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A Direct Line Blog

Succession Beyond the CEO

April 17, 2024 7:30 am

By Donya Parrish, MCU VP Risk Management

Earlier this month, the Washington State Department of Financial Institutions (DFI) released a bulletin that might be worth your time to read. Why? They don’t have oversight of Montana credit unions, but it does a good job of explaining that regulatory agencies, including NCUA, have real concerns about the lack of succession planning in credit unions. The bulletin notes that planning may be done for the CEO role, but other key positions that become vacant can also have an impact on the credit union.

It states that on “recent examinations, examiners are identifying more credit unions with staffing shortages in key management positions because of planned retirements and an active job market. While it has always been important for credit union Boards of Directors and management teams to plan for the potential departure of Chief Executive Officers (CEOs), it is increasingly important to identify and plan for the potential departure of other key management positions.” They discuss the fact that the plan established by the board should be consistent with the credit union’s size and complexity. Smaller credit unions with fewer staff are at an even greater risk of problems or forced mergers if adequate succession planning is not done for both long-term (retirements) and short-term (emergency) vacancies.

It should be noted that regulatory agencies are concerned about your credit union’s survival for your members and not for a place to catch you with a finding or deficiency. NCUA even says in their supervisory priorities letter that “examiners will not issue an Examiner’s Finding or Document of Resolution if the credit union has not conducted succession planning, or the planning is not adequate, unless the credit union violates its policy for conducting succession planning or administering any such plan(s).”

So, how do you get started? You can see previous blogs on the topic here or reach out to our business partner SUCCESSIONapp for assistance. We also have a recorded webinar on the topic from April 2022 that has several great suggestions and tips.

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