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Structure of the Board

The Role as a Credit union directors are elected During board , you share by the general membership. A person in the responsibility for the credit must first be a member of the credit union’s future. You contribute to set- union to run for a board position. The ting policies, approving budgets and may take place at the credit all the other board functions that help union’s annual or balloting guide the credit union. may be accomplished electronically In board deliberations, you must or by mail with the results announced put on your director’s hat. You are Now that you’ve at the meeting. Your credit union’s expected to make decisions that are been elected to the bylaws specify the terms of office and good for the credit union and for the the election procedures. members as a whole, regardless of how board of directors, The average credit union board has those decisions affect your personal seven members, according to a survey situation. For example, your savings in you have two by Credit Union Director’s Newsletter. the credit union or your plans to take roles at the credit The following is true for federally char- out a loan should not affect your judg- tered credit unions: The board must ment about rates. union—director and number at least five directors and no You also wear your official hat when more than 15. The board must have an the board grants you authority to work member. odd number of directors. The mem- on its behalf. For example, the board bers of the board all serve the same could give you authority to disburse length of term. This can be either two funds, invest funds, or sign . years or three years. Terms are usually In doing this, you are acting as an staggered so that about an equal num- agent of the board, not as a member of ber of directors are elected each year. the credit union. If a vacancy occurs between , Your power as a director is restrict- the board appoints someone to fill the ed to those two situations: taking part position until the regular election. in board meetings and acting on the board’s behalf as its authorized agent. Dual Role In all other situations, you have no Now that you’ve been elected to special power or authority in the credit the board of directors, you have two union. roles at the credit union—director and member. It’s important to keep the two Role as a Member roles separate and to understand the When you conduct personal busi- distinct differences. ness as a credit union member, you have the same power as any other member, no more and no less. You are

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not entitled to better service or bet- detail the duties of the executive offi- ter rates than other members. Never cers. See figure 1.1 for a summary of apply pressure on staff to give you these duties. While different titles may special favors. If you are dissatisfied be used, the general responsibilities are with a product or service level, work as follows. for change through the board, which has the authority to make changes on Chair behalf of all members. The chair (sometimes known as the board president) presides at all meet- The Federal Credit The Monthly Meeting ings of the board and at all meetings The Federal Credit Union Act of the credit union’s members. Other Union Act requires requires the board to meet at least once general functions of the chair are to maintain an effective board, to serve the board to meet a month at a time and place agreed on by the directors. A meeting may be as liaison between the board and the at least once a held by conference call or videoconfer- of the credit union, to make sure meetings are productive and month at a time encing if it is inconvenient to assemble at one place. However, at least one all directors are heard, and to serve as a and place agreed meeting per year must be conducted spokesperson of the credit union. The in person. The board chair, or in the board may designate additional duties on by the directors. chair’s absence, the vice-chair, may call to the chair as long as these duties fit a special meeting of the board at any within the boundaries of the Federal time and must do so at the request of a Credit Union Act. of directors. Vice-Chair Board Appointments The vice-chair exercises all the The board appoints the members duties of the chair in his or her absence of the supervisory . When or when he or she is unable to perform vacancies arise on the credit commit- them. There may be more than one tee or supervisory committee, they are vice-chair, in which case ranks may be filled by a vote of the majority of the attached to the title. directors then holding office. (This applies to federal credit unions.) Treasurer In a small credit union, the board The Executive Officers treasurer may serve as manager of The executive officers are the leaders the credit union and receive a salary of the board of directors. The officers for this work. In a federally chartered may serve as an executive commit- credit union, the treasurer/manager’s tee to deal with issues between board duties include: meetings. Most boards have a chair, a • having custody of all funds, secu- vice-chair, a secretary, and a treasurer. rities, valuable papers, and other The credit union bylaws spell out in assets of the credit union;

