Responsibilities, benefits new board members can expect

By Hannah Flanders

Community banks serve a unique and important purpose in every Wisconsin community by directly supporting the growth and stability of small businesses and families. With a mission of reinvestment, it is critical that Wisconsin’s community banks are led by individuals who share similar values to the institution, are knowledgeable of the community, and have experience in banking or local business.

As community banks across the state look to recruit new board members and enhance their strategic planning for the coming year, an increasing number of community leaders who are recruited for their knowledge and skills are curious — and rightfully so — of what responsibilities they will take on as a member of the board.

Key Responsibilities

Like any commitment, joining a bank board leaves individuals to consider many aspects of their willingness to engage with the organization, its shareholders, and bank employees; their understanding of (or desire to learn about) bank policy and regulation as well as the national and local economy; and what skills or experiences make them a qualified leader.

A strong board member adds diversity to the table — be it through their experience or their perspective — and ultimately aids in the growth of the bank.

According to the Federal Deposit Insurance Corporation (FDIC), a bank’s board of directors is responsible for overseeing the institution’s business performance, selecting and retaining competent management, establishing the institution’s long- and short-term business objectives, adopting operating policies to achieve objectives in a legal and sound manner, monitoring operations to ensure that they are controlled adequately and are in compliance with laws and policies, and ensuring the institution helps to meet its community’s credit needs.

Joining a community bank’s board is a substantial commitment to not only the bank, but the community as well. It is essential that responsibilities, such as regularly attending board and board committee meetings, are a top priority of every member of the board.

Benefits for Community Leaders

The benefits new members experience upon joining the board of directors for a community bank range from building connections within the banking industry and expanding skills and knowledge to staying updated on local and national issues. In addition, this unique opportunity allows leaders to give back to their communities and promote economic growth and prosperity.

To many, being elected as a community bank’s board member highlights those who have proven themselves as trustworthy, knowledgeable, and active leaders both in their business and throughout the community. By joining as a board member, community leaders contribute significantly to shaping the local economy and expanding the legacy of Wisconsin’s community banks.


What to Consider Before Joining a Bank’s Board of Directors

  • Commitment to:
    • Professional development
    • Community growth
  • Engagement with:
    • The bank (shareholders, other directors, committee members, staff)
    • The community
  • Experience in:
    • Business, banking,
      or leadership
    • Also includes education or financial/business connections
  • Desire to learn about:
    • Bank regulations
    • National and local economy
  • Fiduciary responsibility:
    • Trustworthy, objective, responsible, and efficient

Bank Director Resources:

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:


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.


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.


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.


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.

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


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 Wednesday, November 9 at 9:00 a.m. and adjourn at 3:00 p.m.

Interested in some extra networking time? Make plans to arrive on Tuesday, November 8 and join the optional pre-summit networking event!

Interested in developing your leadership skills? Looking to build and grow in your career in banking? Then BOLT is for you!

Click Register to visit the event website for the full summit details and to register online!

Confirmed Sessions Include:

  • Great Leaders Are Great Communicators – Denise Thomas, The Effective Communication Coach
  • A look at the future of banking and what every current and future bank leader should know
  • Peer group discussions to learn from your peers and make new connections
  • Leading with Emotional Intelligence – Emily Smit, The Perk

What is BOLT? BOLT stands for Building Our Leaders of Tomorrow and represents the emerging leaders section of membership within WBA. Membership in the BOLT Section is complimentary for all WBA members. Each member bank is encouraged to identify their emerging leaders and have them participate in BOLT as a part of their career development within the bank.

Who typically attends a BOLT Summit? The BOLT Summits bring together a wide variety of bankers in various roles and experience levels from all across Wisconsin. From entry-level roles to c-level staff, BOLT brings together 100+ Wisconsin community bankers in an energized environment focused on educating our current and future bank leaders, building networks and lifelong connections, and advocating for community banking.

Registration Information

Bank Member Registration: The registration fee of $150/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!