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By Erika Pierce, J.D., The Millennial Boardroom

Erika Pierce will be presenting at our November 4 WBA BOLT Winter Leadership Summit in Stevens Point. Visit the registration site to learn more!

Soft skills are skills that you learn through experience, mindfulness, and reflection. They’re your good habits, personality traits, and understanding of workplace norms. These skills are important to have for any worker, especially to those in higher positions. Possessing these skills often denotes experience, confidence, and professionalism.

If you’re chasing a new job, a higher position, or career independence, you need to develop your understanding of certain soft skills. Here are just five important important soft skills that you need to grow your career:

Communication

Being able to communicate well in a professional setting is one of the most important stepping stones to a large network and successful career.

Your communication skills dictate how well you relate with others. Being a good communicator often leads to having great workplace relationships with your co-workers, a more healthy and efficient work environment, and being a better leader.

To be a good communicator, you have to hone specific communication skills. This includes public speaking, giving clear directions, and active listening. It’s also important to hone your nonverbal communication skills, like reading body language, tone of voice/writing, and other unspoken cues.

Self-Management

While you might think that the people who go furthest in their careers are the ones that put in 60-hour work weeks and almost never seem to rest, think again. For most people, this kind of work-life balance is unsustainable and can often lead to burnout. If you want to sustainably grow your career, you need to develop your sense of self-management.

I’ve learned that once you take charge of your own career, you’re in charge of your own work-life balance. You’re the one who decides how often you work, and consequently, how stressed you are.

Knowing when to take a break and step away from your work is a skill in itself. Setting aside time for yourself allows you to reap the benefits of your hard work, and helps remind you why you want to grow even further. This leads to a healthy work-life balance and a sustainably growing career.

Marketing

Even if you aren’t a marketer, having marketing skills is important to career growth.

Knowing how to sell yourself is essential to getting hired, promoted, or even working independently. This means understanding what a company, position, or client needs and highlighting why you’re the perfect fit for the job.

Career Management

Sometimes, career growth doesn’t mean a promotion, but an opportunity elsewhere. Being able to recognize this is a skill in itself, but you should also have the drive and willingness to at least consider new career options.

I tell people that they should look at the market every now and then, even if they’re not looking for a new job, because it’s always changing. If you always know what the market is like, you might find an opening with a better salary, a more convenient location, or even at the company of your dreams.

Resilience

There’s a lot of pressure involved in growing your career. Job interviews, chasing deadlines, and application processes are just some of the pressure situations you’ll be faced with in your career. But how much you grow your career depends on how much you can handle and thrive in the face of this pressure.

There’s a reason some of the biggest career success stories are stories of resilience. When you’re growing your career, you will be faced with challenges and tough times. But the truth is that you grow the most when you’re out of your comfort zone. Understanding this will help you grow your career to new heights.

 

These are just some of the soft skills that you should develop if you want to successfully grow your career. If you want to learn more, consider joining my membership community where we share all kinds of career tips and advice.

By Rose Oswald Poels

It can be difficult to imagine what your bank might look like without you, or other key leaders. This is a topic that executive leadership considers often, and it is one that every bank will face – and has faced – at some point. Regulators routinely look for succession plans during exams not only for the bank president, but also key leaders throughout the institution. Having succession plans for all key roles within the bank helps the institution navigate through a variety of planned and unexpected scenarios. A plan also can be used by executive management as a development tool to ensure that the persons identified as potential successors receive the training necessary to qualify them for the future role.

Beyond staff, you also need to consider shareholder and director succession. We all just finished celebrating our country’s independence this past weekend, enjoying festivities with family and friends or simply relaxing outside in the hot weather. And while I’m sure we all breathed a sigh of relief when another July 4 passed without an alien invasion, on a serious note, the holiday marks the date when our country became independent from Great Britain and serves as a reminder that our freedom isn’t “free.”

I like to consider the importance of our country’s independence when I think about the banking industry. Succession planning across the organization certainly can play a vital role in helping to preserve a bank’s independence if that is ultimately the goal of the shareholders, board, and executive management. Most importantly, it provides options for the institution’s future and positions the bank to be resilient to handle any planned or unexpected events.

