Good governance means sound preparation

The existence of a voluntary Board of Directors elected from among the membership is one of the most essential elements of the credit union movement. But, the time-honored tradition of service to the credit union is getting tougher all the time. Today’s boards are faced with increasing pressure to stay informed of the complex regulatory and business realities of the financial services marketplace.

Being a credit union volunteer has never been a spectator sport. Each month, you receive a huge packet filled with tons of information regarding your credit union’s financial performance and general activities. By now you probably know how to read the financial statements and “dashboard“ reports related to financial trends, but is that enough? From new regulations being crafted on a weekly basis to balance sheet pressures caused by an eroding economy, there are landmines everywhere for an unprepared board member. Now, more than ever, every credit union needs to reassess their governance process to make sure the board is making well-informed decisions and the members’ interest are being well-served.

Here are a few simple tips to help you govern your credit union to the best of your ability. We all understand regular board meetings are essential for good communication between the credit union, the management, and the directors. The old adage that half of success is just showing up does not apply to your credit union’s governance model. You need to be properly prepared for each meeting. A good first step is to review the board package prior to the meeting and to write down your notes, questions or special concerns. You should receive the package several days prior to the meeting to allow yourself time for a thorough review.

At the board meeting, be prepared to ask any questions or make any pertinent comments during the management and committee reports. While you do not have to be an expert on credit union operations, you do need to have a general understanding of how the institution operates. Simply stated, if you don’t understand something, ask questions. Basic or background questions may be asked of the CEO by email before the meeting. It is always best to present the questions and responses to the entire group so that everyone may benefit from the information.

Don’t allow a consent agenda to overrule your governance responsibilities. A board member always has the opportunity to remove items from the consent agenda in order to give them special attention at the meeting. Often times, a good discussion on a subject will lead to a greater appreciation of the issue and a more accurate decision for the credit union. If you feel that you do not have enough information to make an informed decision, consider tabling the matter until the next meeting. It does not resolve your specific concerns when you simply abstain from the vote.

You also need to stay informed of the current regulatory business climate impacting financial institutions. Joining CUNA’s board specific community, participation in volunteer training and networking opportunities, reading credit union trade journals like CUNA Credit Union Directors Newsletter and receipt of NCUA or state regulator announcements are great ways to stay informed and connected to your fellow volunteers.

You may want to consider having a Board Participation Policy that outlines the specific expectations for board members and includes a guideline for meeting preparation. This way, volunteers understand the expectations and have the necessary guidance to achieve success.

The credit union movement could not exist without your time and effort. With some simple preparation, your volunteer experience could be enhanced, and your credit union governance can be strengthened.

David Reed

David Reed

David is a partner in the law firm of Reed and Jolly, PLLC. Through Reed and Jolly, David provides guidance to credit unions concerning a variety of matters including the ... Web: Details