonprofit that that Virginiaand I serve really came about to try to
meet banks where they were at, which issimply to just aggregate the wonderfully
(13:29):
talented women that we know who wouldmake for great bank board directors.
Because oftentimes I get asked thequestion is an outside advisor.
Do you know anyone whocould serve on my board.
The other avenue that boards arestarting to take advantage of
is talking more broadly in theircommunity, who are the academic
leaders, who are the non profit leaders.
But it starts with really taking a, a, atough look at what is your existing board?
(13:53):
What are the skill sets?
And sometimes having reallydifficult conversations.
The average age, I think ofbank board members is 76.
And you have some board members whoare very, very strong contributors,
but you have others who just aren'tconnected with some of the challenges
that banks are facing today.
And those can be very difficultconversations and being willing
(14:15):
to have those conversations,I think is the first step.
Evan Sparks (14:19):
Virginia, do you have any thoughts on kind of the
structure questions around how tohelp boards navigate these challenges?
Virginia Varela (14:26):
Sure so Jenn was talking a lot about, you know,
board composition and how to havethe right mix and the diverse and
skilled composition on the board.
And I would also add to that you need toreally look at how your board is composed
and how they're interacting over time.
So you want to ensure the boardmembers have adequate education.
(14:51):
They keep their skills up and you want tohave performance metrics and evaluation
of board members and sometimes that'shard because the board members are your
peers, you don't want to judge eachother harshly because you're acting,
you know, as a, as a unit, but youalso have to look at, you know, Do I
have the right skill set in place tomove forward in this new environment?
(15:16):
And if not, can we train the existingboard members or utilize the skills?
The other thing is I've seen boardsthat may have the right skill set on
paper, but unless you have really clearroles, responsibilities, and open lines
of communication and kind of fostercreativity, there's something lost.
(15:38):
And so on paper, a board can be, youknow, diverse or have, have the right
skill sets, but I've also seen boardswhere there may be one dominant player
or there's a rigidity that doesn'tallow for an expression of thought.
And one of the reasonsI love Bank on Women is.
(16:01):
Because it's looking not only atdiversity, but like effectiveness
of leadership roles, effectivenessof communication and I think
that's really important.
It's a skill set plus the interaction andthe ability also to have enough humility.
To be open to new ideas abouthow to address the future in a
(16:25):
strategic manner, identify risks,not, and be brave about it.
You, you know, we, we've seen a coupleof banks in the past few years that have,
you know, failed or teetered, teetered onfailure that on paper, you know, had the
right, The right board set, but somethingwas going on in those board meetings that
(16:49):
wasn't really touching the right strategyor, or something was wrong there, so tap
into that, the willingness to do that.
Evan Sparks (16:59):
Just thinking through those, bringing those unconventional ideas
to the table, those trying to surfacenew thought, new, new approaches and
have difficult conversations, what aresome of the tactics that y'all have
seen work best for directors who wantto move their boards in that, in that
direction, or for CEOs who want tomove their boards in those directions
(17:20):
to be able to, to have those kindsof conversations at the board level?
Virginia Varela (17:24):
Well, I'll speak to that and then I'll let Jenn chime in.
One thing that I made a mistakeabout as a, a CEO and a board
member I, I don't think I alwayslet in enough external experts.
If I had invited external experts itmight have given the board and myself, you
(17:48):
know, new information, new perspectives.
And so there was a concern about,you know, maybe drawing new
people in or maybe lack of timeor expense or something like that.
But I have learned over timethat, I have a, you need to really
appreciate and embrace expertsand you can learn from them.
(18:09):
So that's one way to really bringunconventional ideas into the scenario.
And also, I would say, createa real safe space for ideas.
So what I was talking about before,which is, you know, it's okay to maybe,
(18:30):
you know, have an open dialogue wherepeople say just, Brainstorming just
really you know, I think that's reallyset by the culture of the board to
allow a culture that is willing toexperiment and then maybe pilot new ideas,
experiment, you know, try some things on.
(18:52):
And Know it, it might the board maybe holding the management to speak to
the fire by asking them to do a pilotprogram or look into something more,
but that's the job of a board member.
So those are a few of the ideas I have.
Jenn Docherty (19:10):
Yeah, I think that's a, a, a great list.
The only thing I would add,I think Virginia already
touched on, which is training.
It is critical.
