Allan Landon Seen Boosting Community Bank Profile On Federal Reserve Board
January 6, 2015
Forbes: Antoine Gara
The Federal Reserve has been busy with so-called ‘too big to fail’ banks since the financial crisis, but the newest member of the central bank’s Board of Governors brings a perspective rooted in the world of small banks.
Frank Reppenhagen spent the past two years working with Federal Reserve Board nominee Allan Landon scouring the nation for investments in struggling community banks. Reppenhagen told Forbes that the experience, which included investments in banks in states such as California, Texas and Washington, gives him confidence Landon will bring a hands on understanding of community banks to the Federal Reserve Board.
On Tuesday, President Barack Obama said he intends to nominate Landon to serve on the Board of Governors of the Federal Reserve System. The immediate reaction by the Independent Community Bankers of America, and echoed by Reppenhagen, is that Landon’s experience working in banks that serve communities far from Wall Street will bring a new perspective to the Federal Reserve, which is filled with seasoned economists, policymakers and bankers who built their careers at securities firms such as Goldman Sachs Group, Citigroup and The Carlyle Group.
“I don’t think Al has any issue with Wall Street. But he really understands the link between local banks and the communities that they serve,” says Reppenhagen.
Landon began his career as auditor at Ernst & Young covering Midwestern banks, spending nearly three decades with the accountancy firm before becoming CFO of a Tennessee-based bank called First American in 1998. In 2000, Landon was hired by Bank of Hawaii Corporation to be the lender’s chief risk officer. He was quickly promoted to CFO when Michael O’Neill, the current chairman of Citigroup, took over the reins of the bank that same year.
When O’Neill left Bank of Hawaii at the end of 2003, he chose Landon to be his successor. As CEO, Landon prudently navigated Bank of Hawaii through the heady years of the mortgage bubble and the financial collapse the ensued. Forbes named Bank of Hawaii America’s Best Bank in 2009, a year when many similarly sized banks were on the verge of collapse.
Bank of Hawaii didn’t require assistance from the government’s Troubled Asset Relief Program, and the lender has remained among the Best Banks In America, as ranked by Forbes, after Landon retired from the firm in 2010.
“Al is a very smart, public-spirited and highly ethical individual,” Citigroup’s Michael O’Neill told Forbes in an emailed statement. “He’s a very hard worker and has a valuable perspective to offer. He is an excellent choice.”
After a brief stint in academia, Reppenhagen recruited Landon to help him invest a $50 million fund called Community BanCapital, which was looking to bolster the capital position of banks with assets of between $500 million and $2 billion by investing in their subordinated debt. Such deals can bolster banks financial position without diluting shareholders.
According to Reppenhagen, Landon was a great partner in finding investments, exhibiting skills that will serve him and the banking community well at the Federal Reserve. “I think it has given Al a strong perspective on what community banks need from a regulatory perspective to continue to be successful” Reppenhagen says. “He has been instrumental in talking with bank CEOs on what their issues are, and what their opportunities are.”
In total, Community BanCapital made eight investments across the country that ran as high as $15 million apiece, which Reppenhagen says, “will all work out quite well.” Prior to Community BanCapital, Reppenhagen was a principal at Concentric Equity Partners, a subsidiary of Financial Investments Corp, the family office of Chicago-area banker Harrison Steans.
“ICBA is pleased that the President has announced his intent to nominate someone with community banking experience and supports Allan Landon for a seat on the Federal Reserve Board,” Camden R. Fine, head of the ICBA said on Tuesday.
“Having someone with community bank experience, such as Landon, on the board will ensure that community bank interests are more fully understood as the board considers the impact of its policies on smaller banks and the communities and rural areas they serve,” he added.
Fine characterized the appointment as meeting the ICBA’s calls to the President and Congress for a community banking presence on the Fed board and said he expects a quick confirmation of Landon.
“[Allan Landon] brings decades of leadership and expertise from various roles, particularly as a community banker. I’m confident that he will serve our country well,” said President Obama.