In addition to speakers at various WBA education programs, there are many good associate members of WBA that work with banks to help navigate these future changes. And we are already seeing, not unexpectedly, several mergers announced over the last few months. At the same time, I am proud that WBA is also offering a conference at the end of August in Galena designed specifically for community banks, notably those that are closely held or family-owned to address the unique opportunities and challenges facing these institutions as they navigate the future with the goal of remaining independent. More information on this Retreat can be found here. Not surprisingly, having a solid succession plan plays an important role in helping banks remain independent.

BOLT. Building Our Leaders of Tomorrow. Since I’m already in a leadership role today, I’ve thought a lot about why I enjoy being a part of this group.  

We all know that we never stop learning & growing. Or at least we should never stop! Every one of us can always keep improving, and learn how to be better leaders, coworkers, mentors, and human beings. And what better way than in an environment with other bankers, who are also striving to improve or develop their own style of leadership? It’s exciting to meet people who have that self-improvement mentality and goal in common! It’s especially exciting when they’re in the same field – we can learn so much from each other! And if somewhere along the way, I can help someone else learn and grown from my experiences – that’s even better!  

Being a Human Resources leader, it’s imperative that I help our own employees grow into leaders. Introducing these employees to BOLT gives me a great way to help these future leaders meet others and develop their own networks, learn about new leadership techniques and concepts, and get to know them better and coach them here at our own workplace. If we can help develop our own employees into leadership roles, we’re just doing the right thing by everyone.  

BOLT works hard to keep attendance costs minimal, so it’s more attractive to everyone. We’re very aware of the demands at work, and how time spent away from our jobs can deter us all from attending events. However, it’s so important to try to maximize the benefits you’ll receive when attending a BOLT Summit or networking event – and all at the lowest cost possible. All the way around, BOLT is an attractive option for our Bankers!  

I hope to see you at the next BOLT Summit – June 11-12, 2020 at the Kalahari Convention Center in Wisconsin Dells! 

Debi Bartel is VP, human resources director at First State Bank in New London and serves on the WBA BOLT Board of Directors.

By, Lori Kalscheuer

The banking industry’s future is difficult to predict. Fintech, compliance, technology, branch strategy… The list of potential challenges and opportunities seems endless. Who will lead your bank through this shifting landscape of tomorrow?

Succession planning must be more than a list of names. It requires detailed planning and follow-through. “Our belief is that the purpose of long-term succession planning is to create an ideal plan for the future that takes into account all the things that are important to the bank, such as culture, philosophy, and goals,” said Executive Benefits Network (EBN) Managing Partner and Founder R. David Fritz, Jr. “The ultimate goal is to have a smooth and strong transition.” Integrated talent management and leadership development plans are essential for senior management to position key successors for success in their future roles—and to ensure they stay with the bank long enough to fill those shoes.

Common Challenges

Wisconsin banks—and the industry in general—face several challenges when it comes to successful succession planning. Foremost is the lack of young, incoming bankers. “The key challenge that banks face today is finding qualified, driven individuals that fit with the job and with the culture of the bank,” said Kevin Piette, COO at State Bank of Cross Plains and chair-elect of the 2017-2018 WBA BOLT Section Board. “You’re looking for a long-term fit so you can grow that talent.” According to Chief Operating Officer and Market President at Coulee Bank, La Crosse Mike Gargaro, current BOLT Chair, part of the solution to this problem is to do a better job of telling the story of community banking. “We need to get the stories of what community banking is about and what the jobs are like to our potential hires,” he said. “We need to be seen in the communities we serve.” This is especially important in rural parts of the state, where the pool of potential employees is much smaller. “It’s a challenge for community banks, especially in rural areas, to attract talent, but by continually advocating we can show how great our industry is,” said Piette.

Another challenge is the population differential in today’s workforce. “There’s a leadership gap, where you have Baby Boomers leaving the workforce and Millennials entering it,” explained AmyK Hutchens, founder of AmyK International, Inc. “Millennials are the fastest-promoted generation post-Industrial Revolution.” Not only are Millennials filling large shoes because there simply are not enough Gen X bankers to do so, but senior management often are unsure of how to manage these different generations in a way that encourages growth and retention.

Finally, effective succession and development planning must take place in tandem with exit strategy planning. “If the current CEO is not simultaneously preparing for his or her exit, then all the great planning and development you’ve done will get pushed down the line,” said Fritz. “The board needs to keep the CEO honest with the timeline that is agreed-upon.”

