SAN DIEGO — Many economic sectors are experiencing job losses, but in an ironic twist of fate, the nation's financial crisis has increased demand for financial executives with experience managing conservatorships.
John Kutchey, deputy director of the NCUA's office of examination and insurance, said federal regulators have been flipping through the Rolodex of possible candidates more frequently these days but said the credit union industry is stocked with more than enough specialists to handle current and anticipated demand.
"We have people from the banking industry and from the credit union industry, often recently retired CEOs and CFOs," Kutchey said. "It's a very time- and labor-intensive process, especially to run a particularly large conservatorship, so we normally don't look to those currently working in industry. It's more than a full-time job, so oftentimes we'll try to grab someone who's recently left the industry, in between jobs, or retired."
Regional directors who oversee the conservatorship ultimately select the CEO, though they do huddle up with Kutchey's staff before making a final selection. Not surprisingly, geography is the first consideration, along with experience specifically related to the struggling institution's problem.
"What we run into frequently are situations that require a specialized skill set," he said. "It's not necessarily the typical CEO skill set you would think of, though we do give those qualities quite a bit of weight as well."
Recent conservatorships have been based largely on credit-risk problems, he said, so the agency has been calling on candidates with financial experience, as well as a good track record managing credit risk.
"So, maybe a senior VP of lending or a CEO from a credit union with a strong business loan program or real estate lending program…you could see how someone with that background could resolve that particular set of problems," he said.
Former California Credit Union League Executive Vice President Matthew Davidson didn't follow the lending path to his current position as CEO of $216 million Valley Credit Union, which he began running after it was put into conservatorship in early September. However, Davidson also has a regulatory background, having served as superintendent of the Ohio Division of Credit Unions from 1988 to 1991. And, he's served in the conservatorship CEO position before at the request of the NCUA.
Davidson agreed that the conservatorship CEO skill set is a specialized one and compared the difference between his position and that of a permanent CEO to an emergency room doctor and a general practitioner.
"There certainly is a need for executives who can analyze a troubled situation, plan a recovery strategy and implement real change to correct the situation," he said. "It does take a certain mindset to make decisions quickly, especially in these economic times."
Davidson said credit unions under conservatorship require extensive balance sheet management, including the ability to maximize asset values quickly; whereas, permanent CEOs focus more on the sales of profitable products and services.
Kutchey agreed, saying the job is intense and requires the CEO to make difficult "save or kill-type decisions." The position is so draining, he said, most take a long vacation at the end of the process.
Financial expertise is important, but people skills are also necessary to quickly stabilize the situation, both internally and externally.
"In the cases that I have worked, staff has been very receptive to new management," Davidson said. "A conservatorship CEO needs to be very open to member contact as some members, especially large depositors, need information. It sounds clich?, but even credit unions under conservatorship are still all about service."
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