Average CEO Compensation at Large State Chartered CUs Tops $1 Million for Fifth Consecutive Year

The average compensation for Chief Executives at large state chartered credit unions with at least $1 billion in assets was $1,030,696 for 2018. This is the fifth consecutive year were the average compensation topped $1 million.

The median total compensation for 2018 was almost $838,372.

Total compensation includes base salary, bonus and incentives, other reportable income, retirement and deferred compensation, and nontaxable benefits.

Compensation information was obtained from Schedule J of Form 990s filed by state chartered credit unions with at least $1 billion in assets.

At the time this blog post was written, Form 990s for 2018 were not available for the following credit unions -- Municipal Credit Union (NY), Canvas Credit Union (CO), Rogue Credit Union (OR), and Cobalt Credit Union (IA).

Self-Help Credit Union (NC) filed a Form 990, but did not publish Schedule J.

Sixty-two CEOs reported total compensation of at least $1 million. The following table lists the 10 highest compensated large state chartered credit union CEOs.

Mean and median base compensation was $552,498 and $525,599, respectively. Seven CEOs had a base pay in excess of $1 million.

Mean and median incentives and bonuses were $172,853 and $118,419, respectively. Most large state chartered CU CEOs received some sort of incentive or bonus compensation.

Compensation information for CEOs at federal credit unions was not available as federal credit unions are not required to file Form 990s.

Corrections and Amplifications:

The Form 990 for Patelco Credit Union had an error. It was reported that Erin Mendez had a total compensation for 2018 of $2,470,580. The corrected total compensation for 2018 was $916,565. The error arose from the inclusion of Mr. Mendez's unvested 457(f) plan.
This blog post had earlier stated that 63 CEOs had total compensation of at least $1 million.
An earlier version reported that the base salary for University of Wisconsin CU's Paul Kundert was $1,915,557, which was the correct amount in Schedule J Part II B(1). However, it has been brought to the attention of this blogger that the narrative for Schedule J Part III included a deferred compensation payment in the amount of $1,317,000 in the $1,915,557 figure. Therefore, his base salary was $598,557.

Two Georgia CUs in Process of Defecting from Federal Charter

Marshland Community Federal Credit Union (Brunswick, GA) and Interstate Unlimited Federal Credit Union (Jesup, GA) are seeking to convert to state charters.

Marshland Community FCU primary objective in seeking a state charter is to enhance the credit union’s potential for growth. As a state charter, the credit union will be able to extend membership to more people beyond the current areas served by the credit union. Also the change in charter will position the credit union to offer new products and services, improve convenience and potentially open new branches in the future.

The Georgia Department of Banking and Finance approved the charter conversion on May 28.

The credit union is encouraging members to turn in their ballots on the charter conversion no later than July 16.

Marshland Community FCU has $154 million in assets, as of its most recent call report.

Interstate Unlimited FCU stated that the change in charter would better position the credit union to grow and to serve people that they currently could not.

The credit union stated that the conversion would cost approximately $20,000.

The credit union will hold a virtual special meeting on July 27.

Interstate Unlimited FCU has almost $196 million in assets, as of the end of March 2020.

Read more about Marshland's conversion.

Read more about Interstate Unlimited's conversion.

BankBeat Publisher: Time Is Right for A Serious Fight Against CUs

Tom Bengston, the publisher of BankBeat, wrote on December 16 that the time is right for a serious fight against credit unions.

He argues that in states where the credit union charter is more liberal than the federal charter, banker advocacy efforts should seek to rollback these state charters putting them on a par with the federal charter.

Second, Bengston states that "bankers in all states should work to level the taxation playing field for smaller institutions." But instead of taxing all credit unions, Bengston advocates banker efforts should focus on exempting smaller banks from taxation.

Finally, he proposes that the net income of larger credit unions should be subject to taxation. He notes that this would place these large credit unions on equal footing with large banks. Bengston suggests that the line for larger credit unions could be drawn at $500 million or $1 billion in assets.

Read the article.

Iowa Lawmakers Discuss Taxing CUs at State Level

State lawmakers highlighted the challenges of taxing credit unions at the state level at a banker convention.

According to BankBeat, a panel of lawmakers at the recent Iowa Bankers Association Annual Convention pointed out that state chartered credit unions could switch to a federal charter, if taxed at the state level.