Even if you have a wonderful board,as Virginia said on paper, to continue
to upskill your board members to makesure that they understand, and that
can be through the use of outsideexperts through attending conferences,
but to make sure they're really up tospeed on what the latest challenges
(19:32):
are for banking and understanding inan industry setting as opposed to just
in the silo of your individual bank.
I think it's really important tounderstand these things in context.
Evan Sparks (19:43):
Well, I feel like we could really continue this conversation
for the next half hour or more.
But so if, for our listeners, if you wouldlike to hear more of Virginia and Jenn
talking through how to help directors fromtheir own director's eye perspective how
to, how, how to help these direct, howto help directors Have these difficult
conversations and tackle these reallybig challenges that are facing community
(20:05):
banks banks of all sizes over the comingyears you can hear them speaking at the
aba conference for community bankers.
It's going to be in phoenix,arizona, february 16th through 18th.
You can register at aba.
com Ccb i'm looking forward to beingthere as well and meeting virginia and
Jenn in person and hopefully meeting youas well So thanks so much for listening.
(20:26):
Virginia, Jenn, thank you very much forbeing on the show Thanks for having me.
And for our listeners, you can findthis in previous episodes at aba.
com slash banking journal podcast.
Thanks so much for listening.
And we'll be back withyou again very soon.
The average age of bank board members is 76.
(00:04):
And you have some board members whoare very, very strong contributors,
but you have others who just aren'tconnected with some of the challenges
that banks are facing today.
And those can be very difficultconversations and being willing
to have those conversations,I think is the first step.
Evan Sparks (00:22):
From the American Bankers Association.
This is the ABA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and I'm delighted tobe joined by two distinguished leaders
in banking for a conversation on bankinggovernance and how boards can handle
some of the tricky challenges that arefacing those in positions of leadership
in the banking industry in the, inthis year and in the years ahead.
(00:46):
So first we have Virginia Varela.
Virginia is Head of CommunityBanking at SoFi, and she's also
a Director at Bank on Women and apast board member at several banks.
She, and then we also have Jenn Docherty.
Jenn is Chair of Bank on Women, Directorof Performance Trust and Sunrise Banks.
And and so both obviouslyexperts on issues of governance
(01:08):
in the community banking space.
So, welcome to the show.
Jenn Docherty (01:12):
Thank you, Evan.
Happy to be here.
Thank you.
Evan Sparks (01:14):
So I'd love it if we could just get started with a little
more about your personal backgrounds.
I know I introduced, introducedwhat you're currently doing, but
Virginia, if you can tell us a littlebit more about your background in
banking and your role in in thegut, particularly in the governance
side of at banks during your career.
Virginia Varela (01:31):
Sure.
And thank you for having us.
I've been serving in thebanking industry for decades.
So I have a lot of background andseeing a lot happen over the years.
I was a president and CEO of a communitybank in Northern California called Golden
Pacific Bank where I was on the board.
And that bank in 2022was acquired by SoFi.
(01:55):
And With SoFi, I was kept on and I becamean officer of SoFi and I'm currently
head of community banking at SoFi.
So I've seen a lot of changesbetween the community banking world
and the approach from a FinTechthat acquired and became a bank.
I've also served on the boardsas CEO or COO of three other
(02:21):
community banks in California.
And my background is mainly going tobanks and turning them around for success.
So I've been involved in fourdifferent sales of banks.
And during that period, maneuveredwith the board through the sales.
So that was very challenging.
I was also on the federal homeloan bank board, which was
(02:44):
a corporate board position.
And served on as lead of the technologycommittee and the membership committee.
And prior to these years inbanking in the private industry,
I've also was a bank regulator.
So I started my career manyyears ago in the 1980s.
(03:05):
And I served on I served as examinerall the way to lead positions with
several different regulatory agencies,including the Federal Home Loan Bank
the Office of Comptroller Currency,Office of Threat Supervision.
And the Federal Reserve.
So I have a very long andinteresting background.
(03:29):
I also have been on boards ofseveral associations for bankers,
and I'm currently a board memberof California Bankers Association.
And also friends of traditional banking.
Evan Sparks (03:41):
Oh, great.
And and Jenn, I know you, you, you'reno stranger to ABA and our audiences,
having spoken at our events before.
But if for those of you who don'tknow your background, could you
introduce yourself a little more?
Jenn Docherty (03:51):
Sure, Evan.
