Robert Morris Associates, the professional association for loan officers and credit risk managers, has released a book advising new community bank directors.
The 64-page book, "The Business of Banking for Bank Directors," ranges from how banks make money to complicated issues like analyzing an interest rate gap report.
"It is not a litany of their legal responsibilities, by any means," said Charles R. Huntington, director of credit and risk management for Philadelphia-based Robert Morris. The aim is "to hit the basics of banking from a director's point of view."
The book was written by the presidents of two bank consulting firms in Massachusetts, George Darling of Darling Consulting Group in Newburyport and James Chaston of Chaston Associates in North Andover.
They say their book differs from publications for directors written by bank regulatory agencies because it focuses on how to perform directors' tasks, not on their responsiblities.
A chapter on regulatory issues warns that the regulatory point of view and stockholders' interests "might be at odds." The chapter explains that though stockholders want asset growth at least equal to growth in capital from earnings, regulators worry when a bank grows too fast, because of the effect on capital ratios.
A chapter on credit issues explains that directors should "seek assurances from senior management that the lending staff has the experience and expertise to underwrite, monitor, and, if necessary, collect the variety of loans offered by your institution."