In talking with other volunteers in the credit union industry, I find it interesting that we almost always face the same major issues.
One recurring discussion is being able to recruit new volunteers, especially for the board of directors. This is more prominent now than in the past due in large part to the increase of regulatory and compliance issues. This is also especially true given the complexity of new measures that credit unions now have to take on to protect their bottom lines.
In addition, we continually ask for more from our directors through time commitment, education, and exposure to increased personal financial risk due to exposure to litigation. We also expect a greater level of expertise spread across an array of financial areas. Here are a few factors that show why maintaining a diverse board is essential in light of increasing regulatory burdens and more complex financial issues.
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Diversity. One frequent theme I hear is having a well-diversified board that also takes into consideration experience and education. This again presents a challenge depending on such factors as the primary SEG of the credit union, area of the country and size, among other factors. When looking for diversification on your board, you are faced with a multitude of things such as racial and gender, some even say age, educational background, employment background, personal interests, time allocation, financial experience, family demands, travel considerations and more than ever, technological literacy. I'd suggest adding just having plain good luck.
Education. As we see income from fees and interchange income drop, there is a driving need to seek other sources of income; business loans are just one example. These all add to the increased educational burden on directors to be well-versed and to understand the complexities of what their credit union is involved in. Fortunately, the various professional credit union organizations offer a variety of training opportunities throughout the year for continuing one's education. Since many of these are available online, it helps reduces expenses and time requirements.
Time. I frequently hear the need for term limits and younger volunteers. As I consider this, I wonder if I had two young children at home, a full family life, community involvement and had to take vacation time to attend educational sessions and board meetings while having a fulltime career, would I be as involved in the credit union as I am today? I think not. This poses a challenge to many boards.
Exposure. In today's world, we are always faced with potential litigation for one reason or another. By accepting the responsibilities of being a credit union director, that potential expands tremendously. Sarbanes-Oxley and the Dodd-Frank Act are just the tip of the iceberg; add to that the NCUA's ruling on financial literacy a couple of years ago. Other issues are just as pressing such as when was the last time you had your directors and officers liability insurance policy reviewed or have you considered an indemnification agreement.
Luck. Marine Federal is a more than $780 million credit union with 20 branches in Virginia, North Carolina and South Carolina. We have a seven-person board. Of the seven, five are retired military, one is a retired civil service officer and another is an active general manager. All five retired military went into successful civilian careers including a realtor, a college professor, a CEO in health care, the now retired executive vice president of our credit union and an independent contractor. The director who retired from civil service was employed as a manager in another service industry. For the most part, this is a pretty typical board makeup.
Where we got lucky is that every director had an area of expertise from either their primary career or their secondary career or civic involvement that lends itself to a well-diversified board. They provide expertise to the whole body in keeping our credit union strong and sound. I'd like to say we were very smart in getting to where we are but in truth, a lot of it was luck.
Marty Goldman is chairman of Marine Federal Credit Union in Jacksonville, N.C.
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