Some readers have suggested solutions to a problem I discussed in this column recently: How to decide when a bank director must retire.

Consider this from Charles R. Lusk, president and CEO of Rossville Bank in Georgia.

"Several years ago, our board approved a change in the bylaws of the bank which installed mandatory retirement at age 70 for every board member.

"At the time, our board was loaded with older directors. As a matter of fact, the day we adopted the change, we lost three directors.

"However, we immediately elected each one as director emeritus, cut their board fees in half, and strongly encouraged them to continue attending all board meetings, feeling free to inject their comments at any time.

"Since the adoption of this change, we have had two more directors who have reached the age of 70. At the present time, I have three of my directors emeritus who are regular attendees at every board meeting. As a matter of fact, one of them chairs our audit committee.

"In some ways; our directors welcomed this change. They realized it was time for new blood on the board, and they also realized that they had reached a time in their lives when they wanted to feel comfortable that their personal assets were safe and would not be threatened by any problems at the bank.

"We try to operate a progressive and profitable community bank, and so far have been successful in doing that. We certainly realize the importance of our directors emeritus, and continue to draw on their wealth of knowledge. It has been a very good compromise."

The Function of Directors

Other respondents prefaced their replies with discussions of what function the board should fill.

Some feel it should be the eyes and ears of the bank, responding to management with information directors glean on everything from how long teller lines are on Saturday mornings to whether a company that wants a loan is in financial trouble.

Most CEOs look to the board for judgment calls on credit and other major policies.

Naturally, for board members to be effective in these functions they must be active in the community. That is why many banks want directors who lose their outside responsibilities to leave the board.

Some banks go further, asking for the resignation of directors who move out of town because of work or personal reasons.

One CEO told me he'd had remove the son of the man who had hired him. The family owned lots of the stock, but the bank's policy was that all directors had to live or work in town and be able to help the bank.

Personal Opinions

My column also drew comments about who should be on a bank board.

"Never put an architect on the board," warned one reader, who told the sad story of a bank that did just that. The architect talked the board into putting up a building so costly that bank capital was badly eroded.

In the same vein, "Don't ever, EVER put a lawyer on the board," several readers warned. "All he will do is use the position look for business for his own firm." Similar views have been expressed about insurance people.

The concern is that members who view directorship as a marketing opportunity do not have the bank's interest as their first priority.

What do COEs look for in recruiting board members?

Self-made people, some say - their drive helps them see potential in credit applications from others in the community.

One CEO - who asked not to be identified - went further in support of the self-made. His reasoning: Why kill the golden goose?

He prefers such people, from small firms, because they appreciate the bank's service its quick answer to credit requests.

"This makes them think twice before they vote to sell the bank out to a larger organization," he said. "They question whether the acquirer's management will give them the same type of services their community bank now provides."

What all this adds up to is that CEOs want board members to be assets - marketing resources, advisers, and supporters of management.

There is definitely a time when directors' usefulness declines and termination of service should be mandatory. But long after their business or professional activities have been reduced, directors often retain the stature that attracted the bank.

So community banks have a tougher time than larger ones in deciding who is still useful on the board. Even after retirement or age 75, prominent directors help make a bank look good.

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