NICB Looks for Next-Gen Bank Leaders

And RDC litigation is how financial institutions will get sued next.

By Bill Poquette

A father-son team focused on generating the next generation of bank leaders, plus a lawyer duo with updates on webpage accessibility and remote deposit litigation highlighted the opening day program for the annual Management Conference & Trade Show of the Nebraska Independent Community Bankers Nov. 8-9, 2018, in Lincoln.

Today’s middle managers are the best source of top leader succession, according to Tom Hershberger, president and founder of Lincoln-based Cross Financial, and his son Kyle Hershberger.

The Hershbergers recommend building from the inside, as it costs 65 percent more to recruit from outside and 40 percent of those from the outside last just two years. Their view appears to prevail among community banks: an industry survey the Hershbergers cited determined that 81 percent of community banks expect their future management to come from inside the organization.

Community banks should strive to retain and develop talented leaders, advises Tom Hershberger of Cross Financial.

Middle managers are typically frontline staff with more experience or a better knowledge base than other employees, Kyle pointed out, but they need to be nurtured he suggested, because they receive fewer resources, manage more people and are less engaged than all other employee groups. Statistics show that lack of engagement can be a precursor to departures, he added.

Leaner and flatter organizations are emerging, according to Tom, which presents a number of challenges: staff attrition is being absorbed by senior level or knowledge-based workers; middle managers are required to learn new skills and accept more responsibilities; busy managers have less time to lead and develop people; and fewer advancement opportunities are available for talented managers.

When it comes to preparing middle managers for advancement, there are other challenges. Getting baby boomers’ institutional knowledge passed on to the next generation, for example. Or not focusing on tenure but on talent, experience, capacity, creativity drive, motivation, commitment and vision.

Despite the challenges, community banks need to leverage existing leaders, Tom suggested. “They want to know you have their back,” he said. “And we need to get to them what they need to succeed.”

On his list of middle managers’ needs he cited their direct manager’s trust; open communication with senior managers; the respect of peers and managers; supportive resources; challenging responsibilities; authority for responsibilities; and less micro-management.

The Hershbergers suggested that banks’ top executives should ask themselves, “What could our middle managers be doing that would set the stage for higher performance?” On their “improvement list” they put on-the-job education (70 percent); learning from others (20 percent); and formal instruction (10 percent).

Of course, they acknowledged, sometimes it pays — or it may be the only choice — to look outside the bank for future leaders. They see several sources: trade area talent, bankers and non-bankers; competition — be opportunistic; internship programs; high schools, colleges and universities; or, as a result of mergers and acquisitions, acquired staff or displaced talent.

Also on the opening-day NICB program were attorneys R.J. Shortridge and Derek A. Aldridge of Perry, Guthery, Haase & Gessford, who brought updates on current litigation threats.

Shortridge advised the bankers that the Department of Justice has put rulemaking on webpage accessibility for disabled persons on the “inactive list.” However, the agency has not publicly reversed its position that website accessibility is required by the Americans with Disabilities Act, and lawsuits are still being filed that allege non-compliance.

Attorney R.J. Shortridge updates the NICB members on efforts to counter excessive field of membership expansion moves by two area credit unions.

Most courts look to the industry standard Web Content Accessibility Guidelines 2.0, according to Shortridge, and the Department of Justice has used the same standard in previous settlements. WCAG 2.1 was adopted on June 5, 2018, he noted, and bankers should verify with their vendors that websites are in compliance with the new standards.

On the topic of remote deposit litigation, Shortridge prefaced his remarks with this comment: “Here is how banks are going to get sued next.”

Wells Fargo is being sued by USAA, who claims patent infringement on its remote deposit capture technology. Other banks and credit unions have received letters from law firms calling for negotiation of a patent licensing arrangement for RDC.

If a bank receives such a demand letter, here is what Shortridge suggested as a course of action:

  • Contact your RDC software provider and make them aware of the demand and see what guidance or insight they can provide.
  • Review your contracts with your software provider to see if there are representations, warranties or limits on liability.
  • Notify your insurance carrier.
  • Contact legal counsel.

Shortridge said that by suing Wells Fargo USAA is going after the “big dog” first. He questions whether the legal ploy will succeed and noted that a few years ago Every Penny Counts charged — without success — that Bank of America’s “Keep the Change” program infringed on Every Penny’s patented system that creates and distributes excess funds from consumer spending transactions.

In official business during the conference, NICB members elected the following officers for the coming year:

Chairman — Chad Johnston, president, Community First Bank, Maywood; chairman elect — Corby Schweers, vice president, Elkhorn State Bank, Wayne; vice chairman — Rick Heckenlively, branch president, Points West Community Bank, Sidney; secretary — Mark Hesser, president, Pinnacle Bancorp Inc., Omaha; treasurer — Arnold Lowell, chairman, CerescoBank, Ceresco; and immediate past chairman — Patrick Kenner, president-CEO, Thayer County Bank, Hebron.

J. Eric Hallman, who joined the NICB Oct. 1, 2018, as incoming president, is now president/CEO following the death on Oct. 29, of Kurt T. Yost. Having led the association for 34 years, Yost, 70, had planned to retire at year-end.

Bill Poquette is Editor-in-Chief,

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