Bank board work behind the scenes

by Jill Henry

SBJ Reporter

jhenry@sbj.net

Area banks look to the business community for guidance via bank boards. A mix of individuals from various industries lend their experience and expertise to community financial institutions.

Frank Hilton, chairman of the board of directors and CEO of Citizens National Bank, said banks rely on board members to play a role in new business development and oversee policies.

"Every bank goes about it a little different, but these committees would be to generally oversee the policies and procedures that will ultimately cause the bank to be successful," Hilton said.

Commerce Bank, with banks in Missouri, Kansas and Illinois, relies on its Commerce Bancshares Inc. board of directors and on 32 regional advisory boards, including one in Springfield.

"Many of the larger banks have done away with regional advisory boards," said Susan Kirkman, vice president and regional marketing manager for Commerce Bank. "Commerce Bank's regional advisory board does not have the statutory liability, but still serves a very important role."

Typically, board members are not involved with the daily banking activities, Hilton said, but they are expected to have the experience and good business judgment.

Hilton's current board is made up of nine people (including himself) and includes a veterinarian, contractors, business owners and real estate investors.

"That's what you're looking for to bring a large cross-section of experience to the board table," Hilton said.

Diversity is important at Commerce as well.

"Our board is full of business leaders with critical experience and insights who listen and learn from our management strategies and best practices and vice versa," Kirkman said.

Board meetings are held monthly at Citizens National Bank. Both Commerce Bancshares Inc. and the regional advisory board hold quarterly meetings. Additional time may be required, however.

"(The time commitment) will vary widely according to the bank and the personal enthusiasm and involvement, if you will, of the bank director," Hilton said.

Terry Meek, president of Meek's, has been a member of the board of directors for Commerce Bancshares Inc. since 1989 and currently sits on the compensation committee. A challenge, Meek said, is "to keep up with bank regulations and regulations of public companies, as opposed to running your own business where you know more or less the whole process. It's a responsibility which I think any director of a bank takes very seriously."

Something else taken seriously by board members is potential liability.

Hilton said banks carry liability insurance to cover officers and directors for certain liabilities. "I know in the early days of establishing our bank, the bank regulators made it very clear to our board that should they not be attentive to the affairs of the bank, supervise its management and general policy direction, they would certainly be held responsible, even personally."

Many board members are elected to their positions and serve specific terms. The group of investors that formed CNB in 1989 serves as its current board. Looking to the future, if the need arises to fill board positions from outside the group of investors, Hilton has specific qualifications in mind.

"Someone who's well-respected in the business community, well-known, energetic, (and) enthusiastic about business development," Hilton said.

While members of the board receive compensation, both Hilton and Kirkman declined to reveal exact dollar figures.