And thanks again forhaving us this morning.
So I have sort of a complimentaryexperience in the banking
community to what Virginia brings.
I have never worked at or for a bank.
Although I've sat on the board ofSunrise Banks for the last couple of
years, my career, and I won't countthe decades anymore than Virginia wants
to, but my career really has come up onthe legal and financial advisory side.
(04:17):
So I started out my career doing legalwork as a legal advisor for primarily
bank strategic initiatives, M& A, capitalraising, and bank regulatory work.
Shortly after 9 11, I moved overto Sandler who had been a long time
client and spent the better partof 20 plus years there, helping
to build a capital raising group.
(04:39):
Recently, I moved over to PerformanceTrust to become the Chief Legal Officer.
The entire career though, really hasbeen advising boards on the critical
decisions that they have to make.
And so it's been interesting for mesitting on a board now having spent
the majority of my career advisingboards particularly, and I know we're
(04:59):
going to talk about this, but withsome of the novel challenges a lot
has changed in a very short period oftime for community banks, especially.
Evan Sparks (05:07):
Yeah, absolutely.
And I mean, we're here,we're in this environment.
I mean, we have someone who'sworking at a FinTech and bringing
that disruptive perspective.
Virginia, I'm just curious if you couldkind of help us understand, help our
listeners understand a little bit whatare some of the challenges that you're
seeing and that board members at communitybanks need to be aware of and keeping in
(05:30):
mind as they evaluate what's the futurefor this institution, what's the, what's
the path forward for how we're goingto serve our community and customers.
Virginia Varela (05:40):
There's so many different dynamics and the
banking world has changed so much.
And I'll let Jenn talk about theenvironmental, social and governance
issues because she's more, has moreexpertise in that area, but I'll
tell you what's really of concern.
I think at every bank board, or itshould be of concern is economic
(06:03):
I mean, the global economy isfacing so many uncertainties.
There's geopolitical tensions,inflation, you know, you have supply
chain disruptions that can affect everybank, regardless of size and geography.
(06:24):
And you have I'm, I've,I've seen this firsthand.
You've got cyber security and.
Data privacy concerns that are such thatI've never seen in my career before and
things are going much more electronic.
So you have issues like whatwill the AI world look like
(06:44):
to a community banker today?
What's your strategy around crypto?
Technology around technology advancements.
I mean board members today are facingchallenges that I've never seen before
that are really uncharted waters.
So I think that's, it's reallyimportant to stay abreast of that.
(07:05):
Even this year I've been talking withseveral different of my colleagues
and we, we don't know what's ahead.
As far as regulatory changes and theworld with the new administration
is it true that it's going to beeasier to do merger and acquisitions?
How will they how will it beimpacting any kind of regulatory
(07:28):
changes with the payment systems,with loan processing, with privacy?
I mean, it's very, a verycomplicated world today.
So I think you have to really lookat being really up on a game in a
way that you never had to before.
And the one last thing I'd like to talkabout is the shareholder expectations.
(07:51):
I've seen shareholders callboard members directly.
Your feet are being held to the firein a way that I've never seen before.
I mean if there's a disaster inyour area, even a natural disaster,
like, you know Hawaii had You know,a volcano or something like that.
It's going to affect and comeup at a bank board meeting.
(08:15):
Shareholders will call andthey'll be expecting you to have
a plan, a disaster recovery plan.
They'll be expecting you to keepkeep the stock price up or have a
explanation for why it's gone down.
And I don't think you canjust sit back and expect the
shareholders to go with any pricing.
They're going to want to see.
(08:37):
Profitability and they'regoing to want to see a plan.
So the world is changing.
It's, it's a, it's funny cause I,I, with Bank On Women, some women
have come and they really want theboard position, but it's a hard job.
Evan Sparks (08:56):
Yeah.
And, and, and let's, let's like turn tosome of those, those some of those, you
know responsible business issues thatyou alluded to earlier, Jenn, you know,
I know that's something that is kind ofa hot potato in, Washington these days,
a hot potato and a lot of boardrooms.
How are, how are you seeing board memberstackle ESG issues, DEI any of the kind
(09:18):
of responsible business issues that arefacing directors at the strategic level?
Jenn Docherty (09:23):
Yeah, it's a great question, Evan.
And I would say the banking industry byand large is I don't know if agnostic is
the right word, but the banking industryis driven by the fundamentals of banking,
especially community banks, which is whatdo I need to do to better serve my market?