Identifying Candidates

The first step in integrating a development plan into the succession plan is to determine which key roles are likely to experience turnover in the near future (typically 3-5 years). Next, senior management must identify the individuals within the bank who may be tapped for a leadership role in the future. Note: this is different from having a “backup plan” in case of an emergency departure, though that is a useful exercise. “Know what would happen if one of your key people left suddenly,” Fritz advised. “That’s your immediate short-term succession plan. We call it the ‘lifeboat drill,’ and it’s different than the long-term plan.” A successful long-term plan requires identifying and developing key individuals.

The most fundamental quality to look for in future leaders is drive. “If you ask someone if they’re interested in leadership and they say ‘yes,’ you have to support their growth and possible advancement,” said Hutchens. “Give everyone who raises their hand to lead an opportunity to do so.” According to Piette, that “can-do attitude” is more important than trainable skills. “Most of the functional attributes you can train for, but it’s the proactivity and ability to communicate effectively that is the foundation of leadership,” he said. In some cases, proactive employees are also seen as risk-takers, says Gargaro. “Watch for someone who’s willing to step outside their norm and look at problems differently to try to come up with results that work in favor of the bank and the bank’s customers,” he advised.

An effective development plan also differentiates between necessary personality traits and trainable skills. “Good leadership is both innate and learned,” said Piette. “You need to have an inquisitive and positive personality which provides the foundation for the desire to learn and develop your leadership.” Some individuals will have a natural ability to lead, but that doesn’t mean employees who don’t exhibit that trait should not be considered for development. “There is a little bit of truth to the ‘born leader’ idea,” said Gargaro. “On the other hand, attending leadership training can bring out abilities within yourself that hadn’t been exposed previously.”

Finally, the development plan should identify the bank’s appetite for hiring outsiders versus promoting from within. Statistically, home-grown talent leads to better results. “One thing we find is that companies that promote from within often outperform those that recruit outsiders,” said Fritz. “The more you can bring people in and develop them, the better the outcome is.” In addition, a strategy centered around growing from within is more feasible for smaller and/or rural institutions. “Smaller community banks don’t always have the same opportunities,” said Gargaro. “When you can promote from within, strive to do that. They’re already in your culture and understand what your bank is about.”

However, banks should not adhere to a “grow from within” strategy if the talent just isn’t there. Sometimes recruiting outside talent is the best path forward. “I’m a firm believer that you look for the right person for a particular job,” said Piette. “Hiring from the outside can be an important opportunity for community banks because you bring in the experience and talent necessary to run your bank in the 21st century. You’re growing the people you have internally while infusing the bank with new talent to make the entire organization better.”

Development Plan Essentials

Every bank succession plan should incorporate a leadership development strategy, and that strategy should meet three essential criteria: strategic alignment, formalization, and retention. Of the three, the most critical is alignment with the bank’s overall strategic plan. “A well-designed strategic plan identifies where you want to go and what talent and skills you’ll need to get there,” Hutchens explained. “The key is alignment.” That said, no strategy should be set in stone. Allow for adjustments as circumstances change. "Adjust the plan when you have staff turnover," Gargaro advised. "You may hire someone who turns out to be a real high-performer, or maybe someone wants a career path change."

The second essential criteria for an effective leadership development plan is that it be formalized—that is, written down. “If you don’t have an organized development program, it becomes something you make a mental note of in the middle of the night,” said Fritz. “If you have it in writing and need to give monthly or quarterly reports to the board about it, you’re more likely to be actually following those plans.” The exact steps in each plan should be customized to the individual employee and their stated goals. “Find out what areas they’re interested in and create a leadership development pipeline for them,” Hutchens recommended. The goal is to close the gap between the skills they have and the skills they will need in order to be successful in a future role.

Finally, each leadership development plan must include a retention strategy, and it must be customized for each high-potential employee. “Most banks have Baby Boomers, Gen Xers, and Millennials all in the same bank, and they all have different ideas of what’s important from a compensation and retention standpoint,” said Fritz. For example, many institutions have traditional hierarchical structures where employees climb up the rungs of a ladder as they advance—this structure doesn’t appeal to every generation. “If you want to keep Millennials, turn the ladder horizontal,” Hutchens advised. “Each rung is no longer a raise and a new title, but a new project that tangibly shows them you’re investing in them.” One retention strategy that works for nearly every employee: communication. “Open and honest communication with the individual you see potential in is critical,” said Gargaro. “They need to know they’re being considered for a future leadership position.”

