In September 2015, Doug Schukar, president and CEO of USA Mortgage, paid a visit to one of the company's largest branches, located in Jefferson County. Schukar regularly checks in with branch managers and loan officers, treating them as if they're family. But, this particular trip was different.
"I typically go out there and do my normal calls, but the branch manager asked if we could speak in private this time," recalls Schukar. After the unexpected death of a senior executive at a local competitor, the manager had begun to worry about Schukar's own succession plan. The problem was that Schukar didn't have one. Four months later, the entire Jefferson County branch quit and joined a new firm. "I realized that my answer to him wasn't the right one," says Schukar. "And it got me thinking about what I should do."
"Linda Pring [EVP and COO of USA Mortgage] has been here with me from the beginning," states Schukar. "We made a promise to each other that – no matter what – we would do everything possible to make our employees' jobs as fun, yet as challenging, as we could. We never wanted to look at ourselves in the mirror and say that we'd failed someone. But, for the first time, I felt like I'd failed someone."
Founded by Schukar in 2001, St. Louis-based USA Mortgage is now the largest, privately-held mortgage bank in Missouri, and numbers 40-plus branches across the country that generate $1.5 billion in loan volume. As the company's national profile has increased over the years, both Schukar and Pring have fielded numerous mergers and acquisitions calls. Instead of viewing these offers as opportunities to cash out, however, both executives were more concerned about their potential impact on the company's more than 500 employees.
"At the end of the day, I realized that mergers and acquisitions just wouldn't work for us," reflects Schukar. "Too many people would lose their jobs, and the culture of our sales team and other sales teams just wouldn't match."
This concern for employees' well-being eventually lead Schukar and Pring to an answer to the succession question: an Employee Stock Ownership Plan [ESOP]. "I heard about an ESOP at a national mortgage bankers' convention and I knew that was it," proclaims Schukar. As part of the ESOP, Schukar transferred sole ownership of the company to its employees via vested stock shares.
Although the ESOP was only finalized in December 2017, the process took several years of thoughtful planning and review. Schukar, Pring and a select group of high-level employees enlisted BKD, an accounting firm whose ESOP practice is based in Bowling Green, Kentucky, to help the company navigate the many layers of approvals needed to complete the transaction.
For USA Mortgage's leaders, the time and effort it took to execute the ESOP were more than worth it. "As we proceeded, we continued to realize that this was the way to go," emphasizes Schukar. "The ESOP will keep the culture of our organization and continue our legacy."
Perhaps more importantly, the ESOP is a winning option for the company's current and prospective employees. In order to opt into the ESOP, employees only need to log 160 hours of work – equivalent to one month's worth of full-time employment. After six months, or 1,000 hours, at the company, employees qualify for a year of vesting.
"An ESOP is an incredible gift to employees," stresses Schukar. As Pring points out, many industries do not even offer employee retirement plans. "The ESOP is a great way to do so," she says. "Down the road, we'll get to watch a lot of people retire with significant assets that they otherwise may not have had," adds Schukar. Unlike other companies that have initiated an ESOP, USA Mortgage will not eliminate its 401K match. Indeed, the company plans to double its contribution in 2019 and triple it the following year.
"An ESOP changes the mindset of employees, because they're now owners," says Schukar. A group of younger employees is already spearheading a recycling plan, which will help the company cut costs and reduce its carbon footprint. "Making sure that our employees are heard is very important to us, especially with the ESOP," underscores Pring.
The ESOP is part of a bright new chapter in USA Mortgage's history. In conjunction with the shift in ownership, Schukar and Pring have already begun to groom the company's next management team. USA Mortgage recently named Ron Mueller as senior VP of sales and marketing; Lara Taylor as corporate operations manager and Jason Wheatley as chief financial officer. With this new team in place, the company aims to top $3 billion in loans within the next five years.
As USA Mortgage looks to the future, the expert and personalized service it offers to clients will remain unchanged. "The level of ignorance about what our industry does is staggering," declares Schukar. "Our business is all about helping. We refer to our sales team as 'teachers by trade,' because they have to be able to explain home financing in layman's terms. The more you can help someone understand the mortgage experience, the better."