The Federal Credit Union Act exempts federal credit unions from all state and local taxes, except property taxes.

Lee Hein, chairman of the House Ways and Means Committee, stated: "Credit unions have options. They can move to a federal charter, so that makes taxing credit unions not such an obvious solution."

Gary Carlson, chairman of the House Commerce Committee, commented: "If they all go to a federal charter, we do not achieve our goal of leveling the competitive playing field."

While I think the threat of switching charters for Iowa credit unions are overblown because the state charter is more liberal than the federal charter, this perceived threat shows that Congress needs to solve this issue.

Read more.

Average CEO Compensation at Large State Chartered CUs Was $1.16 Million for 2017

The average total compensation for CEOs at large state chartered credit unions with at least $1 billion in assets was $1.16 million for 2017. This is the fourth consecutive year were the average compensation topped $1 million.

The median total compensation for 2017 was almost $803 thousand.

Total compensation includes base salary, bonus and incentives, other reportable income, retirement and deferred compensation, and nontaxable benefits.

Compensation information was obtained from Form 990s filed by 154 state chartered credit unions with at least $1 billion in assets.

At the time this blog post was being written, Form 990s for 2017 were not available for the following credit unions -- Collins Community Credit Union (IA), CFCU Community Credit Union (NY), Melrose Credit Union (NY), Municipal Credit Union (NY), Public Service Employees Credit Union (CO), and Rogue Credit Union (OR).

Mean and median base compensation was $512,148 and $489,783, respectively. The CEO with the highest base salary was Crystal Long of GECU (El Paso, TX) at $1,680,474.

Mean and median incentives and bonuses were $212,134 and $116,416, respectively. Most large CU CEOs received some sort of incentive or bonus compensation.

The data on base compensation and incentives and bonuses excludes information from Lake Michigan Credit Union (MI), because Lake Michigan CU combined base compensation with bonuses and incentives.

Fifty-eight credit union CEOs earned total compensation of $1 million or more in 2017.

The highest paid CEO was R. Heldebrant of Star One Credit Union (CA) with total compensation of $12,465,866 for 2017.

Update

The Form 990s are now available for Canvas CU, CFCU Community CU, Collins Community CU, and Rogue CU. This information has not been incorporated into the statistical analysis of CEO compensation.

Darryl Marksberry of Canvas CU (CO) had total compensation of $771,721 with base pay of $500,941 and bonus and incentive compensation of $225,000.

Lisa Whitaker of CFCU Community CU (NY) had total compensation of $1,283,914. Base compensation was $498,687 and incentive and bonus compensation was $173,918.

Stephanie Rupert of Collins Community CU (IA) had total compensation of $476,183 with a base pay of $308,653 and incentive and bonus pay of $112,499.

Eugene Pelham of Rogue CU (OR) had total compensation of $940,376. Base pay was $472,885. Bonus and incentive pay was $117,248.

The following table lists the 10 highest paid large state chartered credit union CEOs in 2017.

Below is the list of CEO compensation at state chartered credit unions with at least $1 billion in assets (click on images to enlarge).

Georgia CU Statute Amended

Georgia Governor Brian Kemp signed House Bill 185 into law on May 7, 2019.

The bill revises statutory provisions governing banks, credit unions, trust companies, bank holding companies, money service businesses, mortgage lenders and brokers, and mortgage loan originators, as well as certain provisions addressing the Department of Banking and Finance’s general powers.

The following provisions in the bill will affect credit unions. The bill:

• expressly provides that if a credit union acquires a bank, the depositors and borrowers of the bank will be deemed members of the credit union at the time of the acquisition;
• enables credit unions to adopt a policy to expel members for non-participation;
• removes a limitation on the ability of credit unions to sell or purchase certain loans;
• revises the bylaw requirements for credit unions;
• renames the supervisory committee to the audit committee for credit unions

The provisions in the bill will go into effect on July 1, 2019.

Read the bill.

Alabama Credit Union Statute Amended

Alabama Governor Kay Ivey sgned into law legislation amending the state's credit union statute.

The bill, SB33, would:

• authorize the Alabama Credit Union Administration Board to appoint the National Credit Union Administration as conservator of a state-chartered credit union;
• provide that credit union supervisory committees may consist of more than three members;
• permit payment or reimbursement of reasonable and proper travel costs of a member of the board or any committee and one guest per member traveling on official business of the state-chartered credit union;
• increase the meeting notice period prior to the meeting to vote and approve a merger plan of a merging credit union; and
• expand the definition of an official who may serve on the Alabama Credit Union Administration Board.

