Regulator Downplays Worries Over Inexperienced CEO

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Both the Utah Department of Financial Institutions and Newspaper Employees CU here are downplaying concerns raised by several members and/or employees of the $10-million CU over the hiring of a woman with no formal bank or credit union experience to become its new CEO.

"We believe this was stirred up by a few people who were upset that the job didn't go to one of our employees who has been there for eight years," said Board Chairman Arlen Peacock, who noted the primary reason the hiring of Pam Wagstaff made the news is because the credit union serves newspaper employees. In fact, the local reporter who broke the story is a member of the credit union herself.

"[The reporter] asked me a whole lot of questions, and yet not one of my statements was used in the story. Apparently, they were only interested in slinging dirt," Peacock commented. "She's been a good member of the credit union. We were surprised she got hooked up in this."

While both Peacock and the credit union's retiring CEO, Pat Marcusen, expressed full confidence in Wagstaff's abilities, the outgoing CEO has offered a guarantee of sorts to the credit union's board. "Pam Wagstaff starts on Oct. 18, and I'm here until the middle of January. I am very comfortable with her, and I will work with her to ensure she has the knowledge of how this credit union works before I leave," Marcusen told The Credit Union Journal. "If I'm not entirely comfortable with that, I'm not leaving. I've been with this credit union for 25 years, and I love this credit union, and I'm not leaving if I have any concerns. But I don't have any reason to believe that she will not be ready to take over come January."

Marcusen suggested the flap over the hiring of Wagstaff, who previously worked in the credit department of the Newspaper Agency Corp. (one of NECU's sponsor companies), was nothing more than "sour grapes" among some "misguided people who thought they were helping someone."

While the DFI does have concerns about the changing of the guard at NECU, they are no different from the same general concern the regulator shows for any credit union-particularly a small credit union-when a long-time CEO leaves, according to CU Supervisor Orla Beth Peck.

"When the manager leaves, particularly at a small credit union, it's kind of a crisis time for them, especially if they haven't really planned in advance," she said. "We always monitor a credit union when there's been a change in management. We're usually aware of who might be planning to retire. I knew the CEO [at NECU] was looking to retire, but not this soon. Often, the credit union calls us to let us know, and our examiners, when they see a CEO looking to retire in the next five years, put that in their report. Sometimes the first I find out about it is when I see the Call Report is being filed by someone else."

The real issue isn't what is specifically happening at NECU but rather a trend that is happening across the country. With aging baby boomers nearing retirement age, credit unions are facing a massive changing of the guard over the next five to 10 years. At smaller CUs, this can mean the difference between a healthy credit union continuing on, or choosing to merge with another credit union-or even liquidation.

"If they're not planning for [the CEO's departure], it can be a real problem. And in a lot of cases you may have a sponsor who is not as supportive as it used to be. Where maybe they used to allow one of their employees to run the credit union part time and they used to let the credit union use space at their site, well, a lot of that has changed. And if the credit union doesn't have the resources to go out on its own and they can't replace the manager, that is a primary factor in voluntary mergers nationwide," Peck suggested. "It is not our place as regulators to prevent them from merging. We can't help them hire people, we can't run the credit union for them. We ask them if they're prepared [for the CEO's departure] and they think they are, but when the time comes, sometimes they discover they are not as prepared as they thought they were."

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