Audrey HawthorneChief Strategy Officer · Essays & perspective

Audrey Hawthorne · Chief Strategy Officer · United States

What a balance-sheet strategist would bring to a board outside banking

My contribution to a board

A board I joined would get someone who reads a plan by looking for the assumption that would hurt most if it were wrong. I have spent nearly thirty years on the funding side of financial institutions: building interest-rate models at a savings and loan, valuing deposit bases for buyers and sellers of banks, running balance-sheet analysis for a regional bank and, as its chief strategy officer, deciding how it should invest, grow and fund itself. Insurers, universities and health systems face versions of the same question. They hold long assets against obligations whose timing they estimate, and their boards often see the estimate only as a single number in an appendix.

I would also bring transaction judgement from both sides of the table. As an adviser I presented to roughly thirty bank boards deciding whether to sell or buy. As an acquirer I have taken one deal through an eleven-month review that went badly and another through an eleven-month review designed to go well. I know what a special committee should ask about the period between signing and closing, about retention of the people who hold client relationships, and about the price of conditions a regulator may impose.

I would not claim to be a specialist in audit or accounting, though I am comfortable with financial statements and have completed director education on audit oversight. My natural home is a risk or finance committee, and I would serve a full year before chairing one.

Judgement in practice

01

Advising our board to leave an auction it wanted to win

In 2018 Varrowfield bid for a Nevada bank in a competitive sale. To stay in the final round we would have had to raise our price to a level that assumed the seller kept 95% of its commercial deposits after closing. My analysis showed that more than a third of those deposits sat with twenty construction and property clients whose balances had swung by half within a year. Our chief financial officer and two directors wanted to stay in. I put the retention assumption on the first page of the paper and asked the board whether it believed it. The board withdrew. The winning bidder later reported deposit attrition well above its own plan. As a director I would want management to show me the one assumption a price depends on, and I would ask for it if it were missing.

02

Asking a fellow director to leave the room

In 2023, as chair of Sunfallow's loan committee, I received a request to restructure a US$4.2 million loan to an affordable-housing developer in which another of our directors held an interest. The director was well respected and the project was sound, and some colleagues thought a formal recusal would offend him. I asked him to leave the discussion, had the credit reviewed by an outside lender at our expense, and recorded both steps in the minutes. We approved a restructuring on firmer terms than he had requested. He told me afterwards that the process had protected him as much as the fund. Small boards are where conflicts are most often handled informally, and I think that is precisely why they need the formal process.

03

Bringing my own programme's audit finding to the risk committee

When internal audit found in 2022 that we could not reconcile end-user balances in four of our six partner-banking programmes daily, the finding could have reached the board's risk committee as a remediation item owned by the digital bank. I asked to present it myself, because I had proposed and approved those programmes in 2019. I gave the committee the audit report, the remediation plans the partners had offered and my recommendation to close the four. Directors spent most of the meeting on the two programmes I proposed to keep, which was the right use of their time. On a board, I would want executives to bring their own mistakes forward early, and I would try to make that safe for them.

My first year on a board

I would spend the first three months learning how the organisation actually makes money and where it could lose it quickly. That means reading the past three years of board and committee papers, the external auditor's reports to the audit committee, the investment and funding policies, and any rating agency or regulator correspondence the board has received. I would ask the finance chief and the treasurer, separately, which assumption in the plan worries them most. If their answers differed, I would want to understand why before saying anything in a meeting.

Between the fourth and ninth months I would attend every meeting of the committees I joined and visit at least one operating site or business unit outside headquarters. I would ask questions rather than propose changes. A director from banking can easily mistake an insurer's or a hospital system's balance sheet for a bank's, and I would rather find where my instincts mislead me privately than in front of management.

By the end of the year I would ask the chair for a frank account of whether my contributions had been useful, and agree with the nominating committee which committee I should concentrate on in the second year.

Conflicts and their management

My first obligation is to Varrowfield, and any seat would require my chief executive's written consent and a review by our general counsel. I would decline any board that competes with Varrowfield for deposits, loans or payment services, including banks, credit unions, non-bank lenders and fintech companies, and any company that is a significant borrower from or supplier to the bank. Because my work includes acquisitions, I would also decline companies that Varrowfield could plausibly buy, sell to or partner with.

