As data breaches rock the banking and retail worlds, the directors of Mechanics & Farmers Bank in Durham, N.C., are probably glad they have just brought James Sills on board.
The $299 million-asset institution (also known as M&F Bank) hired Sills as president and chief executive to succeed Kim Saunders, who retired after serving as CEO since 2007. Sills, 56, began work this week.
Data security is top of mind -- and that's where Sills' recent work history should come in most handy.
Before moving to North Carolina, Sills was the state of Delaware's chief information officer. He also served as secretary of the Delaware Department of Technology and Information.
Sills got a firsthand look at the destructive force of cyberattacks in his Delaware job.
"The bad guys are extremely sophisticated," Sills said in an interview. "They have some unbelievable tools to penetrate networks, databases and point-of-sale machines."
Sills is one of several executives with significant experience in technology who have been named as executive and directors of banks. That's a shift from banks' typical practices of hiring largely from within the industry.
Bank experience will remain an essential part of banks' talent searches, Sills said. But the trend will continue to move toward hiring those with experience in both financial services and technology, he said.
"It's important that they have experience on both sides of the fence," Sills said. "Deposit gathering, lending, how to drive a profit, in addition to managing the technology functions of a bank, I think that combination of skills would allow a chief information officer or chief technology officer to be the president of a financial institution."
Sills has a lot of other pressing things on his plate like many small bankers do.
For starters, M&F Bancorp, the bank's holding company, is one of about two dozen publicly traded banks that remain in the Troubled Asset Relief Program. Unlike many remaining Tarp banks, M&F has never missed a dividend payment. As of Aug. 11, M&F owed $11.7 million in Tarp preferred shares.
Another is that M&F is wrapping up a huge conversion of its core processing system to Fiserv. Although Sills wasn't on board when the conversion took place, he will be fully engaged in having oversight of its ongoing implementation.
The new core-processing platform should help M&F expand into product offerings that were not easily available under its old system, Sills said.
"We want to diversify our loan portfolio," he said. "We want to get more into first mortgages and offer Small Business Administration loans. We want to leverage the Federal Home Loan Bank more, in terms of community development."
Sills does not plan to test the dealmaking waters any time soon, although North Carolina has been an active area for bank mergers. M&F has eight branches, in Durham, Charlotte, Raleigh, Winston-Salem and Greensboro.
"We think there is enough business in those markets," he said. "We're not in a position to buy any branches from the major banks at this moment."
Even with the need to exit Tarp, fully integrate the Fiserv platform and expand into new business lines, technology will remain a top priority, Sills said. The onslaught of data breaches serves as a warning that all banks, even small ones like M&F, need to constantly strengthen their defenses.
"The bad guys are just way ahead of the curve, in terms of the ability to access personal account information, which they can sell on the open market worldwide," Sills said. "Banks, retailers, insurance companies and health care companies just haven't been able to keep pace."