Annual Conference Highlights and Press Releases

Thomas C. Davis, NACUSO CEO

Thomas C. Davis, NACUSO President and CEO opened the 2009 NACUSO Annual Conference at the Encore Hotel in Las Vegas with an inspiring speech that told attendees that each of them was responsible for their credit union’s and CUSO’s growth and survival.

Davis stated “Today’s credit union industry is in the mature phase of its growth cycle and experiencing some of the most significant challenges of any time in its history. We are confronted with an economic malaise unmatched since the Great Depression and an unprecedented credit union corporate bailout that will adversely impact credit union capital positions. Coupled with these issues are the industry woes of the past several years associated with slow member growth, rapid consolidation, and minimal market differentiation. When we consider the aggregate impact of all of these challenges, the most critical issue facing us today is the sustainability of credit unions and the credit union industry.”

Davis noted that a key factor in addressing the sustainability challenge involves establishing opportunities for collaboration and getting credit unions to work together in business networks to create scale and meet shared needs. Davis said “now is the time for credit unions to transform themselves and the industry by embracing innovation and the unique advantages of collaboration and networked business models.”

“‘Business as usual’” is reaching an evolutionary dead end. When the going gets tough, the tough collaborate” Davis stated.  “Economic downturns provide an opportunity to create a gap between credit unions and their competitors.” Davis quoted  Winston Churchill: “We are out of time and out of money.  Therefore gentlemen, we are going to have to think.”  Davis said “While others cower, credit unions must take advantage of their ability to think critically, collaborate, and innovate together. Collaboration is a learned skill and must, along with implementation, become the new currency of our industry.  You alone can do it, but you can’t do it alone. Collaboration is the furnace that will drive credit union and industry sustainability.”

NACUSO Announces Board of Director Election Results at 2009 Annual Conference

The National Association of Credit Union Service Organizations (NACUSO) announced the results of the 2009 Board Directors at its Annual Membership Meeting on May 4. The Annual Membership Meeting was part of the NACUSO 2009 Annual Conference at the Las Vegas Encore Hotel.  Under NACUSO’s By-Laws, there is a Board of eleven directors, four directors from Platinum Partner members, three directors from CUSO members that are not Platinum Partners and four directors without any qualifying representative connection.

Mike Hales, partner in the Rochdale Group, a credit union consulting firm, and Judy Sandberg from Gateways Services Group, a CUSO providing insurance services and investment and trust program management services, were reelected.  Valorie Seyfert, President/CEO and co-founder of CUSO Financial Services (CFS) a broker/dealer CUSO located in San Diego, California and Mark Zook, President/CEO of MaPS Credit Union in Salem, Oregon were newly elected to the Board.

Tom Davis did not run for re-election to the Board as he has taken the CEO position with NACUSO.  Due to the resignation of a director and the change of a director from one category to another, there are two (2) vacant director seats on the Board.  Both directors must be persons representing members that are CUSOs but not Platinum Partners.  The Board has the ability to appoint persons to fill these vacancies until the 2010 election.

Officers for the NACUSO 2009 Board of Directors are as follows:

Chairman:  Dave Serlo, President/CEO, PSCU Financial Services

Vice-Chairman:  Pete Snyder, President, SCS, Snyder Consulting Solutions, LLC

Treasurer:  Lisa Renner, President/CEO, CU Holding Company, LLC

Secretary:  Judy Sandberg, Senior Vice President/Strategic Direction, Gateway Services Group, LLC

How Staffing Models Can Increase Your Productivity

Scott Jenner, President/CEO, Addison Avenue Financial Partners, discussed how the staffing models that are in place today at Addison Avenue’s investment services program were developed to accomplish multiple objectives:

  • Maintaining Strong Levels of member/Client Service… As more and more investment account relationships are “put on the books” the relationship with the member/client must be maintained thru multiple touches and a strong servicing model;
  • Expanding the Support and Service Model Productively… While adding service and support staff to an investment services program will address the servicing needs of a growing book of member/client business, it can increase overall overhead expense unless certain support staff have an expectation for generating production from existing account relationships as well as with those members that have less complex brokerage and investment needs.

