Today’s Board Essentials

Serving as a bank director could lead to personal liability. The potential for this increases when directors don’t understand the fiduciary duties they owe to the bank, shareholders, and customers – especially the duties of loyalty and of care. Furthermore, bank directors are held to high standards of professional conduct, which require them to make reasonable business decisions on a fully informed basis after proper deliberation. This session will fully explain bank directors’ duties of loyalty and care and the reasonable business judgment rules to help protect directors from personal liability. It will also provide real-world examples of when directors have been held personally liable for a breach of duty.

Regulation O imposes many restrictions on loans made to a bank’s directors and their related interests. Since preferential treatment of directors is prohibited, a loan to a director (or the director’s related interests) must be based on the same terms and underwriting criteria as loans to other customers. Moreover, a loan to a director must satisfy even higher standards. These loans must be specifically approved in advance by a majority of the entire board, and the interested director must abstain. In addition, the aggregate amount of loans to a director and their related interests is strictly limited. Regulators are quick to impose large civil monetary penalties for any Reg O violation, so it is imperative that all directors understand its requirements and limitations.

The BSA/AML/OFAC program is one of the most important and high-risk functions at your bank. Did you realize that directors are ultimately liable and responsible for compliance with the Bank Secrecy Act (BSA), the Anti-Money Laundering (AML) Act, and the Office of Foreign Assets Control (OFAC)? Learn what directors need to know about BSA/AML/OFAC and how they can satisfy their supervisory role and ensure your bank complies with these requirements.

Banks operate in a highly regulated industry filled with inherent risk. To mitigate that risk, banks are required to develop and maintain a sound compliance management system that is integrated into their overall risk management strategy. The bank’s board is ultimately responsible for developing and administering this compliance management system to ensure adherence to all laws and regulations. This module will explain how the board can satisfy its responsibilities.

Fair lending is the consistent, objective, unbiased treatment of all consumers without regard to any basis prohibited by law (i.e., race, color, religion, national origin, sex, age, marital status, etc.). Recent legal changes now impose additional obligations on banks related to small business and minority- and women-owned businesses. Further, banks have started to integrate artificial intelligence (AI) into their lending processes. Learn more about the current issues in fair lending, the changing regulatory environment, and how your bank can defend against discrimination claims.

The board is expected to monitor and maintain sufficient awareness of cyber security threats and how your bank should respond if a cyber incident results in unauthorized access to sensitive consumer information. Learn what your bank should be doing to protect against a cyberattack, what to do if you have a cyberattack, and what should be contained in your bank’s cyber incident response plan.

Recently, banks that offer incentive-based compensation have come under scrutiny from regulators. Learn what constitutes incentive-based compensation and about recently proposed federal regulations restricting incentive-based compensation arrangements, including prohibitions on providing executive officers with excessive compensation or benefits. Also learn about requirements for recordkeeping, policies and procedures, risk management, and governance.

Community banks are increasingly partnering with technology service providers to offer additional products and services to their customers. However, there are many risks associated with technology outsourcing and regulators expect banks to have certain processes and procedures in place when partnering with these technology service providers, including appropriate due diligence, required information gathering, and appropriate service contract provisions. Learn about recent regulatory guidance as well as actions your bank should take when partnering with a technology service provider.

Strategic and succession planning have been a big source of focus for regulators – and banks are expected to have both. Learn what each of these plans are, what they entail, why they are important, and how to implement them.