Benefits To Board Questioned By Press

Register now

HONOLULU-Benefits received by board members at Hawaii State FCU, including up to seven off-island trips per year and certain reimbursed costs for board spouses and companions, have become the subject of newspaper coverage here.

But the credit union has responded to the coverage by telling Credit Union Journal the benefits are helpful in attracting and retaining quality volunteers.

Among those other benefits for board members of the $1.1-billion HSFCU, detailed in a story broken by reporter Rob Perez of the Honolulu Star-Advertiser, are, in addition to the above, reimbursement of monthly health benefits and the costs of a computer, related items and home Internet access.

President and CEO Deborah Kim, who said management has "no role" in determining the benefits package for the board of directors, which are determined by the board itself. Kim noted the directors "stand for election by the 75,000 members every three years."

Information on benefits provided to the board were obtained from exam reports from regulators, according to the Star-Advertiser. CU Journal asked the credit union to confirm these reports. Kim addressed each benefit, as detailed below:

1. Seven off-island trips per year, including four to the mainland.
Kim: Yes. All off-island trips, whether mainland or interisland, must be used for board member education or for credit union activities. It is also important to point out that not all board members use all the trips each year. That has been true for the past two years during the country's difficult economic times.

2. Payment of hotel, meal and ground transportation expenses for a spouse or companion who accompanies a board member on an official trip.
: Yes, those spouse and companion expenses are paid. It is also true that those expenses are modest compared to the cost of airfare from Hawaii to the mainland. Spouse and companion airfare must be paid by the official.

3. Reimbursement of monthly health insurance premiums.
: Yes, this is part of the director benefit package; however, only two directors use a portion of this reimbursement. Five directors are not receiving any of this reimbursement.

4. Reimbursement of the cost of a computer, printer, ink cartridges and Internet service at the director's home.
: Yes. The directors believe these tools allow them to work more efficiently in the intervals between regular and special meetings and provide easier, better communications."

5. A corporate credit card for each director with a limit of $5,000 per card.
: Yes. The credit card and limit are to be used for CU business and education only.

No 'Standard' For Board Compensation

Dennis Tanimoto, CEO of the Hawaii CU League, said the league does not track "standard" board compensation for credit unions on the islands. "We don't really keep records on this issue," he said. "I don't think all credit unions have the same thing. Hawaii State is $1.2 billion, so they are probably doing things other credit unions are not."

Asked how the package of benefits offered by Hawaii State compares to other credit unions in Hawaii, Kim said no one at her CU would "presume to evaluate the policies of any other credit union benefits package."

"The HSFCU board is comfortable with the current benefits package," she added.

Kim said she has not been contacted by a member or group of members unhappy with the board. She said it is the policy of the credit union to listen to all complaints from members, to investigate and to reply in writing to each complaint within 36 hours.

"The board and management of Hawaii State Federal Credit Union are quite proud of their record on behalf of its more than 75,000 members," Kim said. "The institution's financial performance is strong; the prudent management and protection of assets on behalf of members are excellent and the credit union is healthy and growing.

"The board and management have consistently shown a willingness to hear any issue, whether raised by management, individual directors, members, auditors or regulators," she continued. "The board members and management staff are strong, accomplished, successful people who at times will have real disagreement about what is best for the credit union and its members. Good people differ. The disagreements are worked through and decisions are made. Not every member or employee will agree with every decision or policy. Credit union performance makes a compelling argument that its board members and management staff are strong, accomplished and successful at running a high-performance credit union."

Hawaii State FCU's June 2009 call report shows it reported $8.3 million in net income, even after a $6.5-million NCUA Stabilization Expense.

NCUA Examination Reports Revealed

The Honolulu Star-Advertiser also alleged in its story that NCU exam reports that detailed several alleged conflicts of interest involving HSFCU's board. Among the allegations:

The board formerly used a travel agency owned by the chairperson to purchase airline tickets for official credit union trips, frequently paying prices substantially higher than what the airlines offered through direct purchase.

Directors were accepting free rooms from the Waikiki hotel where the CU held its annual general membership meeting.

Regulators noted that the credit union paid travel expenses of two relatives of the board chairperson because she claimed one relative as her travel companion and another board member claimed the chairperson's brother as that member's companion.

In response to Credit Union Journal's inquiries regarding these allegations, Kim said, "The question relates to the confidential examiner reports and it would be wrong to violate that confidentiality by commenting. When apprised of issues, the board of directors addresses them in meetings and makes decisions to satisfy appropriate parties."

Editor's Note: The original version of this story incorrectly stated that Peter Leong was the current chairman of Hawaii State FCU. Mr. Leong served as chairman from March 2009 through March 2010, and was not the chairman referenced in an NCUA examiner's report identifying potential conflicts related to the board chairman. Beverly Lee is chairman with a term running through March 2011.

For reprint and licensing requests for this article, click here.