Turnover is a consequence of business, but a well-developed succession plan and thorough search of qualified candidates can help any organization absorb the disruption from the departure of high-level employees.
Credit unions and community banks represent two common channels from which credit unions pull new hires, but is one better than the other? And in what circumstances?
In the past 24 months, Interra Federal Credit Union ($765.4M, Goshen, IN) has filled two executive-level roles, one with a candidate from within the credit union industry and one with an external hire.
Amy Sink joined Interra as CEO in November 2013. Sink previously served as a senior vice president and chief financial officer at Indiana-based Teachers Credit Union. Andy Marshall joined the credit union as the chief lending officer in September 2014. He came from iAB Financial Bank, where he was a senior leader in the Hoosier bank’s small business and retail banking divisions.
From CFO To CEO
Amy Sink, CEO, Interra Federal Credit Union
Sink began her credit union career at age 22 as an intern at the then-$300 million Teachers Credit Union. She worked with the CFO and other executive leaders from day one and helped the credit union install its first asset liability model. By 30, she was serving as the chief financial officer and was in that role when Interra contacted her — via executive recruitment firm DDJ Myers — about the CEO opening.
To prepare for her interview with Interra’s board of directors, Sink studied the credit union’s financial performance. Notably, Interra’s loan-to-share ratio had been steadily declining. By third quarter 2013, its 60.4% ratio had dipped below the 66.7% of its asset-based peers.
“When you have internal candidates and external candidates you ask yourself, ‘is the board looking for something to change or is it looking for something to help the credit union stay the same?’” Sink says.
At South Bend, IN,-based Teachers — now $2.7 billion in assets — Sink had developed a deep knowledge of the Northern Indiana market and a love for the credit union mission. These two attributes, along with her financial knowledge and leadership skills, made her an attractive CEO choice.
“Regardless of the size of the credit union I was coming from, I’m a credit union person,” Sink says. “I love talking with members about what will improve their financial position, and I believe we offer a better product to the consumer. I was able to express that to the board.”
According to Sink, CEO Paul Marsh of Teachers works closely with his board. This inspired her to create her own open a dialog, knowing that, ultimately, both parties were working to grow the credit union and provide the best service for its membership.
“I had seen how to handle and work with the board from someone who had done it very well,” she says.
Sink introduced a vision document outlining a plan for the future of the credit union. It included goals for executive departments including operations, retail, lending, finance, and risk management. She also set benchmarks, such as reaching 100,000 members by 2019 and deepening auto penetration among its membership.
When you have internal candidates and external candidates you ask yourself, ‘Is the board looking for something to change or is it looking for something to help the credit union stay the same?
“There are things about the credit union that are important to the board, and I want to try and achieve those things,” Sink says.
Of course, Sink had to face some challenges as well. As a new hire, she had to learn about a new workplace dynamic. Additionally, she was no longer a part of the executive team — she was leading it. As such, she was working on strategic initiatives with employees she had known for months, not years.
“One of my friends told me I’d feel like I am on a field trip for sixth months,” Sink says. “When you are in a place for as long as I was, it was harder than I thought it would be. But it’s worked well.”
Hiring From The Other Side
Andy Marshall also began his career in community banks at a young age. He was just a few years out of college when he started in the branch. He became a branch manager and then moved into commercial lending. When he joined a position on the executive team, he had “roughly a few hundred people” under him.
Andy Marshall, Chief Lending Officer, Interra Federal Credit Union
When Interra contacted him — via executive recruitment firm EFL & Associates — regarding the chief lending officer position, Marshall had to weigh the pros and cons of moving into a new arm of financial series as well as leaving iAB Financial in Fort Wayne for Goshen.
“I had never given consideration to moving into the credit union side,” Marshall says. “I listened to the opportunity and found out more about Interra — its values, its market, its strengths, and what needed strengthening.”
Some of the core things that credit union people understood, I didn’t understand.
Marshall felt he could contribute right away using his knowledge of the agricultural loan market in Northern Indiana. More broadly, Marshall brought years of commercial lending experience, and Interra was interested in expanding its commercial portfolio. As of first quarter 2015, Interra held nearly $200 million in member business loans, according to data from Callahan & Associates, compared to $42 million held by its asset-based peers. That $200 million represents year-over-year growth of 18.7%.
MEMBER BUSINESS LOAN GROWTH
For all U.S. credit unions | Data as of 03.31.15
© Callahan & Associates | www.creditunions.com
Source: Peer-to-Peer Analytics by Callahan & Associates
According to Marshall, there are similarities between the community bank and the credit union model. Both operate on a local level to serve their customer base, but beyond that, Marshall says Interra’s product suite and management style is similar to his former employer.
The largest challenge for Marshall was learning the credit union vocabulary and the operational differences between iAB and Interra. There’s been a definite learning curve, he says.
“Some of the core things that credit union people understood, I didn’t understand,” he says.
He studied up on the Indiana State Credit Union Act, the Federal Credit Union Act, and various NCUA lending guidelines. He also took a crash course in Interra’s internal structure as well as its employee- and member-facing technologies.
Through this process, Marshall has noticed policies and systems that are specific to credit unions, and although he’s “trying not to be too critical,” he has noticed a few areas of opportunity. For example, he’d like to tap into for-profit banking vendors to bring additional services and relationships to the credit union side. Also, he thinks credit unions can benefit from a more developed organizational structure.
“I bring the strengths to speak to those,” he says.
Ultimately, Marshall is most excited to work is in his new community.
“Credit unions are concerned with serving the everyday consumer and the local membership,” he says. “We want to allow them to do the traditional banking the banks are struggling to offer right now and find ways to fund loans as well as provide deposit accounts.”