Retaining Your Top Reps – Nicole Valentin-Smith

Nicole Valentin-Smith, Senior Vice President, Retail Sales, Xceed Financial Credit Union discussed the need for credit union investment services programs to have in place a specific retention strategy and plan for its top producing reps to minimize – if not eliminate entirely – the significant risk related to one or more of the program’s Reps from leaving the credit union and taking with them your best member/client investment account relationships.

While there are non-compete and non-solicitation agreements that are utilized by all of the primary broker dealers that serve the credit union marketplace today, you still want to have a retention plan in place to ensure an effective transition from a retiring Rep to a succeeding Rep that would be hired to take over the retiring Rep’s book of business. Credit unions have made a significant investment in putting the business son the books and the member account relationship is owned by the credit union – not the Rep.

Ms. Valentin-Smith talked thru how they built their Rep Retention Plan and what the drivers were as well as what it will look like when implemented.

Investment Services Benchmarking Trends” & “Benchmarking – Meeting The Member’s Needs”

  • Pete Snyder, President, Snyder Consulting Solutions, LLC; and
  • Kevin Mummau, Executive Vice President, CUSO Financial Serivces, LP

It is critical that we continue to monitor and compare our overall performance and productivity to industry benchmarks as well as utilize tools to identify where our business is coming from or could be coming from. During this session both Pete will be providing a glimpse into the benchmarking trends from the 2009 Callahan/SCS benchmarking study. Kevin will be discussing how CFS is providing it’ credit unions with a comprehensive analytic tool that identifies opportunities for productivity and performance enhancements.

“Investment Services Benchmarking Trends” — Pete Snyder

During this session Mr. Snyder presented the high level learning’s from recently completed Callahan/SCS 2009 Retail Investment Services Benchmarking Study for Credit Unions which will be published and available for purchase in mid-May.

In today’s challenging economic times that continue to present significant challenges for credit unions, there is a continued focus on benchmarking retail investment programs to ensure optimum productivity and performance. With the introduction of the Callahan/SCS benchmarking program in 2007, credit unions were provided with a comprehensive study and benchmarking tool from which to track and monitor the “global” trends of the overall credit union sector as well as measure specific key productivity and performance benchmarks.

The 2009 Callahan/SCS Retail Investment Services Benchmark Study is the largest credit union specific benchmarking available to credit unions and continues to be actively supported by the Broker Dealer community that serves the vast majority of the credit unions that provide to their members retail investment services. As did the 2007 study, the 2009 study will have three (3) primary sections.

Section I Is a global view of the credit union industry’s investment services channel from December 2005 thru December 2008 based on the data provided to Callahan/SCS by all of the participating broker dealers.

Section II provides a comprehensive view of the individual credit unions that have provided comprehensive income and expense data on their investment services programs.

Section III is a customized report and detailed peer comparison, including the Callahan/SCS Productivity and performance Scorecard, for participating credit unions that purchase the study.

The Global View’s Institutional Metrics

The participating broker dealers provided to Callahan/SCS aggregate data for all of the individual credit unions that they serve. This data includes:

  • Total number of credit unions that provide investment services;
  • Total number of representatives that serve members;
  • Total value and number of all investment accounts;
  • Aggregate gross dealer concessions (commission income) generated by all of the broker dealers.

It should be noted that the requested information did not include any member or account information, now were the names of the credit unions that are served by the participating broker-dealers provided to Callahan/SCS.

Continued Growth in the Credit Union Retail Investment Services Channel

The global data provided to us by the participating broker dealers suggests that the credit union retail investment services channel continues to steadily grow. The key institutional metrics that are key indicators of this growth are:

  • The number of credit unions that provide to their members with “face-to-face” retail investment services since grew by 3.64% from 938 to 968 between 2005 and 2008. Given that the total number of credit unions in the industry continues to reduce as the result of merger activity, we suggest that this minimal growth factor of 3.64% in fact includes some reduction in programs as the result of merger activity; and
  • The representatives that serve members grew from 1,902 in 2005 to 3,051 by the end of 2008; and
  • Total gross dealer concessions generated in 2005 was $289 million and grew to a total of $352 million by year-end 2008; and
  • The average gross dealer concessions per credit union increased from $308,375 in 2005 to $363,894 by year-end 2008.

