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Corporate Governance

Do LLC’s Need Operating Agreements?

Did you know that most states do not require that a limited liability company adopt a formal operating agreement? In fact, only five states, including California, Delaware, Maine, Missouri and New York, require that an LLC maintain an operating agreement. Therefore, the question often arises as to whether a customer needs or should have an operating agreement.

What to do When Litigation Happens: Part I

Doug Weems discusses what to do when litigation happens. Although litigation risks can be minimized, litigation is a fact of life in the United States.  Here are some suggested steps to take if you or your bank is sued.

Examiners Take a Comprehensive Approach to Reviewing Executive Compensation

An increasing number of our community bank clients report that regulators are focusing significant examination effort on compensation policies and the related risk-assessments and controls. By now, most bankers are aware of the Consumer Financial Protection Bureau’s (“CFPB”) new rules regarding mortgage loan originator compensation that will go into effect in January of 2014. Banks that make residential mortgage loans will likely be reviewing their compensation policies with an eye toward compliance with those regulations long before the effective date. But even now, months before those rules go into effect, examiners are taking a much broader look at bank compensation policies – not just focusing on mortgage loan originators and consumer compliance, but also on a bank’s overall risk-assessments and controls related to all types of incentive compensation. Accordingly, as you think about reviewing mortgage compensation for compliance with the new CFPB rules, we encourage you to expand your review to incorporate the more comprehensive risk-assessment and mitigation components that your safety and soundness examiners will be looking for.

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