Advisory Boards: Does Your Community Bank Need One?

Some community banks have formed advisory boards—separate bodies from their boards of directors—to focus more intently on local neighborhoods, solicit feedback, develop business, create local buzz and promote brand recognition. 

“It’s getting feedback you wouldn’t normally have and hearing what they are hearing in the market,” says Aaron Howell, community president of $920 million-asset Potomac Bank—formerly Bank of Charles Town—in Charles Town, West Virginia.

The scope and function of these boards is up to each community bank. For example, an advisory board can be large or small, from a handful of members to 10 or more. Some banks opt for their boards to meet monthly; some convene every other month. Each bank also determines the length of service, compensation (if any) and membership criteria. 

But these advisory boards have a few common goals: to create liaisons between the bank and the broader community, develop deeper community relationships and learn from different perspectives. What is the doctor hearing about the local economy? What products and services do neighbors think are lacking? How can the bank adapt or evolve in the areas it serves?

“[Yes men are] not what we’re looking for [on our advisory board]. We want to be better than we are today.”

—Steve Peotter, One Community Bank

How to build and run a bank advisory board

While a community bank board of directors focuses on operational issues and has oversight and direction on strategy, growth, profitability and risk management, advisory boards emphasize business development. They provide a sounding board for community leaders, a way for the bank to get market intel and a potential breeding ground for future bank board members. 

Potomac Bank created its first advisory board several years ago when it entered a new market in Maryland and needed prospects and introductions. The bank currently has three advisory boards in different communities with 10 to 12 members each. These panels meet six times a year. Three meetings are business-style, where they brainstorm and discuss community issues. The other meetings are networking events, where advisory board members are asked to bring one or two other business leaders to a social gathering. 

Potomac Bank committee members serve one-year terms, with no more than three consecutive terms allowed, Howell says. The community bank invites former advisory committee members to its mixers, so they still can be involved, albeit at a different level. “It’s still good to have them as liaisons for us, even if they aren’t directly connected with that board,” Howell says.

One Community Bank in Madison, Wisconsin, takes a slightly different approach to its advisory groups. The $2.5 billion-asset bank has had advisory committees since about 2018, when it merged with Grand Marsh State Bank. Since then, it has launched additional advisory committees that are more locally focused, says Jeff Versluys, the community bank’s executive vice president and chief strategy officer.

The number of committee members varies, generally between three and seven. One Community Bank uses a comprehensive vetting process for candidates to ensure commitment and diverse representation. The committees meet 11 times a year, and members serve for two years. 

Advisory boards bring plenty of benefits to banks

Community bankers have seen significant benefits to the advisory process. Howell says Potomac Bank has gotten many new clients through introductions from advisory board members. It’s also been helpful for generating ideas and testing concepts. Say, for example, the community bank is considering opening a new branch. It might seek input from advisory board members. 

“It’s easy to pick out a street corner because it’s for sale,” Howell says, “but do we want to be on the north side of town or the south side? Where would a physical location be most helpful?”

A serious commitment

Community bankers stress that advisory committees and boards require a serious commitment by both the bank and its delegates. They aren’t something banks can simply slap together and expect to be fruitful. 

Steve Peotter, president and chief executive of One Community Bank, says banks should be committed to hearing the advice and acting on it. He routinely attends advisory committee and board meetings to demonstrate the bank’s commitment to the process. 

If banks only want to hear people tell them they’re great, advisory boards are a waste of time, Peotter says. “That’s not what we’re looking for. We want to be better than we are today.”

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