LAS VEGAS — Two long-time CEOs of credit unions here abruptly resigned their positions last week: Dan Paulson of WestStar CU and Tony Mook at Cumorah CU.
George Burns, Nevada's financial institutions commissioner, said his office was consulted in both instances, "and we did not object to the actions the boards wanted to take."
"In each of those cases the boards of directors in their own determination did what they felt was in the best interest of their members," Burns said.
NCUA spokesperson John McKechnie emphasized the regulator has not placed WestStar into conservatorship, nor was it directly involved in either decision regarding the resignation of the CEOs.
"WestStar Credit Union is under normal supervision and its board is responsible for all management decisions," he said. Cumorah is state-chartered and privately insured and as a result NCUA has no supervision over the CU.
Steele Hendrix, vice president of Cumorah, is overseeing day-to-day operations following Mook's departure. Hendrix said the CU's board did not ask Mook to resign. "Tony stepped down. It was a mutual decision."
In a prepared statement, Cumorah Board Chairman Kerry Gifford said: "The board regrets Tony's decision to step down. We have enjoyed a rich and rewarding relationship, and appreciate the leadership he has provided Cumorah and its members over the last 19 years."
Gifford was unavailable for further comment at press time.
Hendrix said there was a sense of "shock" when Mook's Oct. 7 resignation was announced to the CU's employees.
"I've been here 15 years and have worked closely with Tony. The staff is taking it very well, but is taking it very well considering the market out there. They just want the best future for the credit union."
As for Hendrix, he said the aftermath of Mook's resignation has included meetings with regulators and with Cumorah's insurer, Dublin, Ohio-based American Share Insurance. "We wanted to make sure the pieces of the organization are in place. We want people to understand their role and we want to make plans for the future. We want to make sure there is a credit union going forward and we have the best options going forward. Merger is one of those options, and we've been looking at that for a while now."
Data compiled by ASI shows Cumorah CU reporting a net loss of $7.3 million through the first two quarters of the year. Cumorah's allowance for loan losses was $8 million on total loans of $136 million. First mortgages totaled $49 million. Year to date loans charged off were $1.3 million, with 96 loans delinquent more than six months for a total of $5 million.The CU posted a net loss of $7.3 million.
Said Hendrix: "We have had problems with real estate loans because of problems in the local housing market. I believe things are starting to improve a little. Based on the sales figures I've seen we might bounce along the bottom a little bit and then improve slowly."
Cumorah's board named Paul Simons, currently the CEO of Credit Union 1, Rantoul, Ill., as its temporary CEO. Simons was expected to arrive at Cumorah on Oct. 15.
Cumorah CU serves members of the Church of Jesus Christ of Latter-day Saints who live in Nevad,a as well as individuals who live or work in the city of Henderson.
During the first half of the year, the $173-million WestStar reported a net loss before NCUSIF stabilization expense of $3.5 million, a stabilization expense of $1.2 million, and a total net loss of $4.7 million. Total delinquent loans were $5.6 million. It remains well-capitalized at 9.95%.
Kelly Cook, marketing manager for WestStar, told Credit Union Journal rumors of mass layoffs of its staff were exaggerated.
"We have had some recent layoffs, but not anywhere near 40% of our employees," she said, referring to one report. "We have no intentions of future layoffs. Our plans are to regroup and see where things take us with our interim CEO. We believe things are moving in the right direction."
Interim CEO Andy Baumann replaced Paulson on Oct. 5. Baumann served as temporary CEO at High Desert FCU in Apple Valley, Calif., after it was placed into conservatorship by NCUA. High Desert eventually was merged into Alaska USA FCU.
Baumann said Paulson resigned before he arrived at the scene, and therefore had few details to add other than being told Paulson left to pursue other interests.
"I'm just here to keep things going and make a few changes while the board goes through the process of making a nationwide CEO search," Baumann told Credit Union Journal. "My first day was Oct. 5, and since then I have had little interaction with most employees but the people I have talked to are stepping up and moving on. The attitude has been virtually unchanged. Today [Oct. 14] was the first day I had to get out and visit branches. I have not been received negatively by any means."
Baumann noted "some downsizing" has taken place at WestStar, but said "that has been ongoing all year. We need to make sure we have the right people in the right spots. I'm not anticipating more layoffs, and we might be looking to hire some people in specialized areas."
Among Baumann's list of tasks at WestStar: he wants to reduce its delinquent loans and loan losses, he foresees a continuation of efforts to cross-train the staff, and he and the management team are working on strategic plans. He said the goal is to have a strategic plan in place when the new CEO arrives. "Instead of having to create something from the beginning, the new CEO can make some modifications. We just want to make things as smooth as possible."
There is no specific timeframe for the CEO search, Baumann said. He noted such endeavors usually slow around the holiday time, so Baumann expects to be at WestStar for approximately three to four months.
WestStar opened for business on Oct. 17, 1975, as Howard Hughes Employees' Federal Credit Union. Just three years later it changed its name to Summa Employees' FCU. Over the years more casinos became affiliated, until its field of membership expanded to include anyone directly employed or contracted within the gaming industry and their family members. In 1989 it became WestStar Federal Credit Union, and in 1997 it switched to a state charter and the official name: WestStar CU, The Gaming Employees' Credit Union.
Well-Known CEOs
Paulson and Mook are two of the better known CEOs in the movement. Both served two terms as chairman of the Nevada CU League: Paulson in 2007 and 2008, and Mook in 2003 and 2004.
Paulson joined WestStar CU as president and CEO in 1997. Prior to that, he worked at North Island CU in San Diego, Calif., and Nevada Federal Credit Union. His first credit union job was with a small CU in Eugene, Ore., in 1974.
Mook arrived at Cumorah in 1990, and helped build the $30 million CU into $157 million today. He began his career at America First CU in Utah in 1976, followed by a stint at GoldenWest CU, also in Utah.
Mark Andrews, VP of sales and marketing for Clark County Credit Union, which shares the Las Vegas market with both WestStar and Cumorah, said, "Obviously, we hate to see long-time entities that have been clear thinkers depart the credit union industry."
Asked if the tumult at the two CUs was having an effect on CCCU, Andrews said, "No one has been rushing in with deposits. Perhaps people in Las Vegas have become numb with all the bad things going on, so the CEO of their favorite credit union being out doesn't affect them. Then again, with all the things going on at both credit unions and banks, where would they go?"
