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and Bank Regulation
After a recent Insights Bank and Trust board meeting, Will Simms, a long-time board member, spoke with Hiram "Hi" McCard, the bank's board chairman and chief executive officer, about his intention to resign from the board of directors. Having turned over his manufacturing business to his children, Will plans to retire to Arizona with his wife. He has agreed to remain on the board for a few months until Hi can find a replacement.
Hi’s first choice as Will’s replacement is Bill Williams, a pharmacist and local drug store owner. Although Bill has no previous banking experience, he is a highly visible and respected community member and has served several terms on the town council. Hi has invited Bill for a cup of coffee at a local café to discuss the matter.
As you watch the video, keep in mind the following questions:
Reflections on the Video
Clearly, Bill’s reluctance stems from his lack of experience in, and knowledge of, the banking business. Hi assures him that his leadership role in the community, his ability to think outside the box, and his success as a local business owner all indicate that he would be a valuable bank director. Besides, according to Hi, he and senior management do most of the work when it comes to dealing with bank business; Bill wouldn’t have to worry about that.
Hi’s reassurances, along with enticements such as director fees and board retreats at prime vacation spots, do little to ease Bill’s concerns, although he does find the opportunity intriguing.
Hi's invitation to serve as a director has given Bill a number of questions to answer. They may be some of the same questions you asked yourself when you were first asked to serve as a director.
The remainder of this lesson attempts to answer these important questions. After successfully completing this lesson, you will see that external directors not only have much to contribute, but their regular and active participation in board concerns is vital to a bank's success.
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