Read the bill.

Fewer Outstanding Enforcement Actions at the End of 2018

The number of outstanding enforcement actions for federally insured credit unions decreased from 296 at the end of 2017 to 278 at the end of 2018, according to the 2018 Annual Report of the National Credit Union Administration (NCUA).

Enforcement actions include Preliminary Warning Letters (PWLs), Letters of Understanding and Agreement (LUAs), Cease-and-Desist Orders (CDOs), and Conservatorships.

The following table shows the number of outstanding enforcement actions by type for both state chartered and federal credit unions between 2014 and 2018 (click on image to enlarge).

Two CU Bills Introduced in Nebraska

Two credit union bills have been filed in the Nebraska legislature.

LB453 would require the Director for the Department of Banking and Finance to publish a notice of a credit union's application to expand its field of membership when the Director determines that a hearing is not warranted. The notice of the application would be required in a paper of general circulation in the county or counties in which the expanded field of membership has been requested. Also, a notice of the filing will be sent to the Nebraska Bankers Association and the Nebraska Independent Community Bankers Association.

If the Director receives substantive objection to the field of membership application, the Director would be required to hold a hearing. The Director would publish a notice of the hearing in a newspaper of general circulation in the county or counties of the proposed field of membership and notify the Nebraska Bankers Association and The Nebraska Independent Community Bankers Association of the hearing.

LB407 would provide parity to Nebraska state-chartered credit unions with a credit union chartered in another state operating one or more branches in the state. The Nebraska state-chartered credit union would have to apply with the Department of Banking and Finance for approval to engage in an activity that is permissible for a credit union charters in another state operating in Nebraska. A credit union seeking the authority to engage in this activity must be well capitalized as of the most recent examination.

There will be a hearing on both bills before the Banking, Insurance, and Commerce Committee on February 26.

Large CU Executive Pay Was 13 Times Higher Than Average CU Employee Pay

In 2016, chief executive compensation at large state chartered credit unions was on average 13.12 times the average employee salary and benefits in 2016.

The median ratio of chief executive compensation to average employee salary and benefits was 10.22.

To calculate average credit union employee compensation, the analysis divided the Call Report line item Employee Compensation & Benefits by Full Time Equivalent Employees. Full Time Equivalent Employees = The Number of Full Time Employees + (0.5 times the Number of Part Time Employees).

A large state chartered credit union had at least $1 billion in assets.

Premier America Credit Union (Chatsworth, CA) reported the highest ratio of CEO pay to average employee pay at 79.41. The next highest ratio was 66.11 for OnPoint Community Credit Union (Portland, OR). The following chart lists the 10 credit unions with the highest ratio of CEO compensation to average employee salary and benefits.

However, this comparison is not comparable to data being reported by publicly traded companies, which compares CEO pay to median employee pay. It is likely that the ratio for chief executive compensation to average employee pay for large state chartered credit unions is understated, because the analysis uses average employee pay, as median employee pay is not available. The median of employee compensation will be typically lower than the average employee compensation.

Provision to Tax Iowa CUs Not Included in Final Tax Reform Bill

Iowa Republican leaders reached an agreement on tax reform, touting it as the largest tax cut in state history. However, the final bill left out a provision to apply the same state franchise tax to credit unions that banks pay.

The Senate version of the bill included a provision to tax credit unions. This provision was kept on the table throughout final discussions between Senate and House leaders and Gov. Kim Reynolds, but was ultimately dropped.

The Iowa Bankers Association stated that this issue is not going away and it is already working on this issue in preparation for the 2019 legislative session.

John Sorensen, CEO of the Iowa Bankers Association, stated to The Gazette: "Ï think we made real headway. The bill passed the Senate. That's never happened before."

Average Chief Executive Compensation at Large State Chartered CUs Tops $1 Million in 2016

Chief executives of state chartered credit unions with at least $1 billion in assets earned on average $1.051 million in total compensation in 2016.

Median compensation in 2016 was $784,360.

This is the third consecutive year in which average chief executive pay topped $1 million.

There were 155 state chartered credit unions with $1 billion or more in assets at the end of 2016. Compensation information was obtained for all but one credit union, DFCU Financial CU (Dearborn, MI).