The Market Downturn and the Impact on Retail Investment Programs

The aggregate value of member investment accounts grew from $38.9 billion to $40.1 billion between 2005 and 2008. The peak of account value growth during this reporting period was $50.4 by year-end 2007. With the deepening market downturn in 2008 the aggregate account values dropped to $40.1 billion by year-end 2008.

Aggregate account growth also reached its peak during year-end 2007 at 1,320,011 from a total of 1,265,803 in 2005. By year-end 2007 the number of accounts reduced to 1,169,001, below the total number reported in 2005. Based on the input and feedback from the participating broker dealers the primary driver around the vast majority of the reduction in total accounts came from members either liquidating the funds in one or more of their accounts to live on or rebalancing their portfolios which included some account consolidation. This is good news for the credit union channel as other brokerage firms have actually experienced a reduction in their account relationship from their customers moving their accounts to another firm.

Credit Unions Have Been Proactive During This Economic Downturn

It is important to point out that the aggregate number of accounts grew from 1,169,001 in 2007 to 1,273,567 by year-end 2008 during a significant market downturn. This suggests that credit union investment services programs have proactively responded to the downturn. The two (2) primary drivers around this account growth were:

  • Between 2006 and 2008 credit unions grew their representative sales force from 1,964 to 3,051 (55.35%). This new expanded sales force was able to open new accounts with new members that had not been previously served; and
  • Based on feedback received from the participating broker dealers, credit union programs have been increasingly successful in benefiting from having members transfer their investment accounts from other firms over to the credit union.

The 55.35% increase in the number of representatives between 2006 and 2008 while the number of credit unions providing investment services to their members only grew by 3.64% strongly suggests that credit unions recognize the value of reducing their “branch to representative ratio.” This is one of the key metrics on the Callahan/SCS Scorecard that was included in Section II of the 2007 Benchmark Study as well as in Section II of the 2009 Benchmark Study.

The Outlook is Good For Credit Union Retail Investment Services

The global data strongly suggests that the credit union retail investment services channel is well positioned to sustain itself through this economic downturn. Further, that when the recovery kicks in credit union programs credit union programs are very likely to emerge with strong growth in all institutional metric areas that we track in the global view of this study.

Positioning CUSO Value Propositions to Raise Capital

Jon Jeffreys, President and CEO of Credit Union Student Choice and Vice President of Callahan Financial Services; and Jeff Russell, President/CEO of TMG Financial Services and Chief Information Officer and Vice President of Strategic Development for The Members Group, presented a breakout session entitled “Positioning CUSO Value Propositions to Raise Capital” at the NACUSO Annual Conference held in Las Vegas.

Jeffreys identified the key strategic funding differences between single focus and multi-purpose CUSOs and highlighted the processes that exist for raising capital.

Russell presented a case study on the available capital options for the start-up company he helped create, TMG Financial Services.  A credit union-owned CUSO, TMG Financial Services is the sister company of the 20-year processing veteran, The Members Group. The company was started in 2007 to provide credit unions with a truly collaborative solution for partnering their credit card portfolios versus selling to a bank competitor.

Licensed as a non-depository, state-regulated consumer lending company, TMG Financial Services gets its funding to purchase portfolios from other credit unions who believe it is important to keep those valuable assets and relationships within the credit union industry.  Russell overviewed the capital challenges that his company has experienced to date – from regulatory hurdles to industry landscape — and discussed the unique lending vehicles they have established to meet their funding needs.

As industry experts, Jeffreys and Russell led an engaging discussion on capital options that exist for CUSOs.

Collaboration and Innovative Thinking Helps Credit Unions Get   a Piece of the Refinance Pie

Historically low mortgage rates have led to a surge in refinances,  but how can credit unions make sure that they are benefitting from the boom? Some of the leading CUSO lenders shared what credit unions can do to differently to stand out in the crowd during a session titled, “Innovative Mortgage Services Practices and Opportunities,” presented today at the NACUSO Annual Conference.

