Perspectives October 2008
As I write this column, the bad news in the financial services industry continues to flow so quickly that it is difficult to absorb. This stream of bad news is causing concern about the stability of all financial institutions, which is a reasonable concern. However, it is important to take some time to understand the underlying facts surrounding these events in order to avoid panic and overreaction. There are, indeed, issues to be concerned about, and there may be corresponding actions for you to take to protect your household’s interests.
If you are not sure what direction to take at this time with your savings, retirement plans, or mortgage, I urge you to contact SCCU. We can assist you in making an informed decision and in planning reasonable actions.
Why should you trust SCCU? Because Space Coast Credit Union is in the business of generating value for our members in the long term. This defines how we conduct ourselves.
I have stated many times in this column that the credit union is different by nature. It is not publicly traded, so we are not subject to the quarterly demands of analysts and investors to generate short-term growth. This is significant, because organizations respond to the pressures being applied. If your company is beholden to short-term gains, you will take actions to achieve the short-term gains, often at the expense of long-term value.
It is an obvious observation that when you squeeze an orange, orange juice comes out. Squeezing the orange simply reveals what is inside. These tumultuous times are applying new pressures to financial institutions, and we are seeing what is really inside many of these companies. We are seeing that inside these organizations, decisions were made based on greed, short-term focus, bad assumptions and just plain foolishness.
I do not find any satisfaction in the turmoil that surrounds us, but this turmoil is drawing a stark contrast regarding the character of the players. This turmoil has revealed the differences in what occurs in companies driven to produce profits vs. cooperatives driven to serve members.
We are conservative, which is viewed as stodgy in comparison to the former “high flyers,” but the steady conservatism has assured us the strength we need to weather these storms, and the capability to step up and provide needed stability amidst the turmoil. SCCU has grown steadily, but slowly, over the last 57 years so as not to exceed our net worth levels. There is no shortcut and there are no tricks.
The result is amidst this financial upheaval, Space Coast Credit Union has continued to serve and grow. While most other mortgage providers have laid off employees and left the market, we have hired additional employees and expanded in the market, offering millions of dollars of financing that would have otherwise been difficult for homebuyers to obtain. While others have folded up their auto lending, we have grown our offering, saving millions of dollars in payments and interest to our members. We continue to expand our service offerings by through additional branch and ATM locations.
I am grateful to those elected Board members now and in the past who have acted out of service, versus the self-service so common in many corporations. Our Board of Directors has served with no compensation for many years to ensure that the credit union has what it needs to remain strong and relevant now and in the future. This motivation now stands in great contrast to the turmoil that currently surrounds us.
This turmoil continues to emphasize fundamental lessons that we must learn:
There is no free lunch. As we learned from the technology bubble in the late 90’s and again with the mortgage meltdown now, the promise of extremely high returns without risk is an illusion. Wealth and growth are only sustainable through industry, work, time, patience, discipline and productivity.
“Get rich quick” is the best way to get poor quick. It has saddened me over the many years of working in the credit union to see the hard-earned savings of members withdrawn from the deposit accounts of the credit union and invested in the investment fad at the time because the media hype and apparent opportunities looked so alluring only to see it evaporate in an instant. I have witnessed millions of dollars of savings withdrawn and thrown into the frenzy, only to see the members’ decades of disciplined savings disappear.
I am convinced that during these times of extreme uncertainty and turmoil, Space Coast Credit Union’s true difference can make a difference to the families in our community. We will always be careful stewards of the members’ resources, because we are owned by our members, and our members’ long-term best interest is our sole responsibility.
Douglas R. Samuels
President/CEO
