– The appeal decision upon which this story is based has since been removed from public view on the NCUA website. –
A former chief executive officer of a troubled federal credit union has been denied a position on the institution’s board following a failed appeal to the board of the federal credit union regulatory agency, which upheld the regional office’s finding that the former CEO had helped drive the institution’s decline.
According to the information published by the National Credit Union Administration (NCUA) – which does not name the former CEO or the credit union – the credit union has been in troubled condition since June 2019, when it was downgraded to a CAMEL 4 rating and issued a letter of understanding and agreement (LUA) citing numerous deficiencies. It said this former CEO, reportedly “directly involved” in these deficiencies, was terminated by unanimous vote of the credit union’s board in October 2019.
The deficiencies noted by the agency’s regional office, according to the NCUA document, included “significant recordkeeping concerns, secondary capital violations, insider abuse, lending deficiencies, HELOC statement disclosure concerns, Regulation B (ECOA) adverse action notices noncompliance, and insufficient budget and strategic planning.”
This former CEO reportedly sought to run for a position on the credit union’s board last year, but his bid was rejected by the institution’s nominating committee due to his involvement with the credit union’s troubles, the document notes. However, he was nominated from the floor during the credit union’s annual meeting in November and won election. He then filed an application to serve with the NCUA regional office, and that office denied the application in January. When the former CEO appealed, the office upheld its decision. The former CEO then filed an appeal to the NCUA Board.
On July 8, the board upheld the regional office’s denial.
“Based on a full review of the administrative record, the Board finds that the Region’s denial of Petitioner’s application is well supported by the record,” the decision states. “The Region reasonably determined that Petitioner lacks the competence, character, or integrity necessary to serve as a member of the FCU’s board of directors after finding Petitioner’s conduct during his tenure as CEO of the credit union led to the significant supervisory deficiencies that resulted in its troubled condition status. There is a clear nexus between Petitioner’s poor performance as CEO to the competence, character, or integrity necessary for a board position so as to be disqualifying.”