Cory Mackwood, co-founder/CEO/president, CUSO Development Company, and Keith Varney, COO, TruHome Solutions, explained to the audience of credit union leaders that they must break the traditional lending rules and step outside of their comfort zone if they want to see growth in mortgage originations. By researching to get to the core of what members really desire in a financial institution and a mortgage lender, credit unions can provide the programs, service and support to match their unique member needs.

Mackwood and Varney explained how one of the most effective ways to exceed member expectations and generate earnings for the credit union is to partner with an experienced mortgage lending CUSO.  According to a study performed by Callahan & Associates, credit unions that operate as part of a multi-credit union CUSO benefit from more loans, increased assets and a growth in membership.

Attendees Hear about Branching Solution at 2009 NACUSO Annual Conference

At the 2009 NACUSO Annual Conference, Carroll Beach, President/COO, CO-OP Shared Branching, shared information and insights to help credit unions better serve their members and take advantage of opportunities presented in the current market. Beach was one of the speakers presenting at the annual event, held May 3-6, 2009, at the New Encore Wynn Las Vegas. More than 280 participants attended the conference.

In his session “Branching after the Bailout,” Beach discussed today’s financial climate, and how the happenings in both the credit union movement and banking industry will impact the future for credit unions, particularly their branching strategies. He also included a discussion on how shared branching can help in these tumultuous times.

Some highlights from Beach’s session:

  • “With all the bank closures and mergers going on right now, credit unions are presented with some great opportunities. The customers of these banks must go somewhere. Why not your credit union? You can send a powerful message to potential members about the strength of credit unions, in addition to gaining new members.”
  • “Some credit unions are responding to the economic crisis by shutting down branches to cut expenses. Experts warn that the key is to make sure operational cuts aren’t leading to losses in member service. Closing branches can send a negative message to members. For credit unions, where member retention and service take priority, account accessibility must remain in place.”
  • “Just because your credit union may have to close a branch, it does not mean you can’t be in the neighborhood anymore. When proprietary branches are being shuttered, credit unions can direct members to a nearby shared branch, where they can continue to conduct transactions just as if they were in their home credit union.”

Nearly 1,300 credit unions currently offer shared branching through CO-OP Shared Branching.  With over 3,600 branch locations available for member use throughout

the country and worldwide, shared branching ranks fourth in the nation in terms of branches among financial institutions, behind only Wells Fargo/Wachovia, Bank of America and Chase/Washington Mutual.

MarshBerry & Insuritas Present Strategic Insights on Insurance Agency Ownership for Credit Unions at NACUSO Forum

Insuritas, the nation’s leading provider of outsourced insurance agencies, and MarshBerry, the nation’s leading Mergers, Acquisition and Agency Advisory firm provided a detailed examination of the rapid growth in credit union owned insurance agencies.

Woody Ratterman III, SVP for MarshBerry, reviewed the state of the insurance agency industry, pointing out that 2009 represents the best time in over 20 years for credit unions to consider purchasing a local insurance agency. Agency valuations have fallen, and owners are looking for exit strategies. Ratterman explained, “For credit unions looking to build an annuitizing fee income stream while rapidly expanding their field of membership, buying a local insurance agency book of business may be one of the best deployments of capital.”  MarshBerry has assisted over a dozen credit unions in purchasing local insurance agencies.

Separately, Jeff Chesky, President & CEO of Insuritas, demonstrated that a key strategy for buying insurance agency books of business is to start with a de novo agency that is built to support the credit union’s current membership.  Chesky noted, “Using a strategic partner to build an outsourced insurance agency solution creates a great foundation for subsequently acquiring agencies. Outsourcing provides a turn-key insurance agency without the significant capital investments required to build or buy your first agency.”

Chesky continued, “An insurance agency outsourcing solution will enhance credit union’s fee income, competitive position and deepen its member relationships with insurance products that feature the best combination of price, convenience and selection.” Ratterman added, “With an agency in place, acquiring local agency books of business will provide dramatic increases in fee income, expand membership and grow market share.”

