Best Board

When asked what drives strategy at WSFS Financial Corp., Chairman and CEO Rodger Levenson credits the board’s commitment to sustainable, long-term performance.

He points to the bank’s acquisition of Beneficial Bancorp, which closed in 2019, as an example.

“The board had a robust dialogue around the trade-offs that were involved in that,” Levenson explains. Directors knew WSFS needed to expand into larger markets like Philadelphia, and further invest in technology to meet the digital shift in customer behavior; acquiring Beneficial helped it meet these objectives.

“This is a great opportunity to invest in the long-term, [even if we] take the short-term knock on performance,” says Levenson. “If you want to provide the best long-term value for your shareholders, you have to not get tied up in quarter-to-quarter or year-to-year performance. You have to look at it over longer horizons and make decisions that support that.”

It’s tough to measure the effectiveness of a board, but Levenson illustrates how they demonstrate their value: making decisions that guide the long-term direction of the institution. Over the years, Bank Director has identified the building blocks of effective governance — and we dug into these variables to determine the best board.

“You’ve got to have strong governance,” says Kara Baldwin, a partner at Crowe. “If everything’s going to be a rubber stamp, that’s not what you want to get out of your board.” Do directors bring new ideas? Are they challenging the status quo?

We examined diversity, calculating the percentage of women on the board and awarding additional points to boards that include directors exhibiting ethnic or racial diversity. Each board was also ranked based on the percentage of directors with expertise in technology, legal, audit, and compliance and risk. Experience as a high-level executive at a different bank can also provide valuable input; points were awarded for including these views. To gauge pay and performance, we examined median compensation and the bank’s return on equity as of December 2019.

Our assessment also includes a qualitative analysis of each bank’s governance practices — whether these banks conduct an annual assessment, participate in director education or use refreshment mechanisms like mandatory retirement. Much of this information was gleaned from proxy statements; we also considered participation in Bank Director’s training programs, but the scoring wasn’t weighted to favor those banks. Ratings from Institutional Shareholder Services (ISS) were also factored into the analysis.

Topping the ranking, WSFS Financial Corp. features a diverse board. More than a quarter are women, including former bank CEO Anat Bird, Comcast Corp. executive Karen Dougherty Buchholz and University of Virginia COO Jennifer Wagner Davis. The board exhibits high levels of expertise in risk and compliance, technology and audit. Three directors, including Bird, have an independent banking background.

The board conducts an annual self-evaluation to assess collective and individual performance, in line with the bank’s culture and strategy; WSFS engages an outside consultant to conduct the evaluation every three years. This practice helps the board avoid instituting a mandatory retirement age, a mechanism often criticized as ageist.

“People who are in their forties today look at the world very differently than people who are in their seventies,” says Levenson. “We have both on our board.”

New directors participate in an orientation program, and tenured directors are encouraged to participate in continuing education.

Horizon Bancorp ranks second. Twenty-seven percent of its board members are women, and it features a high level of audit, risk and compliance expertise. It also performs annual self-evaluations, and a mandatory retirement age (75) helps facilitate board refreshment. The bank’s proxy indicates active participation by the board in continuing education.

At third, Southside Bancshares conducts a self-assessment that considers individual and board performance. Like Horizon, it also has a mandatory retirement age (75) and demonstrates a commitment to director training.

Eagle Bancorp Montana, coming in at fourth, has a board that’s 40% female. Its nominating and governance committee annually reviews board composition, and the board demonstrates a commitment to director training.

Bank OZK, at fifth, also rates highly for diversity. Women comprise roughly a quarter of the board’s membership, including Paula Cholmondeley and Beverly Cole, who are also Black. OZK conducts annual board and committee self-assessments, along with an annual review of director skill sets and experience.

“It’s when you’re tested — in times like we’re in now — that you find out how strong your governance is,” says Crowe Partner Rick Childs. “You should be willing to find people who disagree with you, [but] when the board makes a decision, everyone sings off the same hymnbook page.”

How They Ranked: Best Board

CATEGORY WINNER: WSFS Financial Corp. 5.42 $108,083 9
2 Horizon Bancorp 5.93 $62,000 10
3 Southside Bancshares 6.92 $92,875 14
4 Eagle Bancorp Montana 7.48 $19,700 7
5 Bank OZK 7.53 $152,405 14
6 Glacier Bancorp 8.28 $99,453 8
7 First Financial Bankshares 8.62 $116,700 10
8 Independent Bank Corp. 9.58 $109,923 11
9 First Capital 9.73 $43,210 10
10 Stock Yards Bancorp 9.76 $82,205 9
11 Auburn National Bancorp. 10.00 $24,650 8
12 Meta Financial Group 10.14 $207,094 7
13 The First Bancorp 10.62 $32,100 7
14 Lakeland Financial Corp. 10.65 $97,636 12
15 Community Bank System 10.70 $105,970 11
16 Hingham Institution for Savings 11.10 $39,195 13
17 City Holding Co. 13.33 $74,215 12
18 Prosperity Bancshares 13.58 $98,674 11
19 Greene County Bancorp 14.40 $102,870 6
20 Southern Missouri Bancorp 14.56 $27,854 8

SOURCE: S&P Global Market Intelligence, Yahoo! Finance, bank websites, proxy statements and other public information