WEST PALM BEACH, Fla. — Given the controversy over everything from name changes to conversions, credit union boards and the idea of fiduciary responsibility is being dragged into the media spotlight.
"The way I look at it is our fiduciary responsibility hasn't really evolved all that much," said South Carolina Telco Federal Credit Union Board Chairman Lou Addison. "Our responsibility is to manage the assets of the credit union using those sound tried and true fiscal principles–perpetuate growth and return benefit to the member. If our organization is not growing then it's dying–so perpetuating growth has to be a very high if not the highest priority." According to Mountain America Credit Union Board Director Scott Burt, while the responsibility remains relatively unchanged the skill sets required of a board member today are more advanced.
"Given what's happened in the past few years with Sarbanes Oxley, today's board members need a higher level and mix of expertise and requirements to perform their duties," said Burt.
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Both agree that as credit unions grow and become more sophisticated and complex, board education is vital in preparing board members to meet their fiduciary responsibility.
"It takes a threefold philosophy that involves education, strategic planning and recruitment," said Addison.
As far as education, Addison says since most directors don't have the experience of operating in a financial institution environment, at his credit union a general education of SC Telco's history and the credit union industry overall is a must. To stay current on issues, continuing education is provided based on areas of interest and the CU's strategic plan. The board revisits and reviews its five-year plan twice a year. "We're always looking for educational opportunities and even bring in someone from the outside to help with our credit union's growth," said Addison. "The way we operate with our biannual tweaking of our strategic plan has been very successful." At MACU board members are required to attend a variety of educational classes at least twice a year. "The board has to police itself and education is one way we do it," said Burt. "We try to look for an area where we may need to develop expertise and go from there to gain more understanding." In addition to education, the recruitment process is just as important. "I know a number of credit unions have trouble recruiting board members but that is not the case here," said Burt. "We've been very successful and had strong interest in serving on the board. We're going into an election in April and we had 15 really qualified candidates to choose from in addition to the incumbents." Burt says that in general candidates come from the membership committee, which encourages members to take advantage of the opportunity to get more involved with their credit union.
"I'm a firm believer in having the right person for the job as the top criteria for directorship," said Addison. "The reason I say this is that the final result is they would be a contributor to making sound fiscal and business decisions. So whether the knowledge is from practical experience or formal education, the match of their ability to the need is the essential ingredient for a board to function." For a few good recruits SC Telco relies on its supervisory committee and member advisory committees from its five branch locations. The credit union looks to its branch managers for advisory committee members since they are in touch with their constituents. "A number of folks have moved up from the supervisory committee," said Addision. "Not every advisory committee member can escalate to director but we're always on the lookout for qualified people. So if we find someone who meets the criteria or even has the potential we try to place them into the flow and that is generally how we've had the most success." Both directors agree that the changing landscape including conversions represent a potentially slippery slope for credit unions. "Everyone's situation is different. For us we believe in the credit union philosophy and we're building an organization and that organization is not a bank but a credit union," said Addison. "So if you're a credit union that no longer subscribes to the philosophy then I guess you might need to be a bank." "Credit union boards have to really consider whether the move to convert to a bank is really in the members' best interest because it seems to be more a move made out of greed," said Burt. "It is a subject more credit union boards will have to be well versed in and aware of." –[email protected]
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