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• providing and maintaining full days after each meeting. (The supervi- and complete records of the assets sory committee should receive a com- and liabilities of the credit union plete copy of all the board .) in accordance with federal laws The secretary also prepares meet- and ; ing notices and performs other duties • preparing and submitting to the as notified. A staff person may be board a monthly statement of the appointed as recording secretary of a credit union’s financial condition, meeting. In this case, the staff person and also posting it in a conspicu- prepares the minutes and the board ous place in the credit union’s secretary approves and co-signs the office; documents (along with the recording • ensuring that financial and other secretary) before distributing them. reports required by the National As owners, members have the right Credit Union Administration are to know about the condition of their prepared and sent; credit union. A federal credit union member has the right to inspect the • hiring and discharging credit credit union’s books and records, union employees. including the board of directors’ min- In most credit unions, however, utes. The inspection must be made in the board hires a separate manager to good faith and for a proper purpose, carry out these duties under the direc- such as trying to determine the finan- tion of the board or the board trea- cial condition of the credit union or surer. Managers typically have the title the manner in which the credit union’s of credit union president or president is conducted. The inspection and chief . cannot be to satisfy mere curiosity or for vexatious purpose. Secretary Before making minutes and records The secretary prepares and main- available, the credit union must delete tains complete records of all meetings any confidential material that identifies of the members and the board. Min- the transactions of, or personal - utes should be prepared within seven mation about, other members.

Profile of a Director What qualifies a person as a com- petent credit union director? Candi- dates for the board of directors must be credit union members. In addition, they should be committed to the suc- cess of their credit union and inter- ested in credit union affairs. At least four other factors clearly

Polka Dot/Thinkstock contribute to the director’s perfor-

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mance: background or experience, examples of forward thinking in their technical knowledge and ability, job performance or other areas of their forward thinking, and enthusiastic sup- lives? People who consistently cling to port. the past and defend or yearn for the way it used to be will hamper the credit 1. Background union’s growth and responsiveness to The first refers to board candidates’ the membership. general experience and education. Have they worked previously with 4. Enthusiastic Support credit unions? What experience have Are the candidates active members they had in other , coop- of the credit union? Do they use all the eratives, or financial institutions? Are services? Are they enthusiastic about they familiar with the credit union’s the credit union’s philosophy and pur- memberships, and do they understand pose? Are they excited about serving the members’ particular service needs? on the board and serving the mem- These are the types of questions to bers? These are questions to consider ask about a potential director’s back- because directors are role models to the ground. membership. If elected officials are not enthusiastic supporters and users of 2. Technical Knowledge the credit union, how can they expect Technical expertise is another con- others to use it? sideration. Do candidates have train- ing in financial services delivery? Are Community Involvement they familiar with the overall economic Other important attributes of the climate? Are they serving as directors director are not easily measurable. on other boards? Do they understand One characteristic is image. This is a basic business procedures and financial subjective measure of a person’s stand- statements? Persons with skills and tal- ing in the community. He or she may ent in management, human resource be active in service clubs, church or management, marketing, legal affairs, school groups, or other local activities. planning, data processing, and budget- By accepting speaking engagements ing may be chosen to create a well- and other invitations to participate, the rounded board. director becomes a leader in the com- munity. 3. Forward Thinking Another attribute is contact. One The purpose of the board is to lead measure of a director’s involvement the credit union forward, respond- with the credit union is his or her con- ing to future needs. Look for candi- tact with members. Also, is the person dates who are forward thinkers. Do in contact with other credit unions? candidates welcome new ideas, seek This can benefit both the individual innovative approaches, accept change, and the board. Contact with credit and question status quo? Are there union leaders through leagues, national

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Figure 1.1

CHAIR BOARD OF DIRECTORS VICE-CHAIR Duties of the BOARD OF DIRECTORS Executive Officers Primary Function Primary Function To act as the chief elected official of the credit union. Preside at all meet- To exercise all duties of the elected ings of the board and meetings of the chair when the chair is unable to per- members. form them. (If there is more than one vice-chair, rank should be attached to Specific Duties each title—first vice-chair, and so on.) 1. Lead all meetings of the board and Specific Duties meetings of the members. 1. Exercise the duties of the elected 2. Assign directors to board commit- chair when that person is unable to tees. Initiate the formation of execu- perform them. tive not required by law. Source: Credit Union Magazine 3. Countersign notes, checks, drafts, and other orders for disbursements of funds in smaller credit unions. TREASURER/FINANCIAL OFFICER Source: Credit Union Magazine BOARD OF DIRECTORS Primary Function

