Women are better represented at the CEO level of credit unions than banks of comparable asset size, a difference that reflects not only how each type of institution recruits for the role, but who is doing the recruiting.
For U.S. banks and credit unions with between $1 billion and $5 billion of assets, 13% of credit union CEOs are women, compared to 2% for banks, according to a Credit Union National Association
The American Bankers Association contends that the CUNA survey is too narrow — most commercial banks are above the $5 billion mark — but acknowledges the need for better representation of women at the CEO level. Data from S&P Global shows that among publicly traded U.S.-based companies, women held 5.3% of CEO roles; in financial services, women account for 4.5% of CEOs.
Several factors may account for the difference in gender diversity at the CEO level, such as how board members are recruited and how professional women's skill sets apply to the mission of the organization. Regardless, both banks and credit unions have opportunities to improve gender diversity among their top ranks.
If credit unions are doing better at representing women in the top job, it may be because women are more likely to be the ones doing the hiring for that role, said Jan Page, president and CEO of the $182 million-asset Community South Credit Union in Chipley, Florida.
“More diverse boards will lead to more diversity in the CEO position, which will lead to more diversity at the executive level,” Page said. “It starts at the top.”
Credit unions also seem to favor CEOs with strong retail backgrounds, which may reflect an institutional tendency to focus on retail business over commercial, according to B.J. Berrettini, New England recruiting manager for the search firm AJ Consultants.
“Given this trend and the fact that women have dominated the retail space, it is not surprising that [more] credit union CEOs are women,” he said. “Additional influences most likely include varying philosophies surrounding work/life balance and profitability versus customer experience.”
According to the group 50/50 Women on Boards, there are 2,918 active companies on the Russell 3000 Index and 27,091 total board seats. Women now hold 24.4% of the seats, a 0.7 percentage point increase from Dec. 31, 2020.
American Bankers Association spokesman Jeff Sigmund agreed that women need to be better represented in bank leadership, though he questioned the survey size in the CUNA study. Since CUNA's overall study limited the included banks to publicly traded ones below $10 billion of assets, it covered only 163 of the nearly 5,000 commercial banks in the country, he said.
The ABA does not have an equivalent set of data, but Sigmund pointed to data from Bloomberg Finance that showed 19% of banks between $1.5 billion and $50 billion in assets had women in executive roles, though this data covers all C-level jobs and does not carve out the CEO role specifically for comparison.
That figure rose to 25% of women in C-level roles at banks between $500 million and $1.5 billion in assets.
Through its Women in Banking program and other initiatives, the ABA remains committed to creating more leadership opportunities for women at banks of all sizes, Sigmund said.
“We are far more focused on the banking industry's ongoing efforts to expand opportunities for women and promote diversity, equity and inclusion at all levels. Despite
Closing the gap
The banking industry’s for-profit model leans more toward traditionally male-dominated fields for its board members, although that is changing, said Elizabeth Hayes, the Maine market president for the $336 million-asset Infinity Credit Union in Westbrook, Maine.
“I suspect that the credit unions’ cooperative, people-over-profits model is more conducive to the strengths of women leaders,” said Hayes, who was president and CEO of Infinity FCU before the credit union last year announced
"There has been a clear shift in recent years with more women earning the top seat at large credit unions than we’ve seen historically,” she said. “Women executives have earned a seat at the table and are being heard and considered more than I’ve seen before.”
Lorrie Trogden, president and CEO of the Arkansas Bankers Association, said it is encouraging to see more women in leadership positions within financial services.
She said the association’s member banks understand that expanding opportunities for women isn’t just the right thing to do, it’s good for business.
“The Arkansas Bankers Association is actively engaging in diversity, equity and inclusion efforts with our member banks,” she said. “If any of those credit unions in this survey also paid their fair share of taxes like banks, I would be more impressed.”
Berrettini said his firm now sees a “clear and sustained effort” to narrow the gender gap with its banking clients, not just at the CEO level but across the C-suite.
“Reactive [diversity] hires are not enough and simply cannot be transformational,” he said. “Creative succession planning below the C-suite should be the primary driver in achieving sustainable diversity among CEOs. Given the shrinking talent pool, a commitment to proactive equitable succession planning is a critical need we cannot overlook.”
'Disproportionately male'
Change is coming to the banking space, but it will take time, said Flynt Gallagher, president of Newcleus Compensation Advisors.
In contrast to credit unions, banks usually pay their board directors a fee and pursue community leaders and influential business owners as directors. Credit union boards reflect their memberships and often feature teachers, small-business owners and others from their community.
“They tend to recruit and promote those who look like them,” Gallagher said. “That is changing along with the gradual proliferation of professional women and business owners.”
At banks and credit unions alike, women CEOs are more common at smaller institutions, but women have also filled the top role at larger institutions such as the $144 billion-asset Navy Federal Credit Union in Vienna, Virginia, which in 2018
Several CEOs in both industries, as well as others who work in the financial services sector, declined to be interviewed for this story. One banking industry headhunter, who requested anonymity, said the issue is "a hornets nest" that many people are loath to discuss.
“Diverse senior leaders can’t be summoned at will, they are the result of several decades of prior decisions and opportunities,” the headhunter said. “In my experience, all boards are equally interested in outstanding male and female candidates, regardless of institution type. But banks tend to hire lenders and CFOs as CEOs, and these roles are disproportionately male.”
