In an “amicable” decision made between Patelco President/CEO Ken Burns and the $3.9 billion credit union’s board, Burns will resign effective sometime this summer.
Both Burns and Patelco Chairman Peter Hanelt confirmed the split with Credit Union Times March 18, and the 274,000-member credit union posted a notice on its website later that day.
Burns said there is no unsolved mystery to his resignation. The decision merely reflects his desire to seek a new challenge.
“I looked at where I wanted to spend the next 10 years in this industry, and thought now was the ideal time to make that move,” said the 57-year-old executive. “My kids are grown and out of college, so my wife and I could relocate if we wanted to. It’s just an opportune time for me, and I’d be leaving the credit union in good condition.”
Patelco’s financial condition has improved significantly under Burn’s regime. Prior to his joining Patelco in May 2009, the credit union had reported a $58 million net loss in 2008, and had already lost $26 million in the first two quarters of 2009. The losses followed Patelco’s acquisition of the failed Cal State 9 Credit Union in May 2008 and the failed Sterlent Credit Union the following month. Burns quickly recovered Patelco’s financial condition, reporting a net profit of $24.6 million in 2010 and record profits of $55.5 million to year-end 2012.
Patelco’s decision to move its headquarters from downtown San Francisco in early 2011 to Pleasanton, located about 40 miles to the East, has been plagued by bad timing in the real estate market. Patelco sold its two historic boutique buildings on Second Street in late 2010 for $11 million, or about $200 per square foot. The San Francisco Business Times reported that in November 2012, owner New Urban Properties flipped the buildings at a 150% profit, selling them for nearly $26 million, approximately $485 per square foot.
“Patelco sold at the bottom of the market. The buildings were empty,” said J.K. Dineen, Business Times reporter who covered the deal. “But even then it was pretty obvious that values would be back. It was a dumb move on their part.”
Dineen said most buildings located in that area of San Francisco have doubled in value since 2009.
Burns said Patelco’s board and management still support the decision to sell the San Francisco offices despite the value gain. The buildings required $2 million in seismic retrofits, and Burns said Patelco officials knew the property would gain value because a new transit center is being built across the street.
Burns also said his decision has nothing to do with Patelco’s recent distributed denial of service attacks, which allegedly occurred at the hands of an Iranian hacker group that has also taken down the websites of big banks like Bank of America and Wells Fargo.
“We dealt with it extremely well, and I think we’ve positioned ourselves as one of those go-to credit unions who understand this thing is serious and it’s not going away,” he said about the DDoS attacks.
Mid-July is when Burns said he expects to make the transition. He’ll stay longer if the board is unable to recruit a suitable replacement for the 247,000-member credit union, but he said he also is free to leave early if he finds the right opportunity.
While he wants to remain a credit union CEO, Burns said he’s not necessarily looking to move up another asset class.
“I have the option to move to an organization that really entices me that may not be $3 billion,” he said.
According to Guidestar.org, Patelco’s 2011 IRS 990 form reported that Burns was paid nearly $1 million, $490,000 in base compensation, $405,987 worth of bonuses, $46,877 in other compensation and $3,063 in deferred compensation.
Waiting in the wings at Patelco is long-time Executive Vice President and Chief Financial Officer Scott Waite, who has been with the organization nearly 20 years. Waite is a two-time Credit Union Times Trailblazer Award Winner, nabbing the top CFO trophy in 2010 and 2012. Waite did not respond to an inquiry asking if he was interested in the CEO position.