SECRETARY To act as the of BOARD OF DIRECTORS the credit union. Manage the credit union if the board has not hired a full- Primary Function time . To oversee the preparation, mainte- Specific Duties nance, and completion of records of all meetings of the members and of the 1. Have custody of credit union assets; board. sign notes, drafts, and orders for disbursement of credit union funds; Specific Duties maintain records of the assets and 1. Prepare and maintain full and com- liabilities of the credit union; prepare plete records of all meetings of mem- monthly financial statements, and bers and of the board within seven post them. days of each meeting. 2. Prepare and forward to regulatory 2. Send full and complete copies of all agencies any required reports. board meetings to the supervisory 3. Perform the duties of the chief commitee. executive officer if the board has 3. Prepare and send out notices of not hired one from outside the board. meetings to be held. Source: Credit Union Magazine 4. Perform other duties as noted. Source: Credit Union Magazine

service , and professional that individuals possess must blend societies is invaluable. well with those of the other directors Taken together, these are some of to ensure teamwork and constructive the qualities of an effective, energetic discussions. volunteer director. Overall, the traits However, teamwork does not

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Figure 1.2 Credit unions with effective board members recruit volunteers with the same care and Seven Tips attention they devote to hiring staff. Here are some of the best practices they use: for Director 1. Keep a list of potential board members. Recruitment 2. Identify prospects: credit union committee members, people who serve on boards of community organizations, neighborhood associations, , local government or other groups. 3. Take prospects out for coffee, lunch, or dinner. 4. Offer a tour of the credit union. 5. Make a firm invitation, with a response date. 6. Submit the invitation in writing, along with the benefits and responsibilities of the position. 7. If your prospect turns you down, ask for a referral to others s/he would recommend.

require everyone to think alike. It is those groups. Figure 1.2 offers tips for important for directors to have a range board recruitment. of backgrounds and viewpoints, and to be prepared to vigorously express their Director Training opinions. As long as directors are civil Volunteers who serve on the board and respect each other as people, diver- must be just as professional as direc- sity and honest discussion are likely to tors in other areas of business and produce better decisions than bland industry. This is particularly true uniformity. since the financial crisis in 2008. In In addition, the board should ade- 2011, the NCUA issued quately reflect the diversity of the cred- 701.4 that clarified and standard- it union’s membership. Surveys show ized the duties of directors of feder- that female, minority, and younger ally chartered credit unions. Among members are often underrepresented its provisions is a financial literacy on credit union boards. Volunteer requirement, which specifies that recruiting efforts should reach out to directors must have at least a work- ing familiarity with basic and practices, including the ability to read and understand the credit union’s balance sheet and income statement and to ask “appro- priate, substantive questions” of management and the credit union’s auditors. Directors who fail to fulfill their responsibilities may be legally liable. As credit unions grow in size and Goodshotv/Thinkstock

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complexity, and the legal and financial credit union offices to observe responsibilities of directors increase, the various job functions, and to continuing education is essential for all become more acquainted with the directors. overall operation in general. Many boards require director 4. Develop a resource library with involvement in training programs— financial textbooks, national chapter, league and CUNA sponsored credit union publications, and seminars, schools, and certification other publications relating to the programs. financial industries. We expect other professionals—doc- 5. Schedule several meetings a year tors, accountants, surgeons, consul- to enable directors and members tants—to stay current and develop new to exchange views on policies, skills. Credit union members expect programs, and any possible prob- the same from directors who are pro- lems or misunderstanding. tecting members’ investments. 6. Limit the terms on the board to assure turnover. Board Development 7. Stagger terms to control turn- Credit union boards are respon- over and thus guarantee at least a sible for their own development and minimal level of experience. The viability, and should have programs board and committees should that supplement professional educa- always have at least some mem- tional efforts. These may include the bers with experience at any given following: time. 1. Provide an information packet and orientation for newly elected Removal from the Board board members (and commit- While all credit unions hope they tee members). An informational will never have to remove a director session conducted by the credit from office, and in fact this is uncom- union chair and management mon, it is sometimes necessary. In a should cover credit union poli- federal credit union, a director may be cies, bylaws, history, and financial removed from office in one of three services, as well as board duties ways. and expectations. Every newly elected director deserves an ori- 1. A majority vote of the credit entation to contribute effectively union members present at a on the board. special meeting called for that purpose may cause a director’s 2. At board meetings, update direc- removal. The director must first tors on regulatory changes and have an opportunity to speak in economic trends. his or her defense. 3. Schedule dates for individual 2. If a director fails to attend regular directors to spend a day in the meetings of the board for three

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consecutive months, or otherwise 3. By unanimous vote, the supervi- fails to perform his or her duties, sory committee may suspend any that office may be declared vacant director until the next meeting by the board. A new board mem- of the directors. Such a suspen- ber is appointed to fill that posi- sion must be upheld by a vote of tion. Your policy manual should the members in a special meeting include a statement about this held seven to fourteen days after issue. the suspension.

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