September 9, 2023 / VOLUME NO. 278

Bankers Who Took Beatings 

It’s times like these when conservative bankers recall the beatings they took in prior years from analysts or investors about why the bank didn’t grow more or generate higher profits. 

Dominic Ng, the chairman and CEO of $68.5 billion East West Bancorp, had just such a moment when a Bloomberg News reporter contacted him recently about the fact that his Pasadena-based bank is one of the last regionals left standing in California. Ng, whose bank kept its capital cushion higher than peers, didn’t always follow market wisdom. “You don’t know how many times I went through an earnings call or maybe a meeting with a portfolio manager or analyst that just browbeat me to death,” Ng said. “I usually just took the beating and moved on.”

East West Bancorp took the No. 1 spot in Bank Director’s 2023 RankingBanking among banks with more than $50 billion in assets. Bank Director’s Vice President of Editorial and Research, Emily McCormick, interviewed CFO Irene Oh for a story entitled “How Investors View the Best Banks.”  

Oh said investors would ask why the company didn’t buy back more shares. The bank had the highest tangible common equity ratio among banks above $50 billion in assets at the end of 2022. “A bank is a leveraged company,” she said. “It’s a leveraged, balance sheet business, and the actual capital that you have matters.”

Conservative bankers have higher levels of capital and pay closer attention to asset quality and underwriting standards, which can help get them through tough times. Although the news of the day implies the economy is in great shape, that doesn’t mean bankers should let their guard down. As East West’s chief financial officer says, “The bank management team needs to manage the bank, regardless of what … investors say.”

• Naomi Snyder, editor-in-chief of Bank Director

The Big Debate: Should Bank Boards Approve Loans? 

Bank Director’s 2023 Governance Best Practices Survey finds that a majority of bank boards still approve individual loans. 

“Everyone's time is valuable. I don't want my board to have to spend time reading these deals … What I need to do is elevate them out of management.”

— Lisa Oliver, The Cooperative Bank of Cape Cod

• Laura Alix, director of research for Bank Director

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Incentive Plan Adjustments in the Current Challenging Environment

Determining award payouts in 2023 will be a combination of financial results and compensation committee discernment.

Retaining Executive Talent During Economic Difficulties

Boards need to go beyond the standard options to keep top talent at their institutions.