• Bank executive committees provide specialized guidance to the overall board of directors,meeting room image by Oleg Kulakov from Fotolia.com
  
  The board of directors of each bank is responsible for the bank's safety and soundness. The daily operation of a bank is delegated to the bank's management, which consists of the president and a team of specialized department heads. The board establishes various executive committees that consist of management along with several board members. The main purpose of the committees is to report business issues and make recommendations to the overall board for ratification.
  
  

Asset and Liability Committee

• The ALCO is responsible for the financial direction of the bank.business report image by Christopher Hall from Fotolia.com
  
  The main executive committee is called the asset and liability committee (ALCO) because it steers the business of the bank. The ALCO meets on a monthly basis in order to present reports that detail the income producing and expense generating areas of the bank. The issues discussed and agreed upon range in scope from new types of business products to existing rates and levels of profitability from all operations. The ALCO is also responsible for the formulation and presentation of profitability reports by product and department as well as the budgets and forecasts for the bank. The overall board must ratify their meetings, plans and financial goals.
  
  

Information Technology Committee

• The IT Committee steers the technology of the bank.Computer system motherboard image by Timur Anikin from Fotolia.com
  
  The Information Technology (IT) Committee keeps track of the technology portion of the bank along with specialized budgets and forecast requirements. This area insures that the bank remains competitive with its IT platform. The board must be informed of necessary changes and ratify the minutes of this committee.
  
  

Loan Committee

• The loan committee is responsible for presenting new and renewed loans.sign. loan sale image by L. Shat from Fotolia.com
  
  The loan committee is responsible for presenting the all important loan function, which carries the most profit along with the most risk for a bank. The committee members possess great expertise concerning their specific areas of lending. The various loans for approval must conform to the established profitability margins of the bank. Problem loans must also be presented in order to determine the collectability and classification of the loan, along with recommendations for reserves, if any. The board must directly approve all large loans beyond the lending authority of the loan officers and committee. The minutes of the committee must be ratified by the board.
  
  

Regulatory Compliance

• Banking regulations, rules and laws must be formalized through the executive committee process.law courts image by Peter Helin from Fotolia.com
  
  Separate regulatory and compliance committees must be formalized in order to document the activities and progress of the audit, consumer compliance and bank secrecy act and anti money laundering areas of the bank (BSA/AML). The bank regulators expect each bank to maintain executive committees for these functions that report to the overall board on a monthly basis for ratification.
  
  

Other Committees

• The board of directors of a bank must determine whether other committees are necessary.dining room image by Leonid Nyshko from Fotolia.com
  
  Each bank must determine its own specialized needs. For example, some banks maintain a risk management executive committee in order to evaluate the operational, reputational and financial risks that exist throughout the entire bank. This type of committee is universal in nature and reports directly to the board. Other types of committees may become necessary as a bank expands and offers more products and services.