Grady & Associates
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Grady & Associates

BANK PEER GROUP COMPENSATION SURVEYS

Due to passage of the Sarbanes-Oxley Act in mid-2002, there has been an increased focus on good corporate governance practices. Activist shareholders, regulators, and the media alike have been constant corporate watchdogs, increasing potential liability exposure for directors. As a result, today’s environment has substantially impacted how the board of directors operates. A financial institution’s board of directors must closely examine the process of determining the competitiveness of executive pay. One area receiving significant attention is the selection of an appropriate group of peer companies that compensation decisions can be measured against. At a minimum, peer group data can be used by the board to make informed executive compensation decisions by examining data on the design and levels of compensation provided to executives who are performing similar duties in roles of similar complexity. Grady & Associates can assist financial institutions in this endeavor by providing bank and peer group compensation surveys so that financial institutions’ boards of directors have the insight necessary to carry out their fiduciary responsibilities in the area of executive pay. Grady & Associates’ peer group compensation surveys are based on information from proxy statement filings, annual reports to shareholders, and Form 10-Ks filed with the Securities and Exchange Commission. Each survey takes into account organization size, geographic location, types of qualified and nonqualified deferred compensation plans offered to employees and executive officers, and participation rates across a particular state and across the country in general. Grady & Associates also prepares surveys showing the incidence of director retirement plans and director split dollar agreements. Like our executive peer group compensation surveys, the director retirement plan and director split dollar agreement surveys are based on review of proxy statement and Form 10-K filings with the SEC. Grady & Associates’ peer group compensation surveys cover all fifty states and Puerto Rico, and are available on a fixed price basis. Today, the board of directors needs a great deal more information than was required in the past. Grady & Associates’ peer group compensation surveys allow the board of directors to (i) make an effective market comparison of executive and director compensation practices, (ii) evaluate the appropriateness of a particular qualified or nonqualified deferred compensation plan, and (iii) understand changes in compensation and benefit plan participation in the regional and national marketplace so that the board can make an informed compensation decision consistent with good corporate governance. Back to Menu


COMPENSATION

We advise financial institutions on appropriate executive compensation packages designed to meet the preferences of an individual officer and the needs of the financial institution. Employment contracts, qualified and non-qualified incentive compensation plans, severance payments, stock option plans, stock appreciation rights, and restricted stock may be included in specially designed plans for an institution and its executives.

  • Executive compensation planning
  • design and preparation of SERPs (Supplemental Executive Retirement Plan), split dollar agreements, and other BOLI-financed compensation agreements
  • consideration of change-in-control and I.R.C. §280G parachute payment tax issues 
  • peer group analysis of industry Back to Menucompensation practices
  • benchmarking an institution's executive compensation practices vis-à-vis “public company” banking organizations
  • preparing surveys showing the incidence of director retirement plans and director split dollar agreements so as to facilitate director recruitment and retention.
COURTESY OVERDRAFT PROTECTION PROGRAM SERVICES

Grady & Associates provides legal services regarding the compliance issues associated with implementing, marketing, and maintaining an ad hoc courtesy overdraft protection program. Financial institutions have long maintained policies by which an institution may, in the exercise of its sole discretion, decide whether to honor customer checks presented for payment that would produce an occasional or inadvertent overdraft. Payment of the insufficient funds (“NSF”) item (which now typically includes electronic transactions as well as paper-based transactions) is not a customer entitlement. Rather, in the absence of an explicit agreement to extend credit, the institution determines on a case-by-case basis whether to honor the customer’s overdraft. If the institution decides to pay the NSF item, the institution notifies the customer and demands that the account be made whole immediately. Typically, the institution also charges the customer a fee for paying an NSF item. This practice, which can be implemented either manually or through an automated process, is commonly referred to as an ad hoc courtesy overdraft protection program or a “bounce protection” program. Overdraft protection coverage for retail checking accounts is a familiar product to the financial services industry. Nonetheless, a number of legitimate regulatory and legal concerns should be addressed to make an institution’s ad hoc courtesy overdraft protection program airtight from challenge by customers and bank regulators.

Courtesy overdraft protection program compliance issues include state consumer protection law, Section 5 of the Federal Trade Commission Act (unfair or deceptive acts or practices), the Truth in Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, the Truth in Savings Act and Regulation DD, and finally the Electronic Fund Transfer Act and Regulation E. Moreover, on May 28, 2004, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration issued proposed Interagency Guidance on Overdraft Protection Programs to address concerns related to the marketing, disclosure, and implementation of courtesy overdraft protection programs. Having extensively counseled a number of financial institutions with prominent “free checking” programs with associated large NSF/overdraft fee revenues, Grady & Associates is aware of challenges that have been marshaled by the plaintiff’s bar to date and current “bank” regulatory scrutiny visited upon financial institutions’ NSF/overdraft fee practices. In this regard, Grady & Associates can provide financial institutions with the relevant ad hoc courtesy overdraft protection program materials including (i) an analysis of legal issues, (ii) an analysis of the proposed Interagency Guidance on Overdraft Protection Programs, (iii) appropriate deposit agreement disclosure, and (iv) appropriate specimen customer communication materials.Back to Menu

De Novo Banks

Members of the firm counsel organizing groups throughout Nevada and the Carolinas in the chartering of state-chartered banks and savings associations, national banks and federally chartered savings associations, commonly referred to as de novo institutions. Working with the organizers and management during the pre-opening/opening phase of the bank chartering process, Grady & Associates prepares state and federal charter applications, and responds to comments raised by regulatory agencies during the application process. Grady & Associates also prepares corporate governance documents, stock compensation plans for directors and officers, and private placement memoranda, as well as offering circulars or prospectuses to be used in connection with raising capital through initial securities offerings. We also offer substantial experience in structuring stock benefit plans, founders warrants and other compensation plans in compliance with applicable federal and state laws.
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DIRECTORS AND OFFICERS LIABILITY

The liability of financial institution directors and officers for acts committed or omitted has grown exponentially. The attorneys of Grady & Associates regularly counsel bank and thrift institutions, their boards of directors and their officers and employees regarding potential sources of liability and how best to design internal controls to avoid situations which may lead to liability.