And so, you know, if you think about it,ESG, D&I, these are all kind of flash
(09:44):
point acronyms, but the fact is communitybanking has really always been, I mean,
DNA is, is taking care of the community.
That's ESG, you know, said differently.
So I don't think the fundamentalsof Banking have changed.
What has changed are the thingsthat Virginia just mentioned.
(10:05):
The complexities of the technology,the complexities on the regulatory
side, complexities just of earnings.
You know, we've had a really challengingyield curve environment coupled with
costs, Of technology and regulatorycompliance that have made just
making money a lot more difficult.
(10:26):
At the same time, you have arapidly evolving demographic
base of most communities.
And so what we're finding is that banksare being drawn more to diverse leadership
teams because it serves the businessof banking, not because D&I or ESG is
something that's in the news, good or bad.
But simply because that's whatit takes to be successful.
(10:49):
So all the skill sets thatVirginia mentioned are
critical in the boardroom now.
Board members historically weresourced through friends and family.
You know, you have, there's a great studythat was done by a former economist at
the Federal Reserve who found that 62percent of men on the same bank board
had a social connection with other men.
That was a wonderful recipefor generating revenue.
(11:12):
When all you had to care aboutwas sourcing loans and deposit
opportunities in your market.
But the needs of a, of a bank board nowreally involves technological expertise,
regulatory expertise, financial expertise.
And so the shift we have seen frombanks is really moving towards more
diverse leadership teams to be able toaddress those sorts of novel challenges.
(11:35):
You have.
Women starting businesses at the rate oftwo to one small businesses of men now.
So you've got to be tied intothose ecosystems in your community
in order to really support thatlevel of business development.
So I would say it's less about theacronyms themselves and more about
what it takes to fundamentallybe successful in banking.
(11:55):
Which hasn't changed.
It's just the level ofcomplexity around doing that has.
Evan Sparks (12:01):
So I'm curious if you have any, if either of you have any tips on
or successful experiences with how tostructure your boards in terms of, you
know, you talked about kind of new waysof sourcing board members of bringing,
bringing in new talent, how are successfulboards that are able to navigate
all these challenges with agility,structuring themselves and building
(12:21):
pipelines that that ensure their success.
Jenn Docherty (12:24):
Sure.
So, I guess the first thing, Evan,is just starting with a gap analysis,
and I think the ABA has some wonderfulresources for boards who are thinking
about this, but starting with anunderstanding of what skill sets you
have on the board currently and whatyou need for the future of the bank.
Who's going to help you setthe right strategic direction?
(12:45):
It also starts with a willingness tolook outside those you know already.
The biggest challenge we hearvery, very often, I'd love
to put a woman on the board.
I'd love to put a technologyexpert on the board.
I just don't know of anyone.
And that is often a true statement.
It doesn't mean those peopledon't exist in your community.
(13:06):
So it starts with a willingness to lookoutside of your conventional friends
and family resources to identify those.
So successful banks are doing that.
They are asking a broader audience.
I mean, bank on women.
Is the nonprofit that that Virginiaand I serve really came about to try to
meet banks where they were at, which issimply to just aggregate the wonderfully
(13:29):
talented women that we know who wouldmake for great bank board directors.
Because oftentimes I get asked thequestion is an outside advisor.
Do you know anyone whocould serve on my board.
The other avenue that boards arestarting to take advantage of
is talking more broadly in theircommunity, who are the academic
leaders, who are the non profit leaders.
But it starts with really taking a, a, atough look at what is your existing board?
(13:53):
What are the skill sets?
And sometimes having reallydifficult conversations.
The average age, I think ofbank board members is 76.
And you have some board members whoare very, very strong contributors,
but you have others who just aren'tconnected with some of the challenges
that banks are facing today.
And those can be very difficultconversations and being willing
(14:15):
to have those conversations,I think is the first step.
Evan Sparks (14:19):
Virginia, do you have any thoughts on kind of the
structure questions around how tohelp boards navigate these challenges?
Virginia Varela (14:26):
Sure so Jenn was talking a lot about, you know,
board composition and how to havethe right mix and the diverse and
skilled composition on the board.
And I would also add to that you need toreally look at how your board is composed
and how they're interacting over time.
So you want to ensure the boardmembers have adequate education.
