By Sue Mitchell
From his start working in the business office of a Los Angeles newspaper to 28-plus years at a credit union in Modesto, Calif., Hank Barrett has steadfastly maintained one overarching philosophy: everything is all about the member.
With retirement within his sight, Barrett says he hopes he has passed on this same lesson to his team at the now $608-million Valley First Credit Union.
“I do not want to see our credit union lose the credit union philosophy and the belief that members are our most important focus in all we do,” he said. “We are not about growth or numbers, we are about making our members’ lives better. I hope my credit union retains that philosophy and that focus moving forward, and I hope the rest of the industry does, too. I hope we do not become so numbers-driven that we forget our primary charge.”
Getting Into Credit Unions
Barrett is preparing now for retirement, which is expected to take place sometime in the summer 2019. He said the first step is to find his replacement, with whom Barrett will work closely during the transition.
In 1980, Barrett was working in the business office for Copley Press. One day, he was asked to take over as manager of Copley Los Angeles Newspapers Credit Union. Barrett was the only full-time employee of the $1.7 million credit union, which served 1,400 members.
“It was great because I was getting my undergraduate degree,” he recalled. “I was there seven years. I had to serve as a teller, an accountant, everything. When I did my first set of books, my account didn’t balance.”
Barrett attended CUNA Management School the first year he was at the credit union.
“I realized I was learning more than those who only worked in one department of a bigger credit union,” he said.
Several Vintage Realizations
In 1987, Barrett became vice president for MGM Studios Credit Union in Culver City, Calif. He was hired to be the successor for the CEO, who was planning retirement. In 1988, he took over.
“I learned we needed to expand. We were a single employer sponsor group CU and we were on the studio lot, so we couldn’t do much. I decided we needed to open another location.”
By this time Barrett was married, and he and his wife had made a decision they did not want to raise children in Los Angeles. When his wife became pregnant, the couple moved to five acres outside of Oakdale, Calif., a city in the San Joaquin Valley that had about 11,000 people at the time.
“On my son’s first birthday I had been at the credit union about three weeks.”
The credit union was $19 million Vintage FCU, which primarily served Gallo Winery, but was beginning to add select employer groups. “When I got here there was some desire to expand. I had just read “Ford, ” about the Ford Motor Company. Ford was a family company that was fine for the first generation and then the second generation, but then problems cropped up in the third generation. I looked at the Gallo structure and decided to begin an aggressive SEG acquisition plan to expand outside of Gallo. Even though we were rent-free on Gallo property, I knew we had to expand our membership.”
As the credit union grew over the years, Gallo eventually asked it to pay rent. Still later, the winery needed the space occupied by the CU’s office, so the credit union bought an old bank building in downtown Modesto, Calif.
The single most important milestone of Barrett’s lengthy career took place in 1999, when Vintage FCU merged with Stanislaus County Credit Union.
“We converted to a state charter, changed our name to Valley First Credit Union, and servedthe SStanislaus and San Joaquin counties,” he said. “As Vintage FCU we were $40 million; with the merger we became a $110 million credit union.”
The increased assets allowed it to better serve both memberships.
In 2002, Valley First CU expanded its field of membership to a seven-county charter, adding Fresno, Madera, Merced, Mariposa and Tuolumne counties. In 2013, it added three more counties: Calaveras, Kings and Tulare. Then came several mergers over the years with credit unions in the Fresno area, then adding credit unions in Yosemite and Tracy.
“A lot of activity, a lot of expansion,” Barrett said. “We went from a single branch in 1999 to as many as 10 branches. We currently have eight branches with locations throughout the Central Valley.”
The Chairman Speaks
Fred Cruz has served as chairman of the Valley First Credit Union board for 16 of the 19 years since the CU was created by the merger of Vintage FCU and Stanislaus County Credit Union. He is a legacy, having been on the supervisory committee with Stanislaus County CU before being elected to the CU’s board of directors in 1998. He remembered it was just his second board meeting when the CEO at the time announced his plans to retire to leave the area.
“Hank’s biggest accomplishment was taking two relatively small credit unions, merging them together, and then growing Valley First into the credit union we are today,” Cruz said. “There were two different credit unions with different cultures, almost like parents who have kids in their first marriages and then get married again and create a blended family. There are always bumps in those situations, but Hank managed us through that change, making the credit union better for all members.”
When the merger took place 20 years ago, Cruz noted, there was a much larger number of small credit unions, but those numbers have dropped off every year.
“Technology costs are a great burden on a smaller credit union. Hank’s solution was to grow the credit union,” Cruz said. “When we merged, both credit unions agreed the best option to grow the membership base was to switch to a state charter.”
Doing the Right Thing
Asked the reason for the credit union’s continuing success, Barrett replied, “We have always been focused on our members and doing the right thing.”
“We had the trust of the members, and that was why were in business. That was who we are and what we needed to do, and we have never varied from that. The banking world is completely different – all about numbers. We focused on our members’ well-being. Involvement in and supporting our communities was and still is a big focus for us. We are very visible and are committed to giving back to the communities we serve. People recognize our logo and our brand is very strong because of our involvement and commitment.”
Added Cruz, “One of Hank’s greatest assets is his involvement in the communities we serve. He is very active and engaged. He has been very visible. He is going to be missed by our senior leadership team, staff and the membership.”
A Witness to Evolution
Barrett was asked to identify some of the most significant changes to the financial services industry he has witnessed during his career, he pointed to his first year in credit unions, the same year deregulation was put in place.
“When I started, you paid 7% on savings and loaned at 12%, so you had a built-in five percentage point margin – and life was great!,” he recalled. “That year was the first time credit unions were allowed to offer checking accounts, then called share draft accounts.”
“The electronics of today are amazing to me – mobile banking, paying bills from your phone, giving members access to their accounts wherever they are,” he continued. “This is only is going to increase in the future.”
Barrett believes the credit union industry is “relatively strong” today. He said it has those that are growing and those that are “sitting in place,” a phenomenon largely driven by asset size. He said overall the movement feels “healthy,” but he believes it is clear the long-term future is in bigger credit unions.
“We see it every day in the consolidation of the industry. When I started there were 18,000 credit unions, and now there is one-third that number,” he said. “The industry is sound from a financial perspective, but it is morphing into something different. We will continue to see consolidation of smaller credit unions merging into larger credit unions. From having worked in a smaller credit union, I know the work that goes into it.”
To survive, Barrett said credit unions will have to remain relevant to consumers and their needs. Most importantly, CUs will have to differentiate from the banking world, he believes.
“There are some good players out there that really add value to their members’ financial lives. We cannot be just another bank. We have to differentiate ourselves by our focus on our members, because if we are just a commodity we will not survive.”
As the number of credit unions dwindle, Barrett wonders how long the government will maintain the National Credit Union Administration as a separate agency. He foresees a point at which officials will deem NCUA unneeded, replaced a super-regulator that oversees all financial institutions.
“That will be troublesome for our industry, because as we have seen in Sacramento and Washington, one-size-fits-all regulations do not benefit credit unions,” he assessed.
Meanwhile, as he looks ahead personally, retirement for Barrett will include golf, day hiking, bicycling and traveling.
“In recent years I have gotten back into baseball,” he said. “I will become a snowbird – visiting my daughter in Colorado in the summer and perhaps living in the Phoenix area in the winter, with frequent visits to see my son and my grandchildren. I might putter with employment but looking forward to enjoying my retirement.”
Sue Mitchell is with Mitchell Stankovic & Associates, a global strategic consulting firm that challenges the status quo and builds trusted partnerships with non-profits, credit unions, CUSOs, boards and executives. For info: www.mitchellstankovic.com