On Operations and Capital: No Excuse for Arrogance and Ignorance
The board, management and staff at Suncoast Schools FCU have worked diligently over the past couple of years to deal with the economic meltdown that has occurred in southwest Florida. In particular, we have focused on retaining as much of the core of the organization as possible while losses have continued.
One of our highest priorities has been to keep all of our branches open and not have employee layoffs. So far, we have been able to achieve that goal through significant reductions in staff through attrition, an emphasis on operating efficiencies, a reduction in assets, multitasking of employees and reductions in employee salaries and benefits.
After reading Stuart Perlitsh's letter in the Feb. 24 issue ("No Substitute for Retained Earnings"), it occurred to me I could have spared us many of those efforts by just asking him what our major focus should be. In his letter, Mr. Perlitsh provides us with the answer: "Suncoast should immediately begin closing some of its 50 branches." He is able to provide that brilliant recommendation despite using inflated expense ratios and flawed assumptions as to our respective fields of membership and local economic conditions. I have no doubt that had he used accurate data, he would have been able to advise us on how many branches to close and which ones to start with.
While Mr. Perlitsh exhibits such a remarkably accurate insight into the operations of Suncoast, he, unfortunately, demonstrates a complete failure to grasp the basic concepts of alternative capital. No one (certainly not me) is suggesting that alternative capital replace required levels of capital that is accumulated through retained earnings. Alternative capital would be an additional level of capital on top of our core capital. It would enhance, not only our ability to better serve our members, but would provide additional safeguards to the share insurance fund.
Additionally, NCUA Chairman Matz has been emphatic in stating that any form of alternative capital would not alter the ownership structure of credit unions, would have full and appropriate disclosure for investors and would only be approved for healthy credit unions.
Mr. Perlitsh finishes his letter by stating that his credit union "can no longer afford NCUA assessments to support poorly performing credit unions." It's ironic that he ridicules those who support alternative capital when alternative capital would only help him to avoid just that.
Tom Dorety, CEO
Suncoast Schools FCU