A director is not expected to be an accountant. You are expected to be able to look at the accounts and know whether the institution you govern is getting stronger or weaker. That takes five numbers and an understanding of what each one is really asking.
What share of the loan book is not being repaid on time. Under 5 percent is healthy in this sector. Between 5 and 10 is a warning. Above 10, the institution is losing money on lending and every other conversation is secondary. Ask how it is calculated, because institutions define it differently, and a number that moved when the definition changed is not a number you can govern by.
The provision is the money set aside for loans expected to fail. Compare it to the arrears figure. If the board is provisioning far less than its own arrears suggest, the surplus reported this year is being borrowed from next year, and the accounts are flattering you.
What share of member savings could be paid out this month if enough members asked. Under 15 percent is fragile, and it is the number that triggers a run. This one matters more than profitability in a savings institution, because a liquidity failure is public and fast, whereas a profitability failure is slow and can be managed.
A single balance sheet is a photograph. What the board needs is the same four or five figures, side by side, for the last twelve months. Almost every institutional collapse I have examined looked survivable in any single month and obvious across the year.
How much room the institution has before it breaches. The gap, not the ratio, is what tells you how much time you have to fix a problem.
A board that asks those five questions every quarter is governing the institution. A board that receives a 40 page pack and approves it is attending a meeting.
Ten questions, fifteen minutes, and a score with the first action your board should take.