Former Board Chair of Conserved Texas Credit Union Speaks Out
Richard K. Kanipe says he and his former board members were shocked to find out the credit union was conserved.
The former board chair of the $106 million Edinburg Teachers Credit Union said he was shocked when he received a call from Texas regulators that the credit union was conserved, though he dismissed the notion as to whether the former CEO’s extraordinary high compensation had anything to do with it.
“Just because we paid our CEO so much money. That’s ridiculous,” former Edinburg Teachers Board Chair Richard K. Kanipe said when recently reached by CU Times. “I mean, yeah, he made a lot of money, but again, he’s been there over 22 years, and he had opportunities several times to go to big credit unions and he decided to stay here, so we had to pay him to keep him, but we thought he was doing great things for the credit union.”
Although the Texas Credit Union Department said conservatorship for the Edinburg, Texas-based financial cooperative was necessary to protect the public interest, the regulator cited no specific reason – not even the typical unsafe or unsound practices reason – for taking over the credit union. The Texas regulator appointed the NCUA as the conservator on March 26.
While ETCU’s financial performance reports showed the credit union was not struggling financially or losing money, the credit union’s 2019 IRS 990 return showed that its former President/CEO Jeffrey B. Moats was paid a total compensation of $1,611,821, which was four times the median base salary and bonus pay for CEOs across all asset sizes in 2019.
According to the 2020 CUES Executive Compensation Survey, the median base salary and bonus compensation package totaled $412,713 for credit union CEOs across all asset sizes in 2019. Among credit unions that managed assets of $100 million to $199 million, the total CEO compensation amounted to $196,178 in 2020, according to the CUES survey.
What’s more, a CU Times review of Edinburg Teachers’ 990 returns from 2008 to 2019 showed that Moats received $8,799,709 in total compensation. Over those 11 years, that averages out to nearly $800,000 annually.
“He actually brought in a lot of money for the credit union,” Kanipe said. “For one, he’s a financial genius. He knows what he’s doing financially, investment wise. He wasn’t only the CEO, but he was the CFO, and he was in charge of lending, so he wore more than one hat.”
Even though Moats was being paid a high annual wage for years, Kanipe claimed that state examiners never questioned the compensation amount during or after annual audits.
In past years, Kanipe noted that examiners would point out what areas the board needed to address, but there were no major issues.
However, that never happened after the state’s examination last year.
“It went on for weeks and weeks and weeks,” he said. “They [examiners] kept asking for this and asking that, and we’d give it to them. They were just digging, looking for something.”
Kanipe would not say specifically what information examiners were asking for.
He said he found it puzzling the examiners were asking so many questions because the board wasn’t doing anything different from previous years.
Kanipe said he spoke to Moats and the other board members who also said they were shocked that the credit union was conserved. He did not elaborate on those conversations.
Former board members Brian Warren and Dale M Ramos did not return CU Times‘ requests for comment. Efforts to reach former board members Joe L. Cantu Jr. and Moats were unsuccessful.
Kanipe said he joined the credit union 36 years ago and was asked to serve on the board by Moats in 2008. But he said he is not sure whether he will remain a member of Edinburg Teachers.
Texas Credit Union Department Commissioner John J. Kolhoff declined to comment but noted the purpose of the conservatorship is to ensure that member deposits are safe. He added that if the regulatory concerns and other matters are successfully addressed, the credit union will be turned back over to the membership.
Edinburg Teachers serves 12,572 members.
Jane Dobbs, who has worked as a turnaround specialist for other conserved credit unions, is listed as Edinburg Teachers’ CEO, according to the credit union’s current profile report filed with the NCUA.