This section is from the "Practical Banking" book, by Albert S. Bolles.
This body is the ultimate governing power of the bank. It is the final jurisdiction, from which there is no appeal within the bank, and in fact there is no appeal whatever, for the only remedy in case of wrong-doing is to punish the trustees personally, and to remove them, which, however, would not act as a reversal of their decisions. They are supreme, and responsible only to the people of the State, through their representative, the Superintendent of the Banking Department. The board of trustees consists of not less than fifteen nor more than twenty members. Under the State law, not less than thirteen is requisite. The board elects to fill its own vacancies occurring by death, resignation, or neglect of duty for six months, and its actions in this respect cannot be questioned if the record is clear.
Seven members of the board constitute a quorum, provided the president, or one of the vice-presidents, be among the number. The entire government of the affairs of the bank, from the most minute \ detail up, is vested in the board of trustees. The powers, which practically are exercised by the executive officers of the bank during the intervals between the sessions of the board, are those delegated to them by the board, as expressed in its by-laws. Some of the duties cannot be delegated. A loan on mortgage can only be made upon vote of the board, based upon the report of the committee. The rate of dividend can only be declared by the board at its annual or semi-annual meeting, and this vote must be recorded by ayes and noes. If a dividend exceeding the accumulated earnings should be declared, it would stand as regards each individual depositor, but the trustees voting for it would be personally liable for the amount of the excess. The election of officers and committees is another duty which must be exercised by the board itself. With these exceptions, the government of the bank is discretionary as to means with the board of trustees, and they may delegate so much of their powers as they desire. It becomes impracticable to do otherwise as regards the routine business of the bank, and the transactions in those investments which are of a less permanent character than upon real estate security. Even the restriction as to loans on mortgage is found a serious inconvenience, and is believed to be systematically disregarded by many banks. Applications are acted upon after examination by a committee, but without previous submission to the board. The more important of the committees usually established in a Savings bank are Finance Committee, the Attending Committee, the Auditing Committee, and the Examining Committee.
The Finance Committee is intermediate between the board of trustees and the treasurer, and considers and acts upon the more important questions which arise in his department.
The Auditing Committee may be regarded as bearing a similar relation to the secretary. It is required by the by-laws to examine and audit the vouchers for all payments. Also to count the cash on hand at least once a month. The process of auditing the vouchers has been described under the secretary's duties. It may be further said, that in so far as the audit is intended as a check upon embezzlement, it should comprise also the cash receipts as well as payments. It should be ascertained whether the receipts have all been fully accounted for. Like all other amateur committees of examination, the proceedings of this committee are almost inevitably perfunctory. They are very seldom thorough—very seldom go to the bottom of the figures which they are supposed to examine. Having ascertained that a certain amount of payment is supported by the proper vouchers, they very seldom even enquire whether this is the entire amount of payment to be accounted for, which simple omission completely destroys all utility of the examination. The officer whose work they are supervising has only to withhold all questionable or improper vouchers from their examination. Such committees seldom take the time necessary for the proper performance of their duties, and seldom possess the ability. They ought, in justice to themselves and to their trust, to employ skilled assistants to point out, at least, the way in which to do their work more thoroughly.
The duty of the Examining Committee is to ascertain the precise condition of the bank at the close of the semi-annual period. An idea of the manner of performance of their duties may be gathered from the description of the schedules furnished them by the secretary as a basis of their examination. One of their number makes up from the figures thus ascertained a report to the board, analyzing the history, results, and prospects of the institution. This committee is also required by law to endorse upon the official report made to the Bank Department their affidavit as to its correctness, so far as the report proper or balance sheet goes.
The Attending Committee. In the infancy of Savings banks, when they were looked upon as charitable institutions, the members of the board of trustees attended in rotation at the bank; but what they did beyond lending a general air of elderly benevolence has never been ascertained. Where this custom is kept up, they almost invariably sign their names in a large book, and this is probably the most important of their functions. Such attendance inevitably degenerates into a farce. In this institution it has been abandoned. All members of the board of trustees are welcome at all times, and even if they were not welcome, it would be their duty to visit the bank, and keep themselves informed. This many of them do, and the more irregular this attendance is in point of time, probably the better it is.