Despite diversity gains, white men still rule R.I. banking

GROWING ROLE: Bank of America Senior Vice President Yahaira
GROWING ROLE: Bank of America Senior Vice President Yahaira "Jay" Placencia speaks with the bank's president for the Rhode Island area, William Hatfield. / PBN FILE PHOTO/JAMIE LOWE

When Ellen Ford joined Middletown-based People’s Credit Union in 1982 she started working in a position that many young women traditionally took in banking.

She was a teller.

“The women were the tellers, bookkeepers and the clerical staff and the men were the managers and officers,” Ford said. “It was stereotypical.”

Ford is now president and CEO of People’s, though her ascension over three decades to the highest rungs is an anomaly of sorts.

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While women comprise a greater percentage of the overall Rhode Island banking industry compared with men, that number is declining and quickly thins moving up the ranks until the very top, where women are greatly outnumbered. And the numbers become even more lopsided when examining racial diversity in banking. Ethnic and racial minorities in Rhode Island, such as Hispanics, blacks, Asians and Americans Indians, have become a larger percentage of banking compared with two decades ago, but still have little representation in senior positions.

The 100-year-old Rhode Island Bankers Association and incoming President Anthony Botelho, president of Freedom National Bank – a Berkshire Financial Services Inc. company – would like to see a greater focus on women and diversity in banking at the leadership level.

“I think it’s been coming for several years,” he said, when asked about demographic shifts he’d like to see in his industry. “Throughout the region there are people at the CEO level who will be transitioning out of the industry, so I think there’s going to be opportunities at the C-suite and senior levels over the next five to six years.”

But reversing 100-plus years of largely white, male-dominated leadership will depend largely on the commitment of individual banks, few of which have publicly identified the issue as a priority.

‘AN UNCOMFORTABLE TRUTH’

Elizabeth B. Eckel, senior vice president of marketing and investor relations for Westerly-based The Washington Trust Co., has been with the bank for 24 years.

She is one of nearly 5,000 women who comprise 66.9 percent of the Rhode Island banking industry, which includes commercial banking, savings institutions, credit unions and other depository institutions, such as industrial banks and private banks, according to the R.I. Department of Labor and Training.

She’s also one of roughly 35 women who comprise 35 percent of senior management in the Rhode Island banking industry, according to Providence Business News research, a proportion that drops to 20 percent among C-suite positions, which include “chief” in the title.

It’s worth noting, however, that while PBN’s research classifies senior management as those with “senior” in their titles, the hierarchy and responsibility given to employees at some institutions isn’t always so cut and dry.

PBN extrapolated data from company listings, federal filings, year-end reports and the Federal Deposit Insurance Corp. for all Rhode Island-based banks and the state’s 10 largest credit unions based on assets.

Washington Trust wouldn’t disclose a full breakdown of its workforce demographics, but Eckel said it closely mirrors DLT and PBN research.

Promoted to a senior position about 16 years ago, Eckel says gender at Washington Trust has always taken a backseat to qualifications in promotional considerations, adding that she had her first child right before being promoted to a senior level.

“It used to be if you had a baby that was it. You’d be crossed off the [promotion] list,” she said. “People don’t think like they did way back in the old days when a woman’s place was at home.”

Anthony R. Wheeler, Spachman professor of human resources management at the University of Rhode Island, studies management and human resources trends. He says there are hurdles – across industries – that are more difficult for women compared with men. Some of these challenges, he explains, come from inherent discrimination stemming from double standards.

“When people talk about the glass ceiling, it’s almost always talked about in terms of pay, but it also relates to promotion,” Wheeler said. “Men tend to be more aggressive when it comes to career options, which is a Catch-22 for women because when women are aggressive in negotiations or career goals, they develop a reputation for being not so nice.

“Also, men will hire other men,” he added. “It’s an uncomfortable truth, there are repercussions to admitting it and it’s difficult to talk about.”

Sandra Pattie, of Newport-based BankNewport, is currently the only female president and CEO of a Rhode Island-based bank. Ford, meanwhile, is the only female president and CEO among the 10 largest Rhode Island credit unions.

But Pattie doesn’t think there’s anything unusual about her being the only woman at the top because – as she puts it – “There aren’t that many banks.”