The need for generationally customized retention tactics directly correlates with the top challenge banks face with recruitment. “Many Millennials coming up are looking for professions other than banking,” said Piette. “We need to continually share the reasons why banking can be a fun and great, rewarding career opportunity for individuals coming out of college. That’s the heart of our industry moving forward: attracting and retaining that talent.”

When creating your bank’s leadership development plan, focus on the desired end result. “At the end of the day, leadership development and investment is about enhancing and supporting the way your people think, problem-solve, and influence others,” said Hutchens. “Change the thinking, and you’ll change the behavior and change the results.”

Seitz is WBA operations manager – senior writer.

EBN is a WBA Bronze Associate Member.

By, Ally Bates

The banking industry is undergoing a prolonged period of tremendous change. In fact, many experts say that constant change is the new normal. As the guiding hand and governing body, bank boards must also adapt and adjust their focus in order to lead their institutions to success in today's volatile environment, all without losing sight of their primary responsibilities. Read on for a look at how directors and boards have changed in recent years, and for perspective on what your bank's board may need to transform into in the near future. 

Who's Sitting Around the Table?

Twenty or 30 years ago, the banking industry was much more straightforward than it is today, and was reasonably stable as well. That placed fewer demands on directors, in general. "As long as the board members were representative of the bank's market and were helpful in generating new business and making lending decisions they contributed to the success of the bank," said Cass Bettinger, president, Cass Bettinger and Associates. Often chosen for their community status or ongoing business with the bank, directors on historical bank boards often mirrored the bank's product mix, which facilitated their role as brand ambassadors, according to Julia Johnson, senior manager, Wipfli LLP. "However, those historical boards may not have had a thorough understanding of banking, and how banks serve as an intermediary of cash," she explained. "They put a lot of faith, confidence and trust in senior management to prudently manage the bank and ensure regulatory compliance." 

Walk into a bank boardroom in 1985 and you'd find a collection of businessmen, lawyers, accountants and community leaders, individuals with backgrounds in either business or finance. New directors were often selected based on their commercial relationship with the bank, their connections to the local business community, or because they (or their family) owned a large share of the bank's stock. According to Philip K. Smith, president, Gerrish McCreary Smith Consultants and Attorneys, the director role used to be viewed as a passive one with little impact on the overall success of the institution. "Historically the makeup of the board of a successful bank was identical to the makeup of the boards of unsuccessful banks," he said. "The focus of those kinds of boards was loan approval, dividend payments and general oversight." 

Walk into that same boardroom today, and you'll still find a collection of businessmen, lawyers, accountants and community leaders, but they may look very different. As with historical boards, today's directors are individuals with business acumen, and may also be representatives of large shareholders. "A good business background is helpful, and those people often end up leading discussions and have significant input," said John Knight, partner, Boardman & Clark llp. However, today's economic and regulatory environment has forced a move toward selecting directors to fill in gaps in expertise on the board, rather than business community or shareholder representation. "That has promoted much more diversity in the board in terms of gender, race, age and ethnicity," explained Smith. "Those go out the window when the question is 'what does the bank need?' rather than 'who should sit on the board?'." According to Knight, the composition of bank boards is transitioning slowly, especially at community banks. "It's quite different between community banks and regional or national banks," he said. "If I see a change, it's modest and gradual. This is not abrupt." Still, Johnson says not only is increased diversity necessary to bring in expertise, but it will also have an overall positive impact on the institution. "When you look at what needs to shift in terms of the composition of the board, we need to have more diversity on the board," she said. "While backgrounds may remain consistent, the diversity of individual experiences and perspectives contribute to the strength of the board by creating a rich and robust platform for discussion. Specifically, there will be greater representation of women and individuals of different ages on the board." 

Same Board, Shifted Focus

While the individuals sitting around the table and their backgrounds are not much different, the expectations placed on them and their approach to their role has shifted dramatically. "Traditionally, the board has looked to the CEO to be the primary strategist for the organization and that their role was simply to look at the strategic plan and approve it," Bettinger explained. "The biggest single change in responsibilities for board directors is that they now must be responsible for being actively engaged in the strategic planning process and understanding what it means." According to Knight, the law regarding directors' responsibilities has not changed appreciably, but the application of it has broadened as expectations from regulators rise. "In general terms, their fiduciary duties haven't really changed," he said. "But the regulators in particular expect more of directors." Those expectations mean directors can no longer be passive sources of commercial loan contacts. "In the past, directors could serve in a more passive capacity," Johnson said. "Today, the regulatory environment doesn't allow for that." 

