John “Bernie” Winne, 66, is one of many CEOs of credit unions and community banks who have postponed their retirement during the pandemic because they did not want to leave when needed.
Winne, president and CEO of the Boston Firefighters Credit Union in Dorchester, Massachusetts, now plans to retire next year after spending four decades in the credit union industry. The last 20 of them were at the head of the BFCU asset of $ 394 million.
âWe had no idea in late spring and early summer 2020 how this was going to play out,â said Winne. “Many of us had granted millions of dollars in forbearance requests to help our members weather the storm, and there was credible doubt as to the long-term viability of many of these loans.”
Many CEOs didn’t 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 past president of the National Credit Union Administration.
Now that a semblance of normalcy has returned and applicants can actually travel for interviews, the pace of retirements has accelerated in the last semester of 2021 and is expected to be “quite rapid” in 2022 and 2023, a declared Dollar.
The wave was inevitable given the aging of the American workforce, especially in the management ranks. Intense cost, regulatory and technology pressures on all banks and credit unions only add to the reasons seasoned CEOs say they have had enough, experts said.
Among credit unions, 40% of CEOs have reached retirement age in the past five years, according to the Credit Union Executives Society.
âThese are the people who built the movement and their respective credit unions and are now looking to the next generation of leaders to help the next generation of members,â said Vincent Hui, CEO of Cornerstone Advisors.
COVID has accelerated changes in the economy and in consumer behavior that require adaptations in financial services, and these movements can be better managed by new leaders. For example, going digital is a long-term endeavor, so maybe now is a good time to transfer leadership to the next generation to take it forward, Hui said.
Still, the transition process could be bumpy.
Like all areas of hiring today, executive hiring is affected by supply and demand, so executives are going to be harder to find, harder to retain and harder to replace, said Dollar.
âThe result will be higher wages and, in particular, more robust benefit plansâ¦
Hui also warned that succession planning is inconsistent as some boards are proactive while others scramble once CEOs let them know they are retiring.
âA lot of times the other executives on the leadership team are the same generation as the CEO, so there are issues for multiple roles. However, this opens up opportunities for the next generation of credit union leaders, âhe said.
John Cassidy announced in November that he would retire as CEO of Sierra Central Credit Union in Yuba City, Calif., Effective January 15. The $ 1.4 billion-asset credit union has said its chairman Ron Sweeney will become the next CEO.
Cassidy, 61, has been the general manager of the credit union since 2000 after spending 15 years at the Great Western Bank in California. He said that, like many of his peers, he had done all he could in the credit union business.
Additionally, Sierra Central had a pending CEO who has been there for a while who can keep the organization on course.
âHe and I have been in sync for 22 years,â Cassidy said of Sweeney, 58. “Although we see it differently, we often end up having the same thoughts.”
Cassidy said it was difficult to bring in a CEO from another organization and keep things on track.
âI firmly believe that CEOs and politicians stay too long,â he said. âFinally, it’s time for a change. “
Small bank executives face the added challenge of maintaining quarter-over-quarter earnings growth.
The end of the paycheck protection program, which gave a temporary blow to fee income, will only add to that tension, said Michael Jamesson, director of community banking consultancy Jamesson Associates.
âYou can’t ignore the fact that CEOs may want to stay on top rather than stick around for a few tough years of profit benchmarking,â he said.
Mike Pollock, chairman and CEO of Fulton Savings Bank, a $ 448 million asset in Fulton, New York, said many community bank CEOs are under pressure to generate profits, and with spreads tightening and disappearing commission income will only get worse.
âIt looks like it could be more difficult in the future,â he said. âI’m sure some people are wondering if they can navigate this. Our earnings will be very good this year, but until next year and beyond, it will be difficult to say how it will all play out.
Pollock, 67, is retiring on December 31. He’s gone longer than expected due to the pandemic and Fulton wants to find a new leader who will ensure the bank remains independent. He has yet to name Pollock’s successor.
Bruce Kershner, chairman of Kershner & Co., an executive search firm specializing in financial institutions, said the pandemic has created new expectations among candidates for leadership positions. People have become used to and enjoy working from home, he said, but community banks want their leadership team to live in and around the communities they serve.
âAs you can imagine, this becomes a dilemma, especially for institutions located in more rural or remote locations,â Kershner said. âMost of my clients have yet to embrace the idea of ââhaving their CFO or CIO work from home, which I think is the way of the future. “
However, many executives who have stayed on after retirement are unwilling to wait.
The strong performance of the stock market since April 2020 and its positive impact on pension plans such as the 401 (k) and 457 have made retirement more attractive, Winne said.
âThis cannot be ignored because the wealth effect of stocks and real estate holdings has dramatically increased the personal balance sheets of many executives,â he said.
Winne said it had lasted two long years, and many CEOs had rethought their business models, going from a large part in person to a significantly distant distance. .
Even with the best plans and the best interests of the employees in mind, today’s workplace is getting tougher and the competition for talent is fierce, he said.
âA lot of CEOs and other office occupants in the C Suite are just plain tired,â said Winne.