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Striving for local input, banks turn to advisory boards

While many banking institutions have become more regional in size and scope, they still strive to retain a strong local presence within individual communities. Knowledgeable employees and convenient locations are critical to this effort, but many banks have also utilized the insights and talents of individuals who serve on community advisory boards.

While specific attributes of advisory boards can be debated by consultants and industry pundits, the boards tend to serve a number of purposes.

If a banking organization has offices in communities outside of where the bank is headquartered, advisory boards consisting of local people who are active in those communities can be helpful to the bank. Experts say that they can provide insight about the community and issues of importance to the community, they can assist in attracting business to the bank, and they can help to identify better ways to serve the community and improve customer service.

Frequency of meetings, compensation and responsibilities vary with individual institutions, according to bankers who participated in interviews on the topic with Mississippi Business Journal.

At Tupelo-based BancorpSouth, community advisory board members provide advice and counsel to the bank on various matters concerning bank business in the geographic area and community in which the member resides. Community bank board meetings are held at least four times per year and members are paid a fee for each meeting attended, according to Randy Burchfield, a BancorpSouth spokesman.

Some of the attributes that are sought in advisory board members include a strong knowledge of the community to be representative of it, success in one’s business or profession and a commitment to attending and participating in meetings. In choosing any prospective community advisory board member, the possibility of or potential appearance of any conflict of interest must be considered.

Burchfield said that advisory board members assist in community relations and business development efforts by keeping abreast of the bank’s condition, promoting the bank within the local community and assisting the community bank president by suggesting any improvements the bank can make.

Additionally, community bank board members are used as a sounding board to local management and to the corporate staff when deemed necessary as to any problem that may be hindering effectiveness at the community bank. Burchfield added that suggestions and input from the various boards are invaluable in new-business efforts and in determining how to improve customer service.

At Trustmark, advisory board members help and support local management in representing the community and they assist with business development efforts, according to Gerard Host, president of Trustmark’s General Bank.

Meetings vary from individual board to board, with the majority meeting monthly and some meeting every two months. Compensation is a function of the number of times the individual board meets. To further enhance communication, Host said that an executive officer goes to each advisory board meeting on a quarterly basis at a minimum to get feedback from the local advisory boards. Trustmark has also fostered communication via regional meetings of several advisory boards.

Diversity in representation of advisory board members is important and diversity also extends to employment experiences.

“Given the role of helping to support local management in representing the community and in assisting with business development, diversity in several areas is important,” Host said.

A survey by the American Association of Bank Directors underscores many of the above-stated roles. The survey showed that advisory boards of participating bank respondents were frequently described as “the eyes and ears into the community” or “bank emissaries to the local community.” Respondents also indicated that business development tended to be a primary focus.

Experts say that advisory board roles will likely evolve in a way that provides added perspective in understanding the local bank’s strategic value in a bigger organizational picture.

Contact MBJ contributing writer Karen Kahler Holliday at mbj@msbusiness.com.

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