Just as regulatory expectations for bank directors have transformed their role, so have market and economic influences. "Banks now have to be constantly reassessing their business model and changing it," said Bettinger. "The bank needs directors who have certain skillsets that will help the bank succeed in a changing marketplace." The ideal combination of skillsets will vary by institution, depending on the bank's strategic goals. "The board needs to know who the bank is and who they want to be in the future," Smith explained. "You identify new members by understanding the kind of bank you're trying to become and then reaching out to those people." For example, if the strategic plan forecasts growth through M&A activity, the board should have at least a couple directors with experience in that arena. That's why Johnson advocates not filling the board to capacity at all times. "I like to see banks that don't keep their board at full capacity, but leave a couple seats vacant as permitted by the bank's bylaws," she said. "This gives the bank flexibility to bring in new board members who have a particular expertise and/or enables the bank to create an overlap between a new director and an experienced director who may be stepping off the board." That provides the board with crucial responsiveness if a critical unmet need is identified.

With this shift away from more ceremonial boards to knowledge-based, strategic, active boards, the recruitment and training of board members is transforming as well. "It's a requirement that the board not micromanage but be much more active than historical boards," said Smith. "That changes the dynamic, even as you're recruiting people." Smith says the board must also take an active role in its own succession planning. "Directors must help recruit new board members," he said. "The board should consider itself a body independent of management and therefore participate in recruitment." The process for identifying potential successors should be familiar to the board, because it's the same one they use within the bank. "Look at the strategic plan and then do a board composition analysis, on the basis of knowledge, skills and abilities, and identify where you have gaps," said Johnson. "It's the same thing you do at the bank level. The key is to be intentional and proactive." Active recruitment also requires directors to understand and articulate why serving on the board is valuable. "In today's world, if you want somebody who's really good to come on your board, you need to have a winning value proposition for them," Bettinger explained. "You want them to feel that going on your board will be a great thing for them to do for the community and their business." 

Training: Not Just for New Directors
Offering regular education and training opportunities is one of the best ways bank executives can equip their directors (and therefore their bank) for success. After all, most directors will not have built-in understanding of the banking industry, and that is an important component of their fiduciary duty. Board education and training is a highly diverse process that varies greatly from board to board. The key is that it should not be a one-and-done onboarding session. "All board members of all banks ought to have some type of minimum requirement for continuing education every year," Smith advised. Bettinger recommends specifying the education and development each individual director needs and incorporating it into a written plan. This not only provides specific training for each board member, it's more efficient, too. "You don't want to spend money to send your entire board off to training that only a quarter of them need," Bettinger explained. "It's much more cost-effective to be individualized in your director education by identifying what specific education that each director needs that's most important." Another approach, specific to the onboarding process, is to provide one-to-one guidance. "You might even assign a mentor for a period of time," Johnson suggested. "Partner a new director with a seasoned director who can respond to questions."

Looking Forward

So, what will you see walking into a bank boardroom in 2030? "I'm already seeing more independent directors with specific expertise and experience that are relevant to the development and execution of strategy," said Bettinger. "A prime example is the crucial role that digital technologies increasingly play in developing, promoting and reinforcing winning customer value propositions; measuring and managing relationship profitability and loyalty; efficiency enhancement; and more effectively managing all categories of risk." With signs indicating that mergers and acquisitions will continue to rise, Johnson predicts the resulting larger banks will have boards focused on those unique challenges. "On the one hand, I think bank boards will need to be more savvy and more skilled in merger and acquisition activity," she said. "On the other side, as the asset size of the banks grows and regulatory pressures increase, they'll need to be increasingly more sophisticated in terms of the banking industry and the applicability of those regulations to their financial institution in order to mitigate risk and liability, to ensure safety and soundness." Increased regulatory pressure will be met with increasing pressure from technological changes, as well. "It's my opinion that it will result in more board turnover because directors will need to constantly stay on top of new threats that didn't exist before," Smith said. "The industry is changing so rapidly it will require a more engaged, nimble board with a much younger average age that is able to monitor technology." Just as we've seen over the past two decades, as the industry becomes more complex, the board will shoulder more responsibility to be informed. "The complexity of banking is much greater now than it's ever been," said Knight. "That requires more well-informed, better educated directors, just to deal with the complexity of it.

