HARRISBURG, Penn. — The corporate assessment won't slow Pennsylvania State Employees CU's strategic plans for 2009, especially its objective to build a new headquarters.
"What better time to build than when concrete and steel prices are low," offered CEO Greg Smith.
And while it is spending money on a new headquarters, the $3.3-billion PSECU isn't budging from its branchless approach to doing business (CU Journal, Dec. 15, 2008), which Smith said makes it easier to deal with the costs of the corporate rescue. "With the lower operating costs that our model provides (2.6% operating expense ratio), we feel confident that we'll work our way through the current challenges."
After posting the corporate charges and the capital account losses, PSECU's capital ratio is 7.34%, down from 10.5%, Smith said. "That's lower than it's been in years but we have no doubt that we can rebuild it."
PSECU does not have a great deal of experience dealing with losses, acknowledged Smith, so ALCO meetings "are different in that respect. There's no panic in the meetings, just a calm resolve to work through the current challenges. When I started with PSECU in 1991, we had capital below 3%. We built it up to around 10.5% and have been giving it back to members over the past few years in special dividends and higher deposit rates."
When it comes to the balance sheet, PSECU will focus more on the loan side of the business for the next few years, Smith said. "A lot of our job involves balancing benefits between borrowers and savers. At PSECU we've been leaning toward the depositors over the past few years. But I think it's time to focus more benefits on our borrowing members. I think there are real opportunities in the credit card segment."
Smith said PSECU is not planning specifically for another financial hit by the NCUA, and it has dealt with the corporate assessment and is "moving on." Now the focus is on rebuilding capital. "You have capital just for these types of surprises," Smith reminded.