Former SBA Insider Interprets the New MBL Landscape

Kent Moon, President and CEO of Member Business Lending, LLC spoke to attendees of the 2009 National Association of Credit Union Service Organizations Annual Meeting.  Moon, a former SBA official and 35 year veteran of the small business lending industry, gave insight into the rapidly changing credit union business lending landscape.  He discussed the implications of recent political appointments, as well as new leadership in the congressional small business committees.

“There are certain opportunities that occur under a new administration and we are about to witness a period of tremendous growth.  If credit unions do not move now and prepare to take advantage of this opportunity they will miss it.  The credit unions with strong member business lending programs will be the industry’s leaders of the future.,” said Moon.

Moon also discussed the impact that President Obama’s stimulus plan will have on credit union member business lending programs.  He said, “the temporary elimination of borrower fees has made the SBA programs increasingly attractive to borrowers.  And with the 90% guaranty, cap issues have virtually been eliminated.”

Moon concluded the presentation with a “reality check”.  Although SBA 7a loan production is down nearly 56% from this time last year, he reminded the audience that total volume is still up 24% from 2000.

Credit Union Collaboration Is the New Frontier and the Answer to Industry Sustainability

Do you run a business, or are you charged with building a business?  When challenged by a bad economy, or the push back from credit unions adjusting to the new environment, are you ready to step up as the architect of the CUSO’s business design that can meet the challenge?

At this year’s NACUSO Annual Conference, Randy Karnes, CEO of CU*Answers and Pepperdine University Faculty Member, gave participants a preview of NACUSO’s first ever Executive Certification Program, planned for October 4-7, 2009. More than just an educational weekend, this event will be year-long networking event combining top notch University programs with distant learning, collaborative project work, and a chance to build relationships with some of the country’s most successful CUSO leaders.

During his session Mr. Karnes discussed why current events and the direction of the CU industry make finding new business designs for credit unions a priority.  He encouraged CUSO leaders to be at the forefront of new business designs, and through their efforts, build collaborative and network templates for the CU industry.  He also gave an overview of the course syllabi from all of the notable faculty members that will be participating in NACUSO’s new “Building Business” Executive Certification Program.

Strategies to improve the performance of your branch network by over 100%

In this session, attendees learned of ideas to improve credit union’s performance immediately while strategically positioning a particular credit union to succeed in the future.  By examining many critical factors from branch location and building design to merchandising, Bill Winter of Winter & Associates and Jeff Pflipsen of HTG Architects share research findings and proven strategies which can improve the performance of a branch by over 100%.  The session includes actual credit union case histories and programs in place today.

Jeff Pflipsen, is a Partner at HTG Architects.  His 23+ years of experience in the planning and design of financial institution facilities is provided through EVOBANK® (the evolving financial institution) consulting, effective planning and creative design ranging from minor remodelings to new facilities.   The firm has a 50 year history and has worked on more than 1,500 financial institution projects.

Bill Winter has more than thirty-five years of experience in financial institution marketing.  Through work with RSM McGladrey and most recently providing Marketing and Demographic services, among other services, on more than 170 site analysis studies throughout the United States, Mr. Winter has established himself as an expert in the field.  Bill is national lecturer and is often quoted in financial institution publications on marketing communications and relationship marketing.

Investment Services Program Manager Panel – “Building Your Program’s Differentiated Value Proposition” and “Weathering The Storm of The Economic Downturn”

  • Michael Prior, President/CEO Credit Union Financial Network, LLC (“CUFN”); and
  • Sandra deChastain, Investment Services Program Manager – CUSO Financial Services, LP

“Building Your Program’s Differentiated Value” – Michael Prior

Credit unions and their investment services programs are competing in a marketplace that requires that we develop and communicate a truly differentiated value proposition for our Investment Services and Insurance Agency offerings to be viable in the future. Mr. Prior discussed the process in which CUFN is developing their differentiated value proposition for the credit union programs that they serve today.

“Weathering The Storm of The Economic Downturn” – Sandra deChastain and Michael Prior

Credit Unions continue to be faced with addressing the challenges related to the current economic downturn. Many have referred to the “time and cycle” that our industry is migrating through as truly unprecedented. During this session both Michael and Sandra addressed how their credit union programs are successfully addressing the challenges related to the economic downturn.