By, Amber Seitz

What if Your Employees Owned The Bank?
A crowdsourced succession solution

Ownership succession is a critical concern for closely held financial institutions. As majority shareholders age and start to look for liquidity from their investment, bank management can find themselves facing a sale if there is no obvious successor. An Employee Stock Ownership Plan (ESOP) is a lesser-used solution that may work well at some banks. An ESOP is a federally regulated retirement plan that invests in the stock of an employer on behalf of its employees. When the employees leave or retire, they either sell their stock on the market or back to the company. As such, ESOPs are often thought of as simply a tax-advantaged employee benefit. While true, they can also be a powerful piece in a bank's ownership succession plan.

Nationally, nearly 800 banks offer ESOPs, but most control relatively small blocks of stock. Very few bank ESOPs own more than a quarter of their institutions, though there is a tiny fraction with 100 percent employee ownership. In order to determine if this strategy is a good fit for your institution, you must first understand why forming an ESOP can be beneficial and the process for implementing one.

Reasons to form an ESOP

Companies choose to form ESOPs for a variety of reasons, but the four most common motivations are to supplement an existing employee benefit plan, to promote growth, to create shareholder liquidity, and/or for its tax advantages. "The benefit is if you sell 100 percent of the company to an S-corp ESOP, you pay no federal and state income tax post-closing," explained Kevin Hanson, director at Business Transition Advisors, a consulting firm that specializes in succession planning at closely held businesses. BTA consults with ESOPs frequently because ownership succession is another very common motivation for forming an ESOP. Nearly two-thirds of ESOPs nationally were created to provide a market for the shares of a departing owner of a profitable, closely held company. "It's sort of a 'have your cake and eat it, too' situation with ESOPs and staying independent," said Horicon Bank President Fred Schwertfeger.

Promoting growth is another common reason for implementing an ESOP. "Studies have shown that there is improved performance when you compare whole or partial ESOPs to non-ESOPs," said Community First Bank President Dan Klahn. ESOPs can also increase employee engagement and retention when staff are educated on the benefits they're receiving. "It helps us attract and retain talent," said Horicon Bank Executive Vice President Jay Vanden Boogart. "When they have meaningful skin in the game through the ESOP, they value that." That value is enhanced when the ESOP is added on to an existing benefit structure. Over half of ESOP companies nationally have at least one additional employee retirement plan. For example, the ESOP at Community First Bank, Boscobel is set up as a complement to their 401k plan. "From the employees' perspective, it's another added benefit," said HR Officer Tammy Nelson.

How to set up an ESOP

The process of implementing an ESOP is a complex one with many variations depending on the specific institution. However, every company – banks and non-banks – must start with being profitable enough to support the debt service of the ESOP. "Profitability is key," Hanson explained. "This isn't something you can do if the company is struggling financially." Scott Huedepohl, president/CEO of Community State Bank, Union Grove, advises starting out with a thorough understanding of what the bank will need in order to support the ESOP from an administrative side, as well. "It's critical to turn over every rock and make sure you really know what you're getting into," he said. "Make sure you have the support structure in place because you're moving from multiple ownership to employee ownership. The trustee will carry a lot of power and a lot of liability risk."

After verifying the institution's financial capability and conducting research, bank management's next step should be to hire outside assistance. "Find a firm that can help with the ESOP implementation," Hanson recommended. That firm can help the bank conduct a preliminary analysis, which will look at the bank's ownership structure, number of employees, and most importantly the value of the company. "If you don't have the value, an ESOP can't happen," Hanson stressed. The bank's ownership structure will also impact its ability to take full advantage of the ESOP's tax treatment. "Having an S-Corp in place is helpful," said Schwertfeger. "Getting your structure to the right place is important."

If bank management determines that an ESOP is still a good fit for all stakeholders, the next step is an in-depth feasibility study. "The feasibility study defines what the structure of the end company will look like from an ESOP trust perspective, a corporate perspective, et cetera," Hanson explained. It will also define the timing and cost of the ESOP implementation. The results of the feasibility study create the groundwork for the purchase price negotiations for the transaction. Once the transaction is finalized, the ESOP must be implemented and rolled out to the bank's employees. "It can be quite complex for the employees to understand, so we focus on education so they understand all the components," said Nelson. "We've also created an Employee Ownership Council who serve as ESOP ambassadors to other staff." This council has members from each of Community First Bank's five branches, with positions ranging from CSR to the manager of the mortgage banking group.