Compensation data are pulled from Schedule J of Form 990s filed by state chartered credit unions.

Federal credit unions are currently exempt from filing Form 990s and the National Credit Union Administration has not acted upon recommendations to require federal credit unions to disclose senior management compensation.

Total compensation includes base salary, bonus and incentives, other reportable income, retirement and deferred compensation, and nontaxable benefits.

Fifty-three credit union executives reported total compensation of at least $1 million.

Base compensation averaged $485,308. Median base compensation was $475,703. The following graph looks at base pay with respect to asset size.

One hundred thirty-nine executives received bonus and incentive compensation in 2016. For these 139 executives, the average bonus compensation was $185,907 with a median compensation of $133,360. The following graph examines the relationship between bonus and incentive pay and asset size.

Below is information on compensation for chief executives at state chartered credit unions with at least $1 billion in assets (click on image to enlarge).

Update: an earlier version of this post stated that Lake Michigan Credit Union did not disclose the compensation information for Sandy Jelinski. The credit union in an e-mail reconsidered its position to not disclose this information. Here is the information provided. Base and bonus compensation was $1,638,000, other compensation was $42,735.20, and deferred compensation was $49,950.00.

Wisconsin CU Regulator Writes CUs about Purchases of Whole Loans

The Wisconsin credit union regulator on April 5 wrote that the purchase of whole loans by Wisconsin chartered credit unions is not permissible under state law.

The Office of Credit Unions noted that during recent examinations it discovered "several situations in which credit unions have purchased whole loans (either individually or in a pool of loans)." The regulator also stated that these loans were non-member loans.

According to the letter, the purchasing of whole loans of non-members is not a permissible activity for Wisconsin state-chartered credit unions.

The Office of Credit Unions advised credit unions that have purchased non-member loans to contact your legal counsel to become compliant.

Read the letter.

Georgia CU Regulator to Add S to CAMEL Rating

The Georgia Department of Banking and Finance (Department) announced that beginning January 1, 2018 the Sensitivity to Market Risk, or S component will become a separate and distinct regulatory examination component, rather than a factor in the Liquidity component.

In making the announcement, the Department noted that regulatory agencies in 17 states already have added the S component to the credit union CAMEL rating system.

Adoption of S will provide greater clarity in identifying interest rate risk and allow the Department to better allocate specialized resources to address interest rate risk outliers.

The Department believes the implementation of a distinct S rating is prudent at this time.

Read the Department Bulletin.

Large CU CEOs in 2015 Earned 13.15 Times More Than Their Employees

CEOs of federally insured state chartered credit unions with at least $1 billion in assets earned on average almost 13.15 times more than their average employee compensation in 2015.

The median executive compensation to average employee compensation ratio was 10.19.

Total CEO compensation is pulled from Schedule J of a credit union's Form 990.

To calculate average credit union employee compensation, the analysis divided the Call Report line item Employee Compensation & Benefits by Full Time Equivalent Employees. Full Time Equivalent Employees = The Number of Full Time Employees + (0.5 times the Number of Part Time Employees).

The following graph shows that there is a positive relationship between CEO compensation and the ratio of CEO compensation to average employee compensation.

The credit union with the highest multiple of CEO compensation to average employee pay in 2015 was San Diego County Credit Union. Teresa Halleck, CEO of the credit union, earned 71.93 times the average compensation of San Diego County Credit Union's employee.

The following table lists the ten credit unions with the highest multiple of CEO compensation to average employee compensation in 2015 (click on the image to enlarge).

Large State Chartered CU CEOs 2015 Compensation Tops $1 Million

Chief executive officers at state chartered credit unions with at least $1 billion in assets reported an average total compensation of $1.021 million for 2015.

Median CEO compensation was $808,942 for 2015.

Compensation data are pulled from Form 990s filed by state chartered credit unions.

Federal credit unions are currently exempt from filing Form 990s and the National Credit Union Administration has not acted upon recommendations to require federal credit unions to disclose senior management compensation.

Total compensation includes base salary, bonus and incentives, other reportable income, retirement and deferred compensation, and nontaxable benefits.

DFCU Financial Credit Union (Dearborn, MI) did not disclose compensation information for its CEO and did not respond to request for this information. Advia Credit Union (Parchment, MI) did not disclose detail information on CEOs compensation in its Form 990 and only provided information regarding CEO's total compensation upon request. Lake Michigan Credit Union (Grand Rapids, MI) combined base and bonus & incentive compensation.

