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Temecula Valley Bancorp Inc. Message Board

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  • bancinvstr bancinvstr Jul 6, 2006 1:48 PM Flag

    stock price

    It was interesting to read your comments on my posting. As a person who has served on 4 bank boards as a director, chaired 2 of them and the president and CEO of 2 of them I am more than just an investor.
    The first bank where I served as presidnet did not pay me an average base or and there was no incentive program so I quit taking my SLO and CFO as well as my best staff members and we formed a new bank. I paid all of my officers less than market but they had an excellent incentive program. The board gave me the same deal. If I had a high base and a low incentive it may have not worked out as well as it did. Absurd? I think not. The bank I left had a steep decline in their stock value that never came up to the level it was at when we left. They saved salary dollars on my replacement but the bank sold out as they could not compete with us.
    If you have a bank that is growing at 5 to 10 percent each year you can run understaffed or on a lower staff and get away with it. When you grow at 30% per year you hire when you find the right people that can create that growth rate and profitablity. Have you ever gone into a store to buy something and you cannot find anyone to wait on you as they are all too busy? Banking is no different. Untrue? Did you wait or did you leave?
    Each of us looks at banks differently. I look at P/E ratios, growth, charge offs, past due loans, officer turnover, and various other things. I never look at the presidents wallet. You get what you pay for and if he make a buck in incentive for every 10 he makes for me I would happy to pay him twice what he is making. Think about it, would you not feel the same way?
    How do others feel?

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    • Congrats on your success in banking. I was at the executive level of very large national banks in both the comm'l and financial areas. I dealt with community bank presidents all the time, both as a correspondent bank and to help in the acquisition assimilation process. Believe me, it is a cultural shock for these presidents to go through an acquisition and it is just as important to the acquiring bank that these community bank presidents maintain some autonomy to preserve the comm'l benefits of a community bank.

      I don't focus on CEO salaries and obviously I've touched a nerve with you. I'll just mention that if you looked at the CEO salary at VNBC, you'll find quite a different scenario. And this is a bank that is twice the size of TMCV and has outperformed TMCV for the last decade. I don't have an answer as to what the proper level of salary, bonus and stock/option incentives are for a CEO of a $1 billion bank. I do, however, know when compensation is excessive.