New York banks are seeking to achieve parity with their nationally chartered peers by getting the states board-meetings minimum reduced, which they say would make them more flexible and better able to draw quality executives.
The New York Bankers Association is asking the state banking commissioner to make the minimum six a year instead of 10. National banks have no such minimums and many states have recently lifted them.
We believe its an issue of effective corporate governance and management, said Michael P. Smith, president of the association, which filed an application with the state banking department in September and hopes to have the issue resolved this year.
Whether youre a major corporation or a community bank, if youre trying to attract directors, the number of times you have to go to a meeting is a significant issue, Mr. Smith said. He said a heavy minimum can turn off prospective hires who may not have the time or see the use of having so many meetings.
Charles J. Hamm, chairman, president and chief executive officer of Independence Community Bank Corp. in the New York borough of Brooklyn, said, For a public bank, with the increased scrutiny of the Securities and Exchange Commission, Wall Street, and stockholders, probably less-frequent meetings is acceptable.
Mr. Hamm added that most public institutions and most institutions dont meet monthly or anywhere near it. I think its in order. Mr. Smith gave as examples Conseco Inc. and Sara Lee Corp., which hold six board meetings a year, and State Farm Insurance Companies and Oracle Corp., which have four a year.
The minimum was 12 in New York until a 1984 amendment shaved it to the current 10. In recent years several states have modernized the laws governing bank charters, leaving New York behind several of its Northeast peers.
For example, New Hampshire requires its banks to meet nine times a year, Maine six, and Pennsylvania has no minimum. Vermont this month halved its board-meeting minimum, to six, in a sweeping modernization of its banking charter.
It was a mammoth undertaking. It hadnt been modernized for 30 years, Timothy Y. Hayward, president of the Vermont Bankers Association, said of the three-year project. Among other things, it created a universal banking charter and incorporated standard business practices.
But the New York trade group has just the one aim: to lop another four meetings off the minimum.
The practice today is major corporations have fewer rather than more meetings because of advances in technology and communication, Mr. Smith said.
Elizabeth H. McCaul, the states superintendent of banks, said in a news release that she is heeding bankers concerns about the issue. The banking department is examining what steps may be possible to accommodate their legitimate needs, she said.