The conflict most likely to arise in practice is quieter. A company I serve might open an account at Varrowfield, appoint it as a lender or ask it to bid for a mandate. I would disclose any such relationship to both boards as soon as I knew of it and stay out of every discussion and decision touching it, on both sides, and I would ask that each recusal be minuted. Sunfallow, where I am a director, has a credit line from Varrowfield, and I already recuse myself from Sunfallow's decisions about that facility. If recusals became frequent, I would resign the seat rather than occupy it half the time.

I would never use information from one board in the other's discussions, including Varrowfield's strategy, client or acquisition material.

My independence statement

I am a full-time executive of a listed bank and expect to remain one. I hold Varrowfield shares and restricted stock, I chair the loan committee of a nonprofit that borrows from Varrowfield, and my bank may already serve the company considering me. I would list all of these at the first conversation. Whether I meet a board's independence standard, under its exchange's listing rules and its own guidelines, is for that board and its counsel to decide on the full facts, and I would not describe myself as independent until they had.

Committee contribution

Chair and member readiness
CapacityCommittees
Ready to chairRisk committee of a non-bank financial company, after a full year as a member · Finance or investment committee overseeing a portfolio and how it is funded · Loan committee of a nonprofit lender (current)
Ready to joinRisk committee · Audit committee · Finance or investment committee · A special committee formed to review an acquisition or sale

Board and committee exposure

Served as a director

Sunfallow Community Loan Fund

Board of directors; loan committee chair from 2022; finance and audit committee member

January 2018–present

Director of a Phoenix nonprofit lender with a US$140m portfolio of small-business and affordable-housing loans; chairs the committee that approves credits above staff authority.

Presented to the Board or a committee

Varrowfield Financial Corporation

Full board

2016–present

Presents the annual strategic plan and every acquisition proposal, including Dunmarrow in 2019 and Kessling in 2024, with the alternatives management did not recommend.

Presented to the Board or a committee

Varrowfield Financial Corporation

Board risk committee

2022–present

Presented the partner-banking wind-down in 2022 and the deposit franchise review in 2023; reports quarterly on strategic risk and deposit segmentation.

Member of a committee

Varrowfield Financial Corporation

Management asset-liability committee (an executive committee, not a board committee)

2011–present

Member since joining; argues for sizing the securities portfolio and funding plan against segmented deposit assumptions.

Presented to the Board or a committee

Halberd Rowe & Co.

Boards and special committees of client banks

2008–2011

Presented strategic-alternatives and transaction analysis to roughly thirty bank boards as an adviser; held no board role.

Capacity and preferences

Time available
22 days per year
Current directorships
1
Sectors
Insurers managing the duration of assets against long-dated liabilities · Financial data and market-infrastructure companies that do not compete with banks for deposits or loans · Nonprofit health systems and universities with large investment portfolios and bond issuance
Company type
A listed mid-cap insurer or financial-services company outside banking, or a large nonprofit with an investment portfolio and debt to oversee
Company stage
An organisation weighing an acquisition, a change in how it funds itself or a review of its investment portfolio

The seat I am pursuing

I am seeking one non-executive seat, on the board of a listed mid-cap insurer or financial-services company outside banking, or of a large nonprofit health system or university with a substantial investment portfolio and debt. In each of these the board must judge how long-dated assets are funded and what happens if the timing assumptions behind them prove wrong, which is the question I have worked on for most of my career. I would expect to join a risk, finance or investment committee and, after a full year, to chair one if the board wished. I would also be useful to a special committee formed for an acquisition or sale. I am not looking for a seat that values my title or contacts more than my questions, and I would not join a board that wanted a banker present without giving that banker committee work. I can commit twenty-two days a year, including preparation and a margin for unscheduled meetings, and I would confirm that figure with my employer before accepting.

Governance learning and readiness

IICA Independent Directors’ Databank: Not yet registered

I live and work in the United States and am considering only US boards. The IICA databank is India's register for people appointed as independent directors of Indian companies, so it has no bearing on the seats described here. I am not registered with it, and I would revisit that only if an Indian board ever approached me.

  • Nonprofit board service since 2018, chairing the loan committee of a community development lender from 2022
  • Director-education programme on audit committee oversight and financial reporting, completed in 2024
  • Annual sessions with Varrowfield's external counsel on bank merger review, disclosure and pre-closing conduct, attended as a presenter
  • Course on fund finance and private credit structures for credit and risk executives, completed in 2025