HOLDING COMPANY FORMATION AND REORGANIZATIONS

The firm assists financial institution boards of directors in the formation of a one-bank or a unitary savings and loan holding company, a multiple bank or a multiple savings and loan holding company, or a mutual savings and loan holding company. The firm will prepare and file the necessary regulatory applications on behalf of the institution, including proxy statements and any required securities filings.

IN-HOUSE SEMINARS

Financial institutions recognize the importance and value of providing topical information to their boards of directors and management personnel. We can design specialized presentations to update your directors, executive officers and other managerial employees on current regulatory or legislative developments, or any of the other areas in which Back to Menuwe have expertise. An appropriate in-house seminar can be tailored to fit the requirements for a particular financial institution. We would be pleased to share our compilation of suggested seminar programs.

LENDING DOCUMENTATION

The firm’s lawyers have extensive experience in real estate development and construction lending and loan participation transactions. The firm has prepared form lending documents and customized loan documents for large financing transactions.

LITIGATION/REGULATORY ENFORCEMENT ACTION

Grady & Associates counsels financial institutions involved in regulatory enforcement proceedings with the financial institution regulators and provides advice on litigation and settlement strategies. Our experience in enforcement in Back to Menuthe public sector gives us unique insights into the workings of the federal and state bank regulatory agencies and assists us in aiding bank and thrift clients to resolve disputes with the least possible disruption to the institution’s business.

MERGERS AND ACQUISITIONS

Financial institution mergers and acquisitions are complex corporate and regulatory transactions. Deciding whether to merge, buy or sell, and determining how each option affects the on-going strategic planning of the organization; negotiating financial terms, management compensation arrangements and conditions of a transaction; determining the appropriate structure of a transaction; and obtaining regulatory approvals require both regulatory and business law expertise. A branch purchase or sale presents a wide range of business and legal options. The firm's attorneys have acted as advisor to both buyers and sellers in branch transfer transactions. Cross-industry and interstate Back to Menuacquisitions present complex and changing regulatory issues, familiar to the attorneys of Grady & Associates. We assist institutions in evaluating the options available and the best methods of achieving those goals. By virtue of its significant practice involving financial institution mergers and acquisitions, Grady & Associates is well positioned to provide anti-takeover protections for a particular institution. We have represented acquirers and selling institutions in both solicited and unsolicited acquisitions.

REGULATORY COUNSEL

Banking-related consumer protection law has taken on a heightened importance in recent years. Media publicity and increasing public awareness accorded the CRA, fair lending and other consumer protection statutes are making it increasingly necessary for financial institutions to commit larger amounts of resources to ensure compliance. Grady & Associates has lawyers who are both authors and recognized experts in banking-related consumer protection law. The firm provides timely counsel regarding compliance with new consumer protection statutes, the design and implementation of new consumer credit and deposit products, sale of securities and insurance products, and compliance of existing operations and consumer lending and deposit products.

Back to MenuThe corporate governance of financial institutions is controlled by numerous federal and state statutes and regulations which are in a constant state of flux. Legislative and regulatory developments impact the day-to-day operations and long-range planning of financial institutions. Knowledgeable regulatory counsel can position management to stay ahead of regulatory developments. Increased regulatory supervision of financial institutions requires even greater knowledge of, and the need to communicate with, both federal and state financial institution regulatory agencies.

With Francis Grady’s significant experience and background as an FDIC attorney involved in enforcement work, Grady & Associates has a unique ability to counsel financial institution clients regarding responses to regulatory directives, requirements and supervision, including the negotiation of formal and informal supervisory agreements. Our experience in working with federal and state regulatory agencies can facilitate smooth relations with regulators and allow management to concentrate its resources on what it knows best –the operation of the financial institution.

Grady & Associates also has an active practice involving the preparation and required review of required regulatory policies and procedures. We can assist in preparing polices and procedures that are at once workable and in compliance with all regulatory requirements.

SECURITIES OFFERINGS AND SECURITIES LAW COMPLIANCE

Grady & Associates has the expertise and experience to assist banks, thrifts and their holding companies with securities offerings on both a private placement and public offering basis. We can help an institution structure the type of offerings best suited to its capital needs and subsequent operations through the formation of holding companies and affiliates. For those financial institutions whose stock is registered under the Securities Exchange Act of 1934, our lawyers assist in preparation, review and filings of annual and periodic reports both for the company and its officers and directors. We routinely update our clients on new developments in securities law.

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Summary of Topic Presentations for Educational Seminars


Regular office hours are:
8:30 a.m. to 5:00 p.m.
Monday through Friday.
We are closed most
recognized holidays.

Our offices are located at
20220 Center Ridge Road, Suite 300
Rocky River, Ohio 44116

Telephone: 440-356-7255
or Fax: 440-356-7254
Contact us via our online web form.