By Debra Cope
This is the cover story of the September-October 2026 Directors Briefing, now a free benefit for ABA member banks. To receive future issues, sign up at aba.com/directorsbriefing and use your bank email address.
Just 39% of respondents conduct annual board assessments, according to Bank Director’s 2026 Governance Best Practices Survey. Among those boards, however, 59% said the process led to changes in strategy, governance practices or board structure. The most common changes included revisiting the strategic plan (56%), changing meeting agendas (51%) and restructuring board committees (51%).
For George Hermann, executive chairman of Windsor Federal Bank, the annual evaluation has become an important governance tool.
“The evaluation is the catalyst that has allowed us to openly and candidly discuss what is working and what is not at the board level,” he says.
Each director completes an anonymous electronic survey that includes quantitative ratings and written comments. The results are summarized and discussed in executive session, creating an opportunity for frank conversations that Hermann says have led to numerous changes over time.
“As a result of these discussions, we have made a number of changes, and the board has evolved into a much more effective body,” he says. “The process is fluid and we have become more self-aware as a group as to what has improved and what needs to continue to evolve.”
The survey suggests many boards are making similar adjustments beyond the evaluation process. Since January 2025, majorities have updated policies, reporting or oversight related to liquidity planning (64%), asset quality and credit monitoring (61%), asset/liability management (60%), capital planning (55%), Bank Secrecy Act/anti-money laundering compliance (56%) and the use of artificial intelligence (60%).
Respondents also identified opportunities to strengthen governance through strategic planning. Nearly half (44%) said they would like better measurement and monitoring against strategic goals, while 39% want a greater understanding of the banking industry’s future. Others cited a need for more creative thinking and debate (34%), stronger competitive analysis or benchmarking (33%), deeper input from the board (27%) and greater consideration of talent (18%).
Neil Stevens, president and CEO of Oconee State Bank, says one of his board’s biggest improvements has been sharpening its focus.
Board meetings that once lasted four or five hours now typically run between 45 and 90 minutes because more detailed work takes place in committees.
“We do most of the heavy lifting in our committees,” Stevens says. “That way the board session is more focused.”
The bank has also become more deliberate about recruiting directors with expertise the board lacks and spends time reinforcing the distinction between governance and management.
“We’ve culled down to the needle-moving items that the board needs to challenge or govern,” Stevens says. “We used to get into lots of minutiae” that is more appropriately left to the CEO, he added.
The survey points to another challenge for governance committees: board succession. Fifty-seven percent of respondents expect one or two directors to retire through 2027. Yet most boards continue to recruit primarily through directors’ personal and professional networks (83%) and executives’ networks (70%), while only 9% use consultants or search firms.
At the same time, boards are becoming more intentional about the expertise they recruit. Forty-four percent now report having directors with mergers and acquisitions expertise, up 10 percentage points from last year’s survey, while 21% say their board includes a director with artificial intelligence expertise.
Questions to ask in the boardroom
- When was our last board assessment, and what specific governance changes resulted from it?
- Does our board spend enough time on strategic oversight, or are meetings still dominated by management-level detail?
- Have we updated our committee structure, reporting or board agenda to reflect the bank’s current risks and priorities?
- As directors retire, what skills and experience will our board need over the next three to five years?
- Are we recruiting new directors broadly enough to meet those future governance needs, or are we relying too heavily on existing personal networks?
