Credit union board of directors responsibilities include planning the credit union’s course and ensuring the best interests of its members.
The National Credit Union Administration (NCUA) outlines the requirements and duties for credit union boards in detail. Read on to learn more about what those responsibilities are, and how credit union board management software helps fulfill those duties.
What's the Purpose of a Credit Union's Board?
A credit union board serves a critical purpose. It’s not only tasked with the role of governance and management of the credit union, but also to represent the will of the credit union’s members and to promote their interests.
Credit Union Board of Directors Duties and Responsibilities
Serving on the board of directors comes with many responsibilities. Some of these responsibilities are general for all board members, while others are required of a specific member.
General Responsibilities
The provisions of NCUA final rule 701.4 indicate the following general responsibilities of a credit union board member.
- Provide general direction for the credit union.
- Carry out duties prudently to serve the best interest of the members.
- Administer the credit union’s affairs in a manner that’s fair to all members.
- Have the required finance and accounting skills to interpret balance sheets and income statements.
- Ensure the credit union operates in conformity with set guidelines for sound business practice.
Specific Responsibilities
The more detailed duties include:
- Soundly handle the operations of the credit union and ensure that vision and objectives reflect the credit union’s philosophy and address the members’ needs.
- Provide direction to the credit union through key roles like approving plans and budgets and monitoring their implementation. Some of these operational functions can be delegated to the management.
- Take charge of the credit union’s financial situation and make policies that regulate the fees and rates for credits. Monitor the financial reserves to ensure they are adequate for proper operation.
- Develop policies for products and services, ensuring they are compliant with bylaws and the applicable state/federal laws.
- Review the performance of the Chief Executive Officer and their commitment to achieving the set goals. It’s the board’s responsibility to hire and supervise the CEO.
- Offer continued education to all the credit union members, volunteers, and staff.
- Ensure there is a proper program in place to adequately protect member funds and the union’s assets.
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Basic Financial Skills Required for Credit Union Board of Directors
A credit union director must have financial literacy skills to adequately accomplish their tasks, such as checking the financial books and contributing to decision-making.
What a Credit Union Director Should Know
A credit union board member should be able to do the following:
- Examine the credit union’s income record and balance sheet, and be able to use the information to make informed decisions.
- Understand the specific functions the credit union is involved in and how they generate revenue or could contribute to financial loss.
- Know common industry risks, including liquidity, credit, compliance, transaction, interest rate, strategic, and reputation risks.
- Understand internal control structures created by the credit union in order to mitigate or limit the risks.
How to Acquire Required Financial Skills
While the NCUA does not intend to tighten the financial requirements on the directors, they are keen to ensure the directors have the most basic knowledge of the credit union’s finances and understand them. Board members have six months from the date of election or appointment to acquire the required financial skills.
The credit union is tasked with the responsibility of making a policy that provides opportunities to train its directors in a bid to improve their financial knowledge. As a board member, this policy should enable you to receive the training and education you need.
The policy should:
- Provide directors with multiple opportunities and the funding they need to acquire the required skills. Such opportunities for training could be an internal training session within the credit union, job shadowing, or external courses.
- Ensure the education opportunities take into account the credit union’s size in terms of members, total income, and complexity. These opportunities could include alternatives such as training from a trade association, college or university courses, NCUA’s Office of Small Credit Union Initiatives (OSCUI) training programs, and NCUA’s Office of Examination and Insurance (E&I) internet-based training.
Bonus Credit Union Board Member Skills
The more knowledge a credit union director has, the better positioned they are. Other useful skills include:
- Strategic thinking and planning, especially on decisions meant to move the credit union forward.
- Understanding of the laws governing credit unions.
- Marketing mindset.
- Effective communication.
- Able to predict risks and manage them timely.
- Understanding of funds management, lending, and collecting concepts.
OnBoard Powers Effective Credit Union Board Management
The importance of a well-organized credit union board cannot be overemphasized, especially because of its primary role of protecting the members’ financial interests. With the right credit union board management software, board members can perform their duties securely from the comfort of their own homes.
As the only board meeting solution designed with credit unions in mind, hundreds of credit union boardrooms trust OnBoard with their boardroom needs. With eSignatures, Zoom integration, and robust security, board members can collaborate more efficiently, saving time for strategy that benefits the credit union and its members.
Bonus: Our software comes endorsed by many industry-leading organizations and associations, including the Credit Union Executives Society.
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