SunCorp CEO Kenealy Terminated; Reasons Unknown

WESTMINSTER, Colo. – Eric Kenealy, CEO of the $2.9 billion SunCorp Corporate CU for the past five years, has been terminated. Kenealy was surprised by the move. “I am very disappointed. I thought that I had been doing a good job. I believe that I was terminated without good reason,” he said. SunCorp Chairman Darin Moody, CEO of Utah First Federal Credit Union, would not provide any details on what led to Kenealy’s termination. Moody did say however that as far as he knows there was no fraud or misappropriation of funds. The SunCorp Board has created an executive search committee to conduct a nationwide search to find Kenealy’s successor. For now SunCorp Senior Vice President Marc Schieffer will serve as interim CEO. Schieffer joined the corporate only last October, prior to that he was with investment CUSO ALM First, and before that with Southwest Corporate for seven years. Schieffer is known for his investment prowess. Moody said he is excited about the opportunity for growth and said that SunCorp will continue on its current aggressive plan as it conducts a nationwide search for a new CEO. “Growth” and “aggressive” are also two good words to describe SunCorp under Kenealy’s leadership. Kenealy has a reputation for being aggressive and certainly brought that to SunCorp, leading the corporate through two mergers in a span of just 18 months. It acquired the $650 million Rocky Mountain Corporate in Utah in 2001 and the $115 million Nebraska Corporate Central FCU in 2002. Both these deals helped SunCorp move into the upper tier of corporates in terms of assets. SunCorp was about $800 million when Kenealy took over in mid-2000, having more than tripled to $2.9 billion when he was terminated. It is now the eighth largest corporate. One of Kenealy’s stated goals was to turn SunCorp into a regional corporate for the Rocky Mountain/Great Plains region, which he feels he achieved. One prerequisite for being a true regional corporate in Kenealy’s eyes was item processing. The acquisition of Rocky Mountain Corporate brought SunCorp into the item processing business, an area SunCorp was not in. Kenealy believes sending items electronically brought about by Check 21 will give CUs advantages they never had before in payment processing, including earning interest faster on their money. Under Kenealy, the corporate invested heavily in Check 21 technologies. SunCorp’s item processing business appears to be going well. It processes approximately 16 million items a month and is poised to take advantage of electronic image exchange when the big banks finally get up to speed. However, it does have new competition in Utah, one of its core states. It is now going head-to-head with WesCorp, the nation’s largest corporate. WesCorp picked up Utah’s two largest CUs – America First and Mountain America – as item processing clients last year, though SunCorp still provides item processing for almost all of Utah’s CUs. Kenealy was clearly unhappy with how the board made the change. “I have been a corporate credit union guy for 22 years. I feel that the whole thing could have been handled in a more appropriate manner,” he said. Kenealy declined to speculate on what could have led to his termination. Prior to joining SunCorp, Kenealy was with Southwest Corporate for 17 years. There was one black mark during Kenealy’s tenure. It announced last year that it experienced a $5 million loss on available-for-sale securities in `03. This dropped the corporate’s net income to just $12,000, way below its typical net income, which in 2002 for example was $4.8 million. The loss did not affect its short-term debt rating and Kenealy reacted quickly, creating a new risk management department and hiring a respected investment mind in the corporate network in Schieffer. The corporate said the loss was the result of some asset-backed securities it held that were downgraded. And while no one provided any reason on the record as to what prompted the SunCorp board to terminate Kenealy, some sources said there was concern at the corporate that it may have paid too much to acquire its way into the item processing business under Kenealy and that the investment loss played a role. SunCorp’s merger with Rocky Mountain was the move that really jumpstarted the corporate’s item processing business, but it also assumed management of Colorado Colleague Services Corporation item processing center in 2004 and invested further in item processing in Nebraska to begin offering it to its Nebraska members. SunCorp also moved headquarters under Kenealy. Kenealy thought it was important to have key personnel under one roof. It merged its Denver regional operations (spread out among a couple locations) into a new office in Westminster and transformed that into its headquarters. The move also served to consolidate operation of SunCorp’s item processing business. SunCorp has been aggressive right up to the end of Kenealy’s tenure, recently announcing a new online loan participation program and revamping its Investments Department into its new Capital Markets Group, which according to the corporate is going to expand not only investment products, but also loan products to help CUs meet liquidity demand. That group incidentally is being spearheaded by interim CEO Schieffer. [email protected]