Capitol Bancorp is more than willing to wine and dine its directors for the sake of a few good sales leads.

Each quarter, the Lansing, Mich., holding company puts on a reception to honor a member of one of its 12 subsidiary banks' boards. The receptions, held in the director's "home" bank, are used as an opportunity for bank officers to meet prospects-most of whom are invited by the honoree.

If directors "are not routinely providing referrals to management, they don't belong on the board," said Joseph D. Reid, Capitol's chairman and chief executive officer. "If you have a board that comes to meetings once a month, reviews financials, and goes home, you have the wrong people."

Always on the lookout for new customers, community bankers are relying more heavily on their directors. Federal regulators require board members to supervise business decisions made by bank managers, but with competition escalating, community bank executives say boards must be just as concerned to generate business leads.

"There is a higher expectation of board members to serve in a sales capacity at smaller institutions," said Greg Golembe, executive director of the American Association of Bank Directors, Bethesda, Md.

"I think it is an important part of a director's role."

Ed Scharlau, chairman of Busey Bank, Urbana, Ill., said his directors are encouraged to explore new ways for the bank to make money.

"I want board members who are out in the community, looking at what is offered, and saying, 'This is something we should be doing at Busey,'" he said.

He added that directors are required to refer at least one large account-for example a commercial loan of at least $250,000-to the bank each year to keep their board seats.

Even banks not currently involved want to be.

Dale E. Pohlmann, president of Ravenna (Neb.) Bank, said getting directors involved is crucial to developing a sales culture at his $47 million-asset bank. "I don't think that can be limited to our employees. I think it has to flow" up to the board.

For their part, bank directors say they don't mind selling.

Larry Hultgren, a director at United Bank of Iowa, Ida Grove, said one of his primary responsibilities is pitching the bank.

"A person should be very vocal," he said. "There are a lot of different opportunities to promote the bank."

Mr. Hultgren, a John Deere Inc. farm equipment dealer, hands out two business cards on sales calls-one for John Deere and one for the bank. He said this technique has netted the bank several customers.

But bankers said directors must know there is a limit to their power. For example directors at North Salem (Ind.) State Bank are firmly told they may not commit the bank to a loan.

"We don't want to get out on a limb," said John H. Colvin, North Salem's president and chief executive officer. "I have to review everything first."

Regulators say banks should be careful not to turn their boards into marketing departments.

"The single most important job of the directors is to set the direction of the bank, and make sure that management follows the course that has been set," said Christie A. Sciacca, an associate director in the supervision division of the Federal Deposit Insurance Corp.

But Capitol's Mr. Reid insisted that that is only one piece of the puzzle.

"The FDIC only discusses one segment to being a director," he said. "A board is not just there to double-check management, it is there to grow the franchise."

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