When the chairman of Ohio's Citizens Bancshares died earlier this year, the directors debated whether the bank needed a full- time executive as chairman.

The discussion was a familiar one at the bank, and so was the answer: no.

With that, the Salineville-based bank gave the job to James C. McBane, a 32-year veteran of the board who runs his own insurance agency.

"He has a good sense of community and knows shareholders," said Marty E. Adams, president and chief executive of the $918 million-asset bank. "He doesn't need to be a banking expert."

Many community banks must ponder the question Citizens did: Should the chairman be an employee or an outside director from an unrelated company?

The decision centers on whether a bank wants leadership with integration of board and management or an independent perspective.

David Baris, executive director of the American Association of Bank Directors, said both options must be weighed.

Some bankers, he said, believe there is stronger coordination with employees if the chairman is also a full-time executive.

On the other hand, bankers interviewed said, an outsider heading the board brings a new perspective and is perceived by shareholders as being more independent from management.

Mr. Baris said the trade group doesn't favor one system over another. The issue should be qualifications rather than a role at the bank, he said.

"It's not whether the chairman is an inside director or an outside director, but who that person is," Mr. Baris said. "It's the reputation as well as the ability," he added.

Banks under $1 billion in assets are more likely to have outside directors as chairmen, said Alex C. Hart, a bank analyst at Ferris, Baker, Watts Inc. in Baltimore. Those chairmen often are community insiders who helped raise funds to start the bank.

Some banks try both forms of leadership.

First Western Bancorp, a $1.7 billion-asset bank headquartered near Pittsburgh, had an outside chairman until last year, when it made chief executive Thomas J. O'Shane chairman as well.

His predecessor as chairman gave up the post after concluding that he couldn't do it well while focusing on the expansion of his restaurant chain.

The bank's directors took steps to ensure that shareholders felt protected. The board created a policy and oversight committee to "monitor" shareholder value, Mr. O'Shane said.

Michael P. Meisel, chairman of $40 million-asset Maryland Permanent Bank, is also trying to tackle both the presidency and chairmanship of the tiny Owings Mills bank. At the same time, he's still managing partner of his real estate firm, Meisel & Cohen Properties.

Mr. Meisel, who had served as nonemployee chairman of the bank since 1991, started working there full-time in May after the president abruptly resigned.

Maryland Permanent is searching for a new president. But Mr. Meisel's stint as a full-time banker has him thinking about a career switch - if he can sell most of his real estate firm's portfolio.

"I've been contemplating it," he said. "I'm not so convinced you need a career banker to build a business."

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