Indeed, together, Pattie and Ford represents 10.5 percent of the 19 CEOs of Rhode Island-based FDIC-backed banks and credit unions.

Comparable national numbers are scarce, but American Banker last year reported three women holding the title of CEO out of the nation’s nearly 100 bank-holding companies with assets of more than $10 billion.

Women last year held about 4.6 percent of CEO positions at S&P 500 companies, according to the nonprofit research group Catalyst.

But Pattie, like Botelho, says there are a number of women advancing within the industry who could enter into more advanced roles if given enough time.

“In banking, like many industries, it takes about 20 years to achieve a senior role,” Pattie said. “When you look back 30 years ago there was a smaller pool [of women] than today in banks’ senior teams.”

Citizens Financial Group Inc. has been putting a greater focus on providing a more “inclusive environment,” said Yvette Vargas, head of development at Citizens. Vargas’ department tracks data and while she couldn’t immediately provide specific figures, she said there’s a “healthy population of women at the top.

“We want to use the full capacity of our talent,” Vargas said. Citizens CEO Bruce Van Saun took over leadership of the Providence-based bank when former Chairman and CEO of RBS Citizens Financial Group Inc. Ellen Alemany retired in 2013. She was ranked No. 4 on American Banker’s list of the 25 most powerful women in banking in 2012.

Botelho thinks the state’s financial institutions will naturally become more diverse, “because you have to play to your customer base. If you look at Rhode Island, there’s a growing population of Hispanics and Asians, so there’s likely going to be more diversity.”

DIVERSITY LACKING

Non-Hispanic, white bankers make up 84 percent of the Rhode Island banking industry. The next largest racial group is Hispanic bankers at 7.4 percent, followed by non-Hispanic black bankers, 4.7 percent, and non-Hispanic Asian bankers at 2.7 percent, according to the DLT.

These numbers largely reflect nationwide trends, as Non-Hispanic, white financiers comprised roughly 84.9 percent of the U.S. financial industry in 2011, according to a 2013 study conducted by the U.S. Government Accountability Office, an investigative arm of the U.S. Comptroller General. To compare, Non-Hispanic, white workers in 2013 comprised 83.1 percent of the Rhode Island labor force and 79 percent of the U.S. labor force, according to the U.S. Bureau of Labor Statistics and U.S. Census Bureau.

But there’s little diversity in the banking industry’s top positions and Rhode Island numbers are even worse.

The General Accounting Office estimated racial minorities comprised 10 percent of all banking executive and senior level officers and managers nationwide in 2008, the most recent data available.

In Rhode Island, 2 percent of senior positions in the industry are held by racial and ethnic minorities, which drops to zero percent at C-suite roles. There are currently no female minorities represented in senior or C-suite positions.

Throughout the country, upward mobility has proven difficult for racial minorities in the financial sector. The GAO reports that from 1993 to 2011 the overall racial minority employment at the management level increased 7.9 percent. Black representation rose 0.7 percent and Hispanic employment increased 2.4 percent over that time period. Asian employment rose the most at 4 percent, according to the study.

Eckel notes that the majority of Washington Trust’s footprint in Rhode Island to date has been in South County, where the general population is less racially diverse compared with Providence County. She says diversity is also often lacking in applicant pools.

Rhode Island, in general, is less diverse compared with the national average.

In 2013, 75.3 percent of Rhode Island’s population was white compared with 62.6 percent nationally, according to the U.S. Census Bureau.

But as Washington Trust, which expects to have 22 branches by the end of the year, continues its growth plan, Eckel believes more diversity in the workplace could follow.

“As we expand our physical presence, it’s opening more opportunities for us to expand the diversity within our pool of workers,” Eckel said.

Both Botelho and Wheeler agree the long-term forecast for the Rhode Island workforce, including banking, is that it’s going to become more diverse. The Census Bureau forecasts that non-Hispanic white people will comprise less than 50 percent of the U.S. population by 2043.

“It’s a natural inevitability, but I don’t think that should be an excuse as to why things aren’t happening now,” Wheeler said.

Vargas, of Citizens, is Latina and says Citizens, like many financial institutions, has “some work to do” when it comes to the inclusion of racial minorities. But as a part of the new talent-building strategy, she says the bank is taking a two-fold approach.