Is it right for your bank?

ESOPs look different at different companies, depending on their intended purpose, maturity and a host of other factors. When deliberating whether to form an ESOP, management must determine early on if this strategy fits well with the bank's overarching strategic plan. For example, the average Wisconsin ESOP has been in place for 19 years, and many have been around for much longer. This longevity requires that bank management be forward-thinking and anticipate potential challenges that may arise for their successors. "Where your ESOP is at in the maturity cycle will impact the kind of challenges you have," Huedepohl explained. "There's a huge difference between an ESOP that's mature and one that's new." Schwertfeger advised the same prudence: "Consider the long-term nature of the decision," he said. A related question to consider is the bank's ability to weather potential cash liquidity issues. Community State Bank's ESOP is 30 years old, and with that maturity comes the challenge of ensuring that all departing employees' shares can be bought back. "One of our major challenges is managing our liquidity," Huedepohl explained. "We're privately traded, so we have to make sure we have plenty of liquidity to buy those shares back."

Another consideration is if the bank has the expertise and time to administer the ESOP in-house, or if they will need to hire a third party. "It's fairly complex and highly regulated from an administration standpoint," Klahn cautioned. "With that complexity and regulation comes higher cost." However, some of that cost is offset via the ESOP's tax advantages. Management must also weigh the intangible benefits, in addition to crunching the numbers. For example, Community First Bank's ESOP is just over two years old, but Nelson says she's already seen a change in employee culture. "We've seen higher employee engagement over the past year or so," said Nelson. The ESOP has also helped as a recruitment and marketing tool. "Our community understands that the bank staff who help them every day are employee-owners, and they view that very positively," said Klahn.

Ultimately, the most important element for management to consider when examining the idea of forming an ESOP is whether their primary motivation for doing so fits within the bank's strategy and culture. "The motivation behind it will impact the structure of the ESOP," Klahn explained. The bank's shareholder base is the crux of both structure and motivation; to form an ESOP bank management must have an accurate assessment of shareholder needs. "You need to have shareholders who are interested in liquidity," Schwertfeger said. For some shareholders the ESOP's tax treatment may be the most lucrative option for the sale of their stock. "Shares sold to an ESOP can qualify for a capital gains deferral, which may save shareholders significant amounts of money as they exit their ownership of the bank," Nelson explained. No matter what the ESOP's purpose is, the concept of employee ownership suits the community banking model. "It's consistent with the community bank culture and mindset," Huedepohl said.

 

Questions about forming or administering an ESOP? The experts interviewed for this article recommended these resources: 

By, Amber Seitz

Events

The WBA School of Bank Management will start on Monday, May 9, 2022 at 8:30 a.m. and adjourn on Friday, May 13, 2022 by 4:00 p.m.

In today’s ever-changing, turbulent banking environment, it is important for bankers – especially those who have potential to rise within the institution – to have a clear understanding of the bank as a whole. The WBA School of Bank Management will provide bankers with:

  • An enhanced understanding of banking as a business.
  • Increased analytical skills and management techniques.
  • A well-rounded understanding of critical banking functions, their interrelationships and the determinants of profitability.
  • An opportunity to provide better customer service to internal and external bank customers through expanded knowledge and ability.
  • An awareness of the changing banking environment.
  • A self-assessment to learn your leadership style and find opportunities for growth and improvement.

Curriculum Includes:

  • The Business of Banking – identifying components of the bank’s balance sheet and income statement, key ratios and profitability analysis.
  • Economics, Money and Market – introduction to monetary policy, understanding of yield curves and interest rates, and a look at economic trends and the impact of a rising rate environment.
  • Understanding Your Bank’s UBPR – identifying and understanding key components of your bank’s Uniform Bank Performance Report.
  • The Lending Function of a Bank – provide an understanding of portfolio growth and management, importance of documentation, lending’s impact on the bank’s balance sheet and income statement, and processes of analysis and spreading, pricing and funding.
  • Bank Human Resources – outlines the functions and responsibilities of both the human resources department and key managers.
  • Compliance Management & Bank Operations – introduction to the regulatory and examination processes, as well as overall bank operations and risk management.
  • Bank Marketing – focus on the role of the marketing function in the bank’s strategic planning and profitability.
  • Retail Banking – understanding the importance of market research, product development, product pricing, and product delivery, techniques for effective customer relationship management.
  • Asset/Liability Management – develop an awareness of the sources and uses of bank funds, and the factors that must be considered in effective management of bank assets and liabilities.
  • Leader’s Self-Assessment – creating self-awareness of your leadership/management styles and identifying opportunities for growth.

