Is there any requirement that Board members sit on the asset/liability committee of a financial institution?

Funds Management is a primary Committee of the Board, equal to the Audit, Loan, and Executive Committees. I cannot cite a regulation, but there are normally four basic committees, as noted, with additional committees added to support board level activities.

The ALCO Committee can be only management people with that group reporting to the Funds Management Committee on a periodic basis.

Our ALCO is made up of just bank management. It sets rates and earnings credits, reviews new product scenarios, and monitors peer group margin comparisons. Its actions are summarized and reported to the board.

According to the OCC Directors Handbook, there are only two committees required by regulation- the audit committe (for banks over $500 million) whose membership should be only outside directors, and a trust audit committee for banks with trust powers. The Book mentions other committees that are recommended, including the Asset/Liability Committee but does not give any qualifications for membership. I am at a very small, family owned bank and our Investment Committee handles Asset/Liability matters. It is comprised of the entire board (all seven of them-three of them owners) and our Controller. If you're a National Bank, check out the Directors Handbook -- it has a lot of good info.

There is a very good discussion about ALCO membership in the November issue of the ABA Banking Journal (page 22-26).

I don't think there's a requirement, but it sure helps if a few board members are on it, just to keep communication open.