John “Bernie” Winne, 66, is one of many credit union and community bank CEOs who postponed retirement during the pandemic because they didn’t want to leave in a time of need.
Winne, the president and CEO of Boston Firefighters Credit Union in Dorchester, Massachusetts, now
“We had no idea in the late spring and early summer of 2020 how this was going to play out,” Winne said. “Many of us had granted millions of dollars in forbearance requests to help our members weather the storm, and there was credible doubt about the long-term viability of many of those loans.”
Many CEOs did not want to leave their boards in the difficult position of trying to hire their replacement during a global pandemic, said Dennis Dollar, a credit union consultant and a former National Credit Union Administration chairman.
Now that some semblance of normalcy has returned and applicants can actually travel for interviews, the pace of retirements has picked up in the last half of 2021 and should be “quite brisk” in 2022 and 2023, Dollar said.
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Among credit unions, 40% of CEOs have reached retirement age in the past five years, according to the Credit Union Executives Society.
“These are folks that have built the movement and their respective credit unions and now are looking at the next generation of leaders to help the next generation of members,” said Vincent Hui, managing director at Cornerstone Advisors.
COVID accelerated changes in the economy and consumer behavior that demand adaptations in financial services, and those moves may best be handled by new leaders. For example, going digital is a long-term effort, so it may be a good time to transfer leadership to the next generation to take it forward, Hui said.
Yet the transition process could be bumpy.
Like all areas of hiring today, executive recruitment is being hurt by supply and demand, so executives are going to be harder to find, harder to retain and harder to replace, Dollar said.
“The result will be higher salaries and, particularly, more robust benefit plans … that are lucrative but have golden-handcuff provisions in an attempt to hold and retain quality executive talent,” Dollar said.
Hui warned, too, that succession planning is inconsistent as some boards are proactive while some scramble once CEOs let them know they are retiring.
“Oftentimes, the other execs on the management team are of the same generation as the CEO, so there are issues across multiple roles. However, this does open opportunities for the next generation of credit union leaders,” he said.
John Cassidy announced in November that he will retire as CEO of Sierra Central Credit Union in Yuba City, California, effective Jan. 15. The $1.4 billion-asset credit union said that its president, Ron Sweeney, will become the next CEO.
Cassidy, 61,
Also, Sierra Central had a CEO-in-waiting who has been there for a while and can maintain the organization’s trajectory.
“He and I have been in sync for 22 years,” Cassidy said of Sweeney, 58. “Although we look at things differently, we end up a lot of times coming out with the same thoughts.”
Cassidy said it is hard to bring in a CEO from another organization and keep things on track.
“I’m a big believer that CEOs and politicians stay on too long,” he said. “Eventually it’s time for a change.”
Small-bank leaders face the additional challenge of having to eke out earnings growth quarter to quarter.
The winding down of the Paycheck Protection Program, which gave fee income a temporary jolt, will only add to that strain, said Michael Jamesson, a principal at the community bank consulting firm Jamesson Associates.
“You can’t discount the fact that CEOs may want to leave at the top rather than stick around for a few tough years of earnings comparisons,” he said.
Mike Pollock, president and CEO of the $448 million-asset Fulton Savings Bank in Fulton, New York, said many community bank CEOs are under pressure to produce earnings, and with spreads tightening and fee income disappearing that will only get worse.
“It sure looks like it could be more difficult going forward,” he said. “I’m sure some people are wondering if they can navigate through this. Our earnings will be very good this year, but going into next year and beyond it’s going to be difficult to say how that’s all going to work out.”
Pollock, 67, is retiring Dec. 31. He went longer than he planned because of the pandemic and Fulton wants to find a new leader who will ensure the bank remains independent. It has not yet named Pollock’s successor.
Bruce Kershner, president of Kershner & Co., an executive search firm focused on financial institutions, said the pandemic has created new expectations among candidates for executive posts. People have gotten used to and enjoy working from home, he said, but community banks want their executive team to live in and around the communities they serve.
“As you can imagine, this is becoming a dilemma, especially for institutions located in more rural or out-of-the-way locations,” Kershner said. “Most of my clients have not yet embraced the idea of having their CFO or CIO working from home, which I believe is the way of the future.”
That said, many executives who have stayed past retirement don’t want to wait any longer.
The strong performance of the stock market since April of 2020 and its positive impact on retirement plans such as 401(k)s and 457s made retirement more inviting, Winne said.
“This cannot be ignored as the wealth effect from stock and real estate holdings has significantly increased the personal balance sheets of many executives,” he said.
Winne said it has been a long two years, and many CEOs re-engineered their business models from largely in-person to significantly remote and are now wrestling with a work-from-home culture and how to make that succeed on a more permanent basis.
Even with the best plans and the best interests of employees in mind, the current workplace is increasingly difficult, and competition for talent is fierce, he said.
“Many CEOs and other occupants of C-suite offices are just tired,” Winne said.