(14:51):
They keep their skills up and you want tohave performance metrics and evaluation
of board members and sometimes that'shard because the board members are your
peers, you don't want to judge eachother harshly because you're acting,
you know, as a, as a unit, but youalso have to look at, you know, Do I
have the right skill set in place tomove forward in this new environment?
(15:16):
And if not, can we train the existingboard members or utilize the skills?
The other thing is I've seen boardsthat may have the right skill set on
paper, but unless you have really clearroles, responsibilities, and open lines
of communication and kind of fostercreativity, there's something lost.
(15:38):
And so on paper, a board can be, youknow, diverse or have, have the right
skill sets, but I've also seen boardswhere there may be one dominant player
or there's a rigidity that doesn'tallow for an expression of thought.
And one of the reasonsI love Bank on Women is.
(16:01):
Because it's looking not only atdiversity, but like effectiveness
of leadership roles, effectivenessof communication and I think
that's really important.
It's a skill set plus the interaction andthe ability also to have enough humility.
To be open to new ideas abouthow to address the future in a
(16:25):
strategic manner, identify risks,not, and be brave about it.
You, you know, we, we've seen a coupleof banks in the past few years that have,
you know, failed or teetered, teetered onfailure that on paper, you know, had the
right, The right board set, but somethingwas going on in those board meetings that
(16:49):
wasn't really touching the right strategyor, or something was wrong there, so tap
into that, the willingness to do that.
Evan Sparks (16:59):
Just thinking through those, bringing those unconventional ideas
to the table, those trying to surfacenew thought, new, new approaches and
have difficult conversations, what aresome of the tactics that y'all have
seen work best for directors who wantto move their boards in that, in that
direction, or for CEOs who want tomove their boards in those directions
(17:20):
to be able to, to have those kindsof conversations at the board level?
Virginia Varela (17:24):
Well, I'll speak to that and then I'll let Jenn chime in.
One thing that I made a mistakeabout as a, a CEO and a board
member I, I don't think I alwayslet in enough external experts.
If I had invited external experts itmight have given the board and myself, you
(17:48):
know, new information, new perspectives.
And so there was a concern about,you know, maybe drawing new
people in or maybe lack of timeor expense or something like that.
But I have learned over timethat, I have a, you need to really
appreciate and embrace expertsand you can learn from them.
(18:09):
So that's one way to really bringunconventional ideas into the scenario.
And also, I would say, createa real safe space for ideas.
So what I was talking about before,which is, you know, it's okay to maybe,
(18:30):
you know, have an open dialogue wherepeople say just, Brainstorming just
really you know, I think that's reallyset by the culture of the board to
allow a culture that is willing toexperiment and then maybe pilot new ideas,
experiment, you know, try some things on.
(18:52):
And Know it, it might the board maybe holding the management to speak to
the fire by asking them to do a pilotprogram or look into something more,
but that's the job of a board member.
So those are a few of the ideas I have.
Jenn Docherty (19:10):
Yeah, I think that's a, a, a great list.
The only thing I would add,I think Virginia already
touched on, which is training.
It is critical.
Even if you have a wonderful board,as Virginia said on paper, to continue
to upskill your board members to makesure that they understand, and that
can be through the use of outsideexperts through attending conferences,
but to make sure they're really up tospeed on what the latest challenges
(19:32):
are for banking and understanding inan industry setting as opposed to just
in the silo of your individual bank.
I think it's really important tounderstand these things in context.
Evan Sparks (19:43):
Well, I feel like we could really continue this conversation
for the next half hour or more.
But so if, for our listeners, if you wouldlike to hear more of Virginia and Jenn
talking through how to help directors fromtheir own director's eye perspective how
to, how, how to help these direct, howto help directors Have these difficult
conversations and tackle these reallybig challenges that are facing community
(20:05):
banks banks of all sizes over the comingyears you can hear them speaking at the
aba conference for community bankers.
It's going to be in phoenix,arizona, february 16th through 18th.
You can register at aba.
com Ccb i'm looking forward to beingthere as well and meeting virginia and
Jenn in person and hopefully meeting youas well So thanks so much for listening.
(20:26):
Virginia, Jenn, thank you very much forbeing on the show Thanks for having me.
And for our listeners, you can findthis in previous episodes at aba.
com slash banking journal podcast.
Thanks so much for listening.
And we'll be back withyou again very soon.
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