Old-Fashioned Strategy at Tampa's Suncoast Schools

To see how much credit unions have grown in the past 40 years, simply follow the career of Perry M. Dawson.

When he started at Dallas Teachers Credit Union in 1956, the institution's $6 million in assets made it the Lone Star State's largest financial cooperative. The acquisition of calculators that printed out on paper tape was seen as a major technological advance at this Lilliputian institution.

Now, Mr. Dawson is president and chief executive of Suncoast Schools Federal Credit Union in Tampa. With $1.2 billion in assets and 162,000 members along the west coast of Florida, it is the largest financial institution based in the Tampa Bay area.

Despite the two institutions' vast differences in size and complexity, Mr. Dawson said he has followed the same old-fashioned strategy at both: providing financial products at the lowest possible price and with the highest level of service.

"Our staff is taught to personalize service every time they see a member," Mr. Dawson said.

Now 67, the soft-spoken former high school teacher plans to retire next March. Industry officials, who credit him with integrity and honesty, said he'll be missed.

"He's a legend," said Jim Blaine, chief executive of State Employees Credit Union in Raleigh, N.C. "He's highly respected by me and everyone else who's come into contact with him."

Mr. Dawson arrived at the credit union, then called Hillsborough County Teachers, in 1967, when it had $9 million in assets.

Under Mr. Dawson, the credit union grew - in membership numbers and geographic reach - by merging with smaller school credit unions along Florida's west coast.

But the key to attracting and retaining members was offering them a good deal, Mr. Dawson said.

Suncoast Schools prices competitively. Its one-year certificate of deposit offers a 5.73% rate, compared with the 5.08% average rate offered by local financial institutions, according to the Bauer Group, a Coral Gables, Fla., rating firm.

A five-year new-car loan carries a 7.73% rate, and a five-year used-car loan is 8.75% The averages for the competition are 8.58% and 9.26%, respectively.

The products appear to be successes. Suncoast Schools' loan-to-deposit ratio for June 30 was 72.8%, compared with a 68.8% ratio for its billion- asset peers, according to figures from Callahan & Associates, a Washington- based consulting firm. Its return on assets was slightly off, earning 88 cents for every $100 of assets, compared with 95 cents for its peers.

Mr. Dawson estimated that 60 cents of every dollar the credit union generates in income is returned to members, either in the form of lower loan rates or higher savings rates.

A desire to maximize returns to members put Suncoast Schools at odds with the National Credit Union Administration during the 1980s. Thrifts and banks were having problems, and the credit union regulator was pushing institutions to boost their capital. Mr. Dawson grudgingly pumped up reserves, but not at the frantic rate of some of his peers.

There was a perception that credit unions might be at risk, he said. "But we didn't feel like there was a great deal of risk for us. We were always being berated because we weren't building capital as fast as others."

As of June 30, Suncoast Schools' capital-to-assets ratio was 8.1%, compared with 9.1% for its peers, according to Callahan.

Now that the financial crises of the 1980s are over, Mr. Dawson thinks it's time to stop building capital levels and start to maintain, or even reduce, them.

"By and large, most credit unions have excessive capital," he said. "In our case 7.5% to 8% is good. It's time to give it back" to the members.

Suncoast Schools' membership includes some city and county government employees, as well as hospital workers, but the bulk of it is schoolteachers and their immediate families.

The credit union offers several products and services with its core membership in mind.

For example, its "summer skip" loans allow members to structure their loan repayment schedules so there are no June or July installments. Many teachers don't get paid during those months.

Suncoast Schools also has a program where it takes a slice out of teachers' earnings during the school year through payroll deduction and places it in a savings account for a summer nest egg.

Suncoast Schools has a myriad of ways to reach its membership, which is stretched along 250 miles of west Florida coastline. It has a network of 14 branches, with two more on the way, as well as 50 ATMs. On the telephone front, the credit union has an audio-response system and two years ago opened a 15-person member service facility.

The credit union also relies on electronic funds transfer. About 103,000 members are on direct deposit or payroll deduction, and the credit union receives $75 million in electronic deposits and loan repayments a month, Mr. Dawson said.

Mr. Dawson is looking for new ways to reach members.

"I don't doubt we'll be offering home banking soon," he said.

Just because Mr. Dawson is a traditionalist in some ways doesn't mean he's not an innovator.

In 1977 he helped found the association, Payment Services for Credit Unions, to help institutions offer credit card services to their members. In 1988 he helped organize a spinoff group, Card Services for Credit Unions, after the original association canceled its contract with Telecredit Inc., now Equifax Card Services.

In 1987 Mr. Dawson organized a trust service at Suncoast Schools, making it one of the few credit unions, if not the only one, to open such a subsidiary.

"We saw an urgent need to serve members with trust services because of the high fees and high deposit requirements" at other trust services, he said. "We offer a program with modest fees and don't set levels. It's not a profit center, but I believe the overall value for our image as a financial services provider is enormous."

Over the years, Mr. Dawson has seen his industry's financial footings grow stronger. But now that he's at the twilight of his career, he worries whether a new generation can maintain the values that made the industry strong.

Mr. Dawson, who knew some of the credit union organizers of the 1930s and 1940s, fears that the industry's tradition of providing low-cost financial products with a smile may be giving way to a greater concern for profits.

"There are some credit unions where everything is seen as a profit center," he said. "They need to understand everything we do has to be seen from the perspective of how it will affect the members. When we price loans, fees, and dividend rates, we have to keep the member in mind."

"A credit union that loses sight of these principles might do O.K., but it will not do as well as it could," he said.

When it comes to operating the way a credit union was intended to, Mr. Perry said: "Some people carry it out and some just talk about it. I carry it out."

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