Who Should Attend?

This school has been designed for bank emerging leaders, management trainees, experienced bank managers who are new to the banking industry, and bankers interested in pursuing a career in bank management and leadership.

Many bankers will attend this school as a way of preparing for future enrollment in the Graduate School of Banking program.

Registration Information:

The registration fee of $1,395 includes program registration, instruction and materials, and daily lunch and refreshment breaks.

Aging is a fact of life. Unfortunately, community-based financial institution shareholders, officers, and directors are not exempt from this reality. At some point, each individual will no longer be able to serve in their current capacity. Will your institution be properly positioned for this significant transition? If you are not preparing today for that event, the answer is likely to be ‘no.’ This webinar will present seven key steps to effectively plan for shareholder, officer, and director succession.

Attendance certificate provided to self-report CE credits.

AFTER THIS WEBINAR YOU’LL BE ABLE TO:
Appreciate the importance of effective succession planning
Understand the different types of succession planning, including long-term, near-term, and emergency planning
Identify key strategies to ensure an effective succession plan
Define key components and action items to prepare for a management transition
Recognize best practices for this important aspect of operations

WHO SHOULD ATTEND?
This informative session is designed for senior management.

TAKE-AWAY TOOLKIT
Written materials will underscore the need for succession planning and its importance as part of corporate governance and strategic planning
Employee training log
Interactive quiz

PRESENTER -Greyson E. Tuck, Esq., Gerrish Smith Tuck, Consultants & Attorneys
Greyson Tuck is a member of the board of Gerrish Smith Tuck, PC, Attorneys and Gerrish Smith Tuck Consultants, LLC of Memphis, Tennessee. Greyson’s legal and consulting practice places special emphasis on community bank holding company formation and use, mergers and acquisitions, regulatory matters, corporate reorganizations, corporate taxation, general corporate law, and strategic planning.

He holds a bachelor’s in accounting and finance from the University of Tennessee and received his law degree from the University of Memphis Cecil C. Humphreys School of Law. He is also a graduate of the Paul W. Barret, Jr. School of Banking and serves as a faculty member at a number of banking schools across the country. A frequent presenter at national and state association conferences, Greyson has authored a number of articles of interest to financial institutions.

REGISTRATION OPTIONS
Live Webinar Access – $245
On-Demand Access + Digital Download _ $245
Both Live & On-Demand Access + Digital Download – $350

Leadership development and succession planning place a high priority on any company’s ability to develop talent within their organization. We continue to hear stories from managers about the gap between Baby Boomers and Millennials. The Baby Boomers are managing based on performance practices that helped them achieve results. They apply those practices to the next generation of employees. After all, the Boomers produced success with those activities. The challenge is, Gen X and Millennials may not see the benefits of adopting practices the Boomers found helpful. So, how do we build a work environment that is attractive to younger employees and productive for seasoned managers? This presentation focuses attention on three important ingredients to bridge the Boomer-Millennial gap…communication, engagement and rewards. The best solutions for your organization might be the ones you haven’t tried yet. This session, presented by a Baby Boomer and a Millennial, will examine challenges created by generational differences in the workforce.

Target Audience
Senior and middle managers, branch managers, supervisors

Presenters
Tom Hershberger & Kyle Hershberger, Cross Financial Group

Registration Option

Live presentation $275

Recording available through Jan. 28, 2022

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Join WBA and your fellow emerging leader banker peers from across Wisconsin for our annual BOLT Winter Leadership Summit! The summit will kick off on Thursday, November 4 at 9:00 a.m. and adjourn at 3:00 p.m.

Click Register to visit the event website and watch for more information on the agenda coming soon!

Registration Information

Bank Member Registration: The registration fee of $100/attendee includes networking meals and breaks, general sessions, and access the summit mobile app.

Associate Member Registration: Associate Members are encouraged to send their emerging leaders as well! The same registration fee is available to WBA Associate Members. Interested in upgrading your presence? Register to be a summit sponsor to receive additional benefits and summit recognition!

Click Register for additional details and to register online.