The mean base salary was $489,614. The average bonus and incentive pay was $148,449. The mean other compensation was $197,815. Retirement and deferred compensation was an average of $166,645.

Forty-nine credit union CEOs earned more than $1 million in 2015.

The highest paid CEO was James Jordan of Schools Financial Credit Union (Sacramento, CA) at $5.7 million. The next highest paid CEO was Teresa Halleck of San Diego County Credit Union (San Diego, CA) at almost $5.6 million.

Below is compensation data for each CEO (click on images to enlarge).

Massachusetts Dishonored Check Fee Set at Maximum of $7.23, Goes Into Effect on July 1

The state of Massachusetts set the maximum dishonored check fee that state-chartered banks and credit unions may assess at $7.23. This fee will go into effect on July 1, 2017.

The 2017 deposit return items (DRI) fee is based upon deposit return item cost data from a sample of state-chartered banks and credit unions.

The state surveyed 72 financial institutions. The sample was evenly divided between banks and credit unions.

The cost of processing deposit returned items ranged from $1.21 to $30.38 per item with a median cost of $7.23.

The survey found that credit unions had a higher average cost of processing dishonored checks than banks -- $9.35 versus $7.43.

Unfortunately, this state-mandated price control will cause half of the state's institutions to incur a loss in processing dishonored checks.

This is bad public policy.

Read the decision.

Corporate CUs Are Required to Disclose Executive Pay, Then Why Not All FCUs

It is time for the National Credit Union Administration (NCUA) to require natural person federal credit unions to disclose senior management compensation.

Let's look at the facts, state-chartered credit unions are required to disclose senior management compensation via Form 990s. Also, NCUA requires a corporate credit union to annually prepare and maintain a disclosure of the dollar amount of compensation paid to its most highly compensated employees, including compensation paid to the corporate credit union's chief executive officer (read the regulation).

NCUA's corporate credit union regulation states that a corporate credit union "must distribute the most current disclosure to all its members at least once a year, either in the annual report or in some other manner of the corporate's choosing."

The regulation also states that "[a]ny member may obtain a copy of the most current disclosure, and all disclosures for the previous three years, on request made in person or in writing. The corporate credit union must provide the disclosure(s), at no cost to the member, within five business days of receiving the request."

The rule allows a corporate credit union to provide supplemental information to add context, such as salary surveys.

If NCUA believes that it is appropriate for corporate credit unions to disclose compensation information to its members, then why hasn't NCUA required natural person federal credit unions to do the same thing.

Clearly, requiring such a disclosure would improve accountability and transparency and would promote good corporate governance.

Alliance FCU Changes to State Charter and Private Share Insurance

Alliance Federal Credit Union (Lubbock, TX) switched from a federal charter to a state charter and changed from federal share insurance to private share insurance provided by American Share Insurance.

According to Scott Rose, President and CEO of the $245 million Alliance FCU, one of the main reasons he and his board of directors chose to convert to American Share was the simple fact that the role of the regulator and insurer needs to be differentiated.

Another key factor in the credit union's decision to move to a state charter, and to partner with American Share Insurance, was that they wanted to be regulated by local government officials that better understand the needs of Texas residents.

This is the third Texas-based credit union to join American Share Insurance in the last 18 months.

Read the press release.

Puerto Rico's Cooperative Credit Unions' Financial Outlook Is Dire

Addressing a federal oversight board overseeing Puerto Rico’s financial restructuring, Governor Alejandro Garcia Padilla stated that Puerto Rico’s cooperative credit unions face huge financial losses and could collapse.

The island's 116 Coops have suffered large losses in their investment portfolios from the default on Government Development Bank and General Obligation bonds and could suffer larger losses under a broader debt restructuring plan.

The Governor warned that a broader debt restructuring could: cause one-third of all Puerto Ricans to suffer losses on their deposits; reduce lending and economic growth on the island; and cause the collapse of the island's state-insured credit unions as depositors flee to FDIC-insured institutions.

The Governor noted that the cost of protecting credit union depositors, as well as the cooperative credit union system, was estimated at $1.2 billion.

Note: These 116 cooperative credit unions are not insured by the National Credit Union Share Insurance Fund.

Below is the slide from the Governor's presentation.