Top-Level Takeaways
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Erin Mendez has been CEO of Patelco Credit Union for nearly six years.
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In that time, she’s helped the credit union recover financially and create a new culture.
CU QUICK FACTS
Patelco Credit Union
Data as of 03.31.19
HQ: Pleasanton, CA
ASSETS: $6.9B
MEMBERS: 350,055
BRANCHES:36
12-MO SHARE GROWTH: 9.1%
12-MO LOAN GROWTH: 13.4%
ROA: 0.95%
The drive from Santa Ana to Pleasanton, CA, takes just about seven hours.
Erin Mendez knows this because she made the drive nearly six years ago, when she left her post as chief operating officer at SchoolsFirst Federal Credit Union ($15.9B, Santa Ana, CA) to take over the CEO role at Patelco Credit Union ($6.9B, Pleasanton, CA).;
I left on a Friday and started the following Monday, she says.
Before the opportunity arose, Mendez aspired to lead. Just not as CEO. Before joining credit unions, she worked in thrifts and savings banks where the head leader, to her, was not the CEO. It was the chief operating officer.
My observation was that the COO really ran the bank, so that’s what I aspired to, she says. But when I got to credit unions, that’s when I changed my mind. She came to realize that the CEO role was one in which she could affect the most change.
And when she took the reins of Patelco in 2013, the opportunity to affect change was immediate.
The Lost Decade
Erin Mendez, CEO, Patelco Credit Union
By fourth quarter 2002, Patelco had become a $3 billion credit union; due in part to difficulties caused by the Great Recession, by fourth quarter 2012, Patelco had only added some $800 million in assets, an annualized growth rate of approximately 2.5%. Over that same period, the average annual asset growth industrywide was 6.5%.
Because the credit union made little traction over those 10 years, the board called it, The Lost Decade,’ Mendez remembers. I walked into my role knowing there was work to be done.
Although that stasis provided a long-term challenge, it also allowed Mendez to draw on what was otherwise a blank slate: the future of the credit union was hers to design. Her overarching mission? To create an institution committed to the financial health and financial wellbeing of its members.
As a leader, Mendez describes herself as collaborative, inclusive, and forthright. She believes in the power of her people and bristles against any thought that, because she’s CEO, she knows all.
I don’t sit in a room and think I’m the smartest one in it, she says. I use the power of my people.
That proved especially important as she settled into her new job.
The First 90 Days
Three Big Letters
What does the title CEO mean to Patelco CEO Erin Mendez?
I don’t think of the title in its big, grandiose context, because it’s not the title that matters, she says. What matters is that you do what you can for the people you’re responsible for.
For her first few months, Mendez set a plan. She assessed internal talent, the credit union’s financials, and more to determine her strategic and tactical objectives. These are critical weeks and months for a new CEO, she says, when each decision made matters.
Your choices are how you will forge ahead strategically, she says. And every choice you make must align with the mission you’ve set, otherwise it’s confusing for people. And the last thing you want is for your people to be confused.
But by finding out what the credit union will be in Patelco’s case, using its products, services, and community outreach to support the financial wellbeing of its members leadership, management, and employees can successfully align their day-to-day work under that direction:
Do our products support it? Does our fee schedule? Do our services? Mendez says. Then, do we communicate our difference during training? Does the language we use internally align with our mission?
As an example, in 2018 Patelco redesigned its website to focus on its members’ own individual financial goals. Depending on a member’s individual need, visitors can choose a guided experience tied back to a personalized goal whether buying a car or saving for retirement.
To help set this direction, in her first 90 days Mendez met with every California-based team it took an extra month on top of this to meet with the lone team operating from Chicago to ask several questions:
- What do Patelco members have to say about the credit union?
- What do they like? What don’t they like?
- What’s in the way for you to successfully serve members?
From those conversations, she identified hundreds of unique member service issues, which she then whittled down to the 400 that she presented to her board. Issues fell into several categories, including culture, technology, and deficiency, and resulted in several long conversations between Mendez and her board. Addressing these issues was critical to the future of Patelco.
The board agreed. Ultimately, over the next four years the credit union invested north of $10 million on its own infrastructure, whether people, technology, or processes.
It was the start of a transformation, Mendez says. From the Patelco of the past to the Patelco of the future.
Water The Garden
For Mendez, her first 90 days on the job were critical to setting the strategic direction of the credit union, as well as building the necessary buy-in from her staff and her board in order to do achieve. Plus, half the seats on her senior team were empty and needed filling.
5 Tips For New CEOs
Erin Mendez became CEO of Patelco Credit Union in 2013. Here, she offers five tips for new CEOs.
- Assess what you have: You need to know what you can build on, and what you can change.
- Know how you’ll make changes: If you plan to change the culture, you need to map it all out and get your board to buy in 100%. You need to be transparent about all of it.
- Be optimistic, but not overly so: Nothing will go as smooth as you think, and you’ll learn things you didn’t expect as you go. When you paint the picture, be realistic in where you want to go and what you need to support it.
- Be committed: Whatever you choose, be 100% committed to it. If you waffle, if things aren’t aligned, you’re going to find it difficult to get the full backing of your team, because they’re going to be confused. When they understand who you are and where you are going, that’s where the magic happens.
- Listen: In your first 90 days, you’ll need to listen a lot.
I had some hiring to do, she says.
But setting strategy is not all a CEO does in her first three months.
Mendez’ first week coincided with a regulator visit. As it happened, the regulators had questions and requested changes, which forced Mendez to make a few quick decisions with less information to go on than she would have otherwise preferred.
Sometimes you’re forced to do that, she says.
But with few exceptions, Mendez was able to delegate daily decisions to her senior team or hold off on them altogether until she felt ready to address them. Without a strategic direction, it didn’t make sense to make strategic decisions, no matter how small.
The worst thing you can do is make a directional decision that is not in the direction you want to go, she says.
In those early months there was frequent change, and it took longer than 90 days for Mendez to feel as though the Patelco she inherited had become the Patelco she knew it could be. Culture is not an easy thing to change, and while technology and operations are easy to implement mostly, they require money culture takes time. By the end of 2017, says Mendez, she felt the culture she had tried to create those years ago had come fully alive.
Even so, I believe culture is alive, she says. It has to be cared for every day. It requires a constant watering of the garden.