After Call Reports are filed and earnings are released in January, the attention of boards and management at many publicly-held community banks and bank holding companies turns to preparation of 10-K filings and Annual Reports to shareholders, with Proxy Statements next on the horizon. The current mantra in the market seems to be that the economics of banking are looking better. However, it is a challenge for some banks to admit some past regulatory missteps and discuss frankly with their constituencies certain challenges they face in returning to solid earnings and quarterly dividends.

For example, directors are reluctant to admit that they may need to improve as fiduciary caretakers and may have relied on a management team that needs to be strengthened. And it would win no points for bankers to observe in hindsight that they were allowed, if not encouraged, by monetary policies, regulator passivity and pressure from competitors to make loans with poor underwriting attention. Blaming borrowers for being overconfident or loan brokers and investment bankers for fanning the lending and securitization frenzy also will not play well with bank shareholders or regulators.