The study results are intriguing. Organizations that scored higher in the area of board risk oversight also had higher tier 1 capital than those with low scores.
Chicago, IL (PRWEB) September 20, 2012
In a community bank study commissioned by Baker Tilly and performed by Integrated Governance Solutions, respondents indicated that while their boards are well-informed, they also believe many of these same boards lack the necessary aptitude or experience to put critical information to use. This paradox is just one finding from a recently completed study of community bank governance norms.
1) 74% of study participants rated their bank’s board “strong” or “moderately strong” when it came to being informed of organization health and the monitoring of organization practices.
o Participants said board members demonstrate a clear understanding of their legal and fiduciary duties, and that the board receives a reliable, integrated, and holistic view of enterprise health from management.
2) 2.5 out of a 5 point scale was the overall average rating (moderately weak) respondents gave for their board’s recruiting, orientation, training, and tenure/removal processes.
o Study participants gave their banks low grades when it came to board member recruiting, orientation, and training.
o Director tenure was rated lowest – specifically, director assessment and removal.
3) There is a clear correlation between the objective monitoring of bank practices and financial returns.
o Survey data shows banks that rated highly their monitoring information and reliability of their monitoring system also had a higher pre-tax Return on Equity than other participants in the study.
“The study results are intriguing. Organizations that scored higher in the area of board risk oversight also had higher Tier 1 Capital than those with low scores,” said Tim Kosiek, CPA and Financial Services Partner with Baker Tilly.
“Community bank boards have been given the task to steer the ship in the midst of a major storm. It is important that they are equipped for their new responsibilities and are prepared to thrive in this challenging economic and regulatory environment. This study provides insights into just where their focus needs to be,” said Bill Bojan, CEO and Founder of Integrated Governance Solutions.
This study was conducted from April 1 to June 30, 2012. 23 banks in the upper Midwest, with assets ranging from $30 million to over $4.5 billion, completed a 28-question, online assessment regarding their board governance practices.
Respondents consisted of board members and senior management, of which 56% were bank CEOs, presidents, and chief financial officers.
About Baker Tilly
With more than 1,400 employees, Baker Tilly provides a wide range of accounting, tax, and advisory services. Ranked as one of the top 20 largest firms in the country*, Baker Tilly serves clients from offices in Chicago, Detroit, Minneapolis, New York, Washington DC, and throughout Wisconsin.
Baker Tilly is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 125 countries, with more than 24,000 professionals. The combined worldwide revenue of independent member firms exceeds $3 billion.
About Integrated Governance Solutions
Integrated Governance Solutions was founded in 2008 with the mission of establishing a standard for corporate governance. Its Solomon365™ equipping platform is a cloud-based system that provides guided or self-administered assessments and tools for continuous monitoring and improvement.