HARRISBURG, Penn.-Pennsylvania State Employees CU has learned that during a recession the credit union can't get too defensive and cut back in key growth areas.

That lesson was learned the hard way as the $4-billion PSECU ratcheted back on technology development efforts in 2008 and 2009 to save money, and then enjoyed record performance years in 2010 and 2011.

Those banner years let CEO Greg Smith know the CU could have afforded to spend more on technology growth during the recession, and had the CU done so, lamented Smith, it would not be lagging behind in IT development in 2012. "We have to play catch-up now. We have some new things rolling out on mobile and desk-top that are exciting. We're getting there, but we are not where I wanted us to be right now."

Locking Down Costs, But...

Smith gave the order in 2008 that if the tech development expense was not for a security purpose or to meet a regulatory requirement, the money would not be spent.

"I was serious about locking down costs. The economy was tough, as we all know, and as a result, in 2009, we had one of our worst years in terms of net earnings, around 30 basis points of ROA. However, as things turned out, we did not have to be quite so hard in terms of expense control."

Smith conceded he will now hold to advice shared by many analysts during the recession that credit unions that find ways to invest in growth during the hard times will come out ahead when the economy recovers. Smith said he'll take a different tack the next time the economy pulls back.

"We have rebounded very well from the recession, incredibly strong. I just wish we would have continued our efforts to build new technology, we'd be even stronger today."

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