Who's on board: Serving on a bank's board of directors brings benefits

The boards of directors of local banks read like a who's who list among Springfield business elite - from the mayor to the chamber of commerce president to leaders in fields that include advertising, real estate and education.

Getting those notable names to offer their time and attention to lead a bank is not always easy, but bank executives and board members say there are significant benefits - both tangible and intangible - to board service.

The perks

While serving on a bank board comes with plenty of work, the difference between serving on an organization's board and a bank's board is that most banks' board members are well-compensated for their time, which includes not only monthly board meetings, but also telephone calls and legal and financial research.

Proxy statements filed with the Securities and Exchange Commission show that Springfield-based Great Southern Bank and Guaranty Bank pay their directors $30,000 and $15,600 a year, respectively. Those directors also have the ability to purchase restricted company stock.

Board members at Great Southern include Springfield Mayor Tom Carlson, and Guaranty Bank's board counts Springfield Underground Vice President John Griesemer and architect Tim Rosenbury among its members.

Naturally, board compensation is higher at larger banks. National board members at Bank of America, for example, receive $80,000 a year and another $160,000 in restricted stock, while board members at U.S. Bank receive $90,000 a year and $130,000 in restricted stock, according to SEC filings.

At Commerce Bank, each of the bank's markets is served by a regional advisory board, which doesn't carry the same liabilities or responsibilities of a governing board.

"Our regional boards ... give our management feedback on service delivery, advise management about industry-specific information based upon the director's experience, provide valuable community information and perspective on people in the market, and help management attract, expand and retain business," said Bob Hammerschmidt, Commerce's regional president, who added that those advisory board members meet quarterly and are paid in stock rather than cash.

An exception to the compensation rule is Springfield First Community Bank, which is forgoing director fees for the first year while the bank works toward profitability, according to CEO Brian Straughan. The bank has eight directors: three employees, including Straughan, and five shareholders from outside the company. Shareholder board members include former O'Reilly Automotive executive Charlie O'Reilly and Realtor Larry Lipscomb.

The job

In exchange for the financial perks, board members must bring their expertise to the table. Straughan notes that among board members' many duties, the first is making sure the bank complies with a "laundry list" of financial documents and legal regulations.

"It's oversight of the ... financial status of the bank," added Emily Fox, CEO of Discovery Center of Springfield and one of the two most recent additions to the local board for Arvest Bank. "We go through all the bank reports, get monthly status reports on deposits and loans. It's like any other company; we have oversight of budget versus actual expenses each month."

Mike Daw, Springfield market president for Arvest, said the job of a director also crosses into business development, adding that Arvest's directors are paid an undisclosed amount for their services.

"They give us a lot of leads, they know the pulse of the community, and it helps us feel that pulse," he said. "They're a marketing force, and every year we fill out a strategic plan where they tell us what they see in the community. It helps us see what's coming."

Building a board

Bank executives usually approach individuals about serving on boards of directors, according to Daw, and often - as in the case of Springfield First - board members are shareholders in the bank.

Banking industry experience is also a plus; Fox, who joined the Arvest board in February along with John Q. Hammons Hotels and Resorts Executive Vice President Scott Tarwater, worked in the banking industry in Dallas before coming to Springfield. Neither, however, are investors in Arvest.

Tarwater said he was approached by Daw about serving on the local board.

"We had several meetings and discussed Arvest's strategy for the Springfield area," Tarwater said. "I had an opportunity to check out the bank's background and the activities that Arvest has been involved in in their respective communities, and I found them to be a very well-organized, well-capitalized, strategic organization."

Daw said the bank looked for different sectors of business to be represented on the Arvest local board. Drury University President Todd Parnell brings both banking and educational experience, and Jamie Harrold, owner of Liberty Dock Co., has entrepreneurial spirit, while Tarwater and Fox bring business development and community backgrounds, respectively.

"You look for all different areas of the community, and then you start your search," Daw said. "You get a more diverse group of ideas."

More than the money

Board members say their service is about more than just financial gain, however, as intangible benefits from community support to gaining useful knowledge make giving of time and effort an easy choice.

For Fox, the main draw was Arvest's community involvement, a cause with which she is well acquainted in her role at Discovery Center.

"I was so impressed with the leadership of the bank, the feel of the bank, and their role in the community," Fox said, noting that the bank is also working on its first branch with Leadership in Energy and Environmental Design certification. That branch is slated to open at Chestnut Expressway and National Avenue by the end of the year.

"That's where I fit in the best - the community side of it. That's why I came on board with them," Fox said.

Tarwater said he enjoys being able to bring the knowledge of major financing deals he's acquired through his work for Hammons Hotels. The benefits work in reverse, too; Tarwater said he takes the knowledge he gains from his board service, which usually takes 10 to 15 hours a month, to his day job.

"When I am in Denver or Chicago or New York working on funding a hotel project, I can bring that information back to the board about what's going on in those markets," he said. "Conversely, when I work with Arvest, it gives me a point of reference when I go out in the field to look for funding for major projects."

Springfield First's Straughan said it's those unmeasurable benefits that help the banks attract new board members - and members also can bring in customers via referrals.