For the past two years, Rodney Tibbatts and Victor Bartruff have done what few bankers would ever consider: share a bank presidency.
Now, Mr. Tibbatts has done what even fewer bankers would ever do: voluntarily given that up to take a lower-ranking job-at the same bank.
Putting an end to an ambiguous dual leadership, the former co-president and co-chief executive officer of Oregon's West Coast Bancorp will now seek out new business and acquisition targets as the bank's executive vice president.
The move last week leaves Mr. Bartruff in sole control of the Lake Oswego-based company and eliminates one of the few examples nationwide of a banking co-presidency between unrelated executives.
"It was working very well up to now, but it would provide additional clarity to have a single CEO and avoid any confusion as we go forward," said Mr. Bartruff, president and CEO of the $712 million-asset five-bank holding company.
West Coast's worry that its customers and the general public were confused by its two-year-old power-sharing arrangement reflects the inherent problems with a dual presidency. Although bank officials insist that regulators never criticized it, consultants say that such a joint leadership can easily lead to clashing loyalties among employees and uncertainty about exactly where the buck stops.
"I'm a firm believer that one person has to be responsible for running the bank," said George Freibert, chairman of Professional Bank Services, a Louisville, Ky., consulting firm. "There's just a lot of reasons why the co-CEO is a bad idea."
A divided leadership leads to finger-pointing when there are problems and credit-sharing when there are successes, Mr. Freibert said.
Developing and carrying out a firm corporate mission or policy is also more complex when a bank has two heads. And though regulators apparently weren't worried about West Coast, they may still frown on such a structure if they can't tell who's in charge, Mr. Freibert added.
"It might work for a while, (but) it makes it very difficult to operate a unified company," Mr. Freibert said. "If that's necessary to get the merger done for some short period of time, fine. But over the long haul, every company needs a leader, a designated CEO."
In fact, few banks today rely on a joint leadership, except on a short- term basis after a major merger. In those situations, allowing the selling chief executive to temporarily share in corporate governance while the two banks and cultures are integrated can reduce tensions between management teams.
That was the case at West Coast, which initiated the joint presidency in March 1995 after a merger of equals with Commercial Bancorp.
However, one person usually will quickly emerge as the CEO, and the other may become the chairman with clearly stated plans to retire. "They're given a nice title, but everyone really knows who's running the show," Mr. Freibert said.
The exceptions to the rule are generally family operations, most notably Oakland, Calif.-based Golden West Financial Corp., which is run by the husband-and-wife team of Herbert and Marion Sandler.
In other successful cases, the two executives have different titles that reflect clear separation of duties. For example, at Prestige Financial Corp. in Flemington, N.J., president Arnold Horvath handles corporate lending strategies and business development, while chief executive officer Robert Jablonski manages day-to-day operations.
"It works here because you have two guys who have known each other for at least 15 years, and we've got a lot of respect for each other and what our roles are," Mr. Horvath said. "We've got two clear paths of responsibility, so we never actually bump into each other."
"You have to have the right personalities," Mr. Bartruff said. "That's what made it work here. We didn't let egos in the way of what needed to be done; we just did it."