“Bringing in diverse talent to the mid- to senior-levels and expanding your professional network will help safeguard and accelerate the process,” she said.

Jim Vincent, president of the NAACP in Providence, agrees with Wheeler, saying the numbers found in banking are reflective of other industries. But he sees no excuse for lack of leadership in top positions.

“It’s a drummed-up excuse saying more diversity will come,” Vincent said. “We’ve had robust diversity in our colleges and universities for about 45 years now and to say you can’t find people for senior and C-suite positions is disingenuous,” he said.

WHO WILL LEAD?

Merrill Sherman, Rhode Island’s first-ever woman CEO in banking, took over at Woonsocket-based Eastland Bank, a failing thrift in the 1990s. She came in as general counsel before she was asked to lead it prior to being sold to Fleet Financial Group.

When asked about how it felt to be the state’s first woman CEO in banking, she quipped back: “If it was a great job, they wouldn’t have given it to a woman.”

But the FDIC valued Sherman’s performance and subsequently asked her to run a different failing bank in Vermont. She returned to Rhode Island when Fleet acquired Shawmut Bank in 1995 and had to divest branches. Sherman and others raised capital, bought the branches and created Bank Rhode Island in 1996, which she headed as president and CEO before it was acquired by Brookline Bancorp Inc.

Sherman, now working as a consultant, says one issue the banking industry has right now is that it’s not attracting a “dynamic workforce,” properly equipped for today’s environment.

“I think it’s a cultural thing within the [industry],” Sherman said.

This idea is paired with the fact that women are steadily becoming a smaller percentage of the overall banking workforce. From 1996 to 2013, women in banking dropped from 77 percent of the overall workforce to 66.9 percent, according to the DLT.

Botelho will become the new R.I. Bankers Association president on Sept. 21, at the group’s next meeting.

He wants to keep the association’s platform and agenda for the most part consistent with past objectives, with the notable exception of encouraging more diversity in leadership.

But he admits he’s not entirely sure right now how the association can bring women in banking or racial diversity to the forefront of the conversation.

“I think some of it is continuing to network, promote the association and make it more inclusive,” he said.

The reality, however, is that with little-to-no sway over individual institutions and a plan to follow a set of standards established in 1915, whatever role women and racial minorities play in the future of Rhode Island banking is largely in the hands of current banking leadership.

Sherman says it’s commendable the association is advocating for more female executives, but thinks individual banks and boards must get more involved before actual progress is achieved.

“Over the years women have – from time to time – achieved senior executive roles in the banking field, but sadly it’s not nearly to the extent that it should be, nor are the board of directors reflective of either the population or the customer base,” Sherman said.

Botelho thinks women will continue to make gains, but he is admittedly less certain about how to get more racial minorities in the local industry.

“I don’t know the depth of why there aren’t more ethnic bankers at more senior levels,” Botelho said. “The data obviously says there aren’t, so I would concur, but as for why, I don’t really know.”

Wheeler agrees individual institutions must change the way they think about diversity for there to be a recognizable change in the industry, especially at the top.

He says more banks could benefit from establishing in-house mentoring and inclusion programs, as some have already done.

Yahaira “Jay” Placencia, senior vice president, private-client adviser of U.S. Trust, at Bank of America in Rhode Island, is Latina and has been working with the bank since 2000. She recognizes the paucity of minority bankers in Rhode Island, but says she’s always felt included at Bank of America, partly because of an inclusion program called Hispanic/Latino Organizations for Leadership & Advancement, or HOLA.

The program allows her to connect with other Latinos from throughout the bank’s global footprint and is designed for Bank of America bankers from other racial and ethnic groups to learn more about Hispanic and Latino culture.

“In essence, it gives you the opportunity to network within the bank with those who want to learn about different cultures throughout the bank,” Placencia said.

Wheeler says internal mentoring programs, specifically designed to connect new hires with midlevel employees, or mid-level workers with senior executives, are largely effective if done with intent and not because an institution is trying to improve its reputation.

There are some regional companies, such as AAA Northeast, that run these types of programs with positive results, Wheeler says. He thinks banks could take a cue from them and advises against taking a passive approach in the future.

“Companies that really value people, their cultures, respect diversity and respect their viewpoints usually perform very well financially,” Wheeler said. “But it tends to be a tough thing for a company to do.” •

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