This latest edition of the directors' handbook, published by the Federal Reserve Bank of Kansas City, is a practical guide for bank directors to help them be more effective supervisors of their banks.

The first chapter details the purposes of regulation, discusses the role of the bank regulatory agencies in achieving these purposes and defines the directors' responsibility for overseeing bank operations. The second chapter addresses bank performance and financial soundness. It discusses topics pertaining to bank capital, asset quality, management, earnings, liquidity, and sensitivity to market risk and presents ideas that directors might find useful in judging the condition and performance of their banks. The last chapter lists additional resources available to directors to help them build more detailed knowledge on bank performance matters.