Another CEO of Converting CU Leaves Post Soon After Conversion

PLANO, Texas – There may be few CEO jobs in the credit union industry more at risk than that of CEO of a credit union that converts to a mutual bank charter. Out of the 21 credit unions which have either converted or almost finished the conversion process (as opposed to merging with mutual banks), 19% of CEOs have left their positions, often not long after having completed the conversion. Less than a year after leading the $150 million Share Plus Federal Credit Union to convert its charter to Share Plus Federal Bank, CEO D. Craig Barnes, has left the institution, according to a member of the bank’s staff. The bank did not return calls, so no details about Barnes’ move were available at press time. Share Plus ceased to be a credit union and began life as a mutual bank on October 1, 2004. Barnes is the fourth CEO of a converted bank to leave his post, joining Mark LeCain, the CEO of Sunshine State FCU who left after his members approved the conversion but before the regulatory agencies finalized it; Ronald Blankenship, whose First Security Bank of Washington (formerly Washington’s Credit Union) let him go within a year of conversion, and Lee Bettis, the CEO of Heritage Bank of the South, the former CEO of AGE FCU, retired relatively soon after the conversion. Bettis, who now serves as the executive director of the Coalition for Credit Union Charter Options, an organization which includes former credit union CEOs and which favors the switch to the bank charter, stressed that he doesn’t have any idea why the other CEOs might have left their banks. But in his case he said that it was a mixture of retirement approaching and a difference in vision with his board about where the bank should go post-conversion. “I was 62 then and getting ready to retire anyway,” Bettis said. “The board and I had already put together my retirement package and I had already built the home I wanted to live in after the retirement. But I also pretty strongly believed we needed to merge to expand the bank’s range into a growth market and the board didn’t feel comfortable going there yet.” Bettis said Heritage, which is based in Albany, Georgia, had been involved in merger talks with another credit union that had become a bank, Atlantic Coast Federal, in Waycross, Georgia. “Heritage needed to get into a growth market and Albany is not a growth market,” Bettis said. When it became clear that the former credit union’s board was not interested in pursuing the growth options that he believed the bank needed, Bettis said, “There really wasn’t much of a reason for me to keep going.” Richard Garabedian, a partner in the Washington, D.C. law firm of Luse Gorman Pomerenk & Schick, whose firm advises credit unions on converting to mutual banks and mutual banks on forming mutual holding companies, noted that boards and CEOs can sometimes have conflicting visions after an institution converts and that there can even be a sense of disappointment if the reality of being a bank doesn’t measure up with the expectation the board might have had about becoming a bank. “Look, boards get proposals for converting charters that contain certain information and based on that information they make a decision,” Garabedian said. “Maybe if reality doesn’t meet the expectation, they might be upset about that.” Before his departure, Barnes became a member of the ABA’s Mutual Council and had been profiled in Community Banker, the magazine published by America’s Community Bankers. Alan Theriault, consultant with CU Financial Services whose firm had helped three of the four credit unions to convert to banks pointed out that in two of the four cases the CEOs had been interested in retiring prior to the charter change and had only stayed on to help move the institution forward. “I think they would have departed had the credit unions remained credit unions,” Theriault said. He also suggested that some credit union CEOs might be losing their jobs because they are not as open to charter change as their boards of directors wish they would be. -