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Tools: Prepare Your New Board Members with Insights for Bank Directors

Wednesday, April 1, 2009

When taking on a new bank director, you probably want them up to speed as quickly as possible.

Have your new board members take the Fed’s free Insights for Bank Directors course. Since 2004, tens of thousands of new bank directors across the nation have prepared for their oversight duties through Insights for Bank Directors, according to the creators of the course, the Fed’s Community Banking Organization Management Group. The web-based course introduces directors to their duties and responsibilities, provides general information on analyzing a bank’s financial performance and gives general guidelines on managing the bank’s portfolio risks.

Based on feedback, bankers and directors have found the course useful and insightful. The course currently covers seven general areas:

  1. the job of the bank director,
  2. evaluations of financial performance,
  3. large loans that may present policy exceptions,
  4. regulatory issues in lending,
  5. allowances for loan and lease losses,
  6. market and liquidity risks, and
  7. operational risk.

While the course is designed for new directors at community banks, more-experienced directors and those of larger banks often find the course useful as a refresher on their board responsibilities and regulatory issues. The tenets of being a good bank director transcend bank size and it’s never too late to revisit director responsibilities.

The course is built around events occurring at the fictional “Insights Bank & Trust,” a small community bank where the participant serves as an outside director. Early parts of the course serve as a prelude to a board meeting, which will offer information typically covered by directors. The course employs exercises and examples, and offers links to other useful information.

You can take the course at your own pace, all at once or in pieces. Insights is the collaborative product of the Federal Reserve banks of Kansas City and St. Louis, based on an onsite director training course developed by the Kansas City Reserve Bank. The course is updated on a regular basis, with operational and compliance risk content added in 2008.