COLUMBUS, Ohio - In a major deal for the corporate network, Corporate One has agreed to sell its SimpliCD program to Corporate Exchange, a new CUSO consisting of 29 of the nation's 31 corporates. With 29 corporate owners, Corporate Exchange shows corporates can still work together. The wild card with Corporate Exchange's future has been Corporate One, whose CUSO offers SimpliCD. Corporate Exchange was prepared to develop its own brokered-CD product, but from day one wanted Corporate One's participation, given the success the SimpliCD product has had. Under terms of the deal, Corporate One will become one of the major shareholders in Corporate Exchange; Corporate One President/CEO Lee Butke will have a seat on the six-person Corporate Exchange Board; and Corporate One will continue to manage SimpliCD for the next three years. SimpliCD has been one of the most successful corporate credit union products ever. Corporate One developed SimpliCD in 1996 to meet a demand for higher yielding term investments that could compete with Treasuries and other investments. Through a co-agent program, Corporate One started offering it to other corporates to sell to their members. Corporates receive commissions off sales. How successful is it? As of press time the program had $3.2 billion outstanding, and there are currently 16 corporate CU co-agents with over 1,800 credit union clients. While Corporate One President/CEO Lee Butke said having 16 co-agents is tremendous, this new deal will almost double that number, and that was the impetus for going ahead. It's rare for one corporate to have such success with other corporates for a single product. Butke thinks the success was driven by, as the name says, the simplicity of SimpliCD. "The beauty is with one call to the corporate you can place not just one CD, but a whole block. You can be guaranteed that you will not double them up, have monthly interest automatically collected and deposited in your account through ACH. This was our vision," said Butke. It's also a good value for a CU's investment dollars. During the interview Butke checked SimpliCD rates and those of Treasury. "Right now our two-year rate is 43 basis points better, and the three-year is 45 better, and that's probably the tightest spread in awhile," he said. With SimpliCD so successful, why did corporates get together to form a CUSO that could have possibly competed with it? The primary reason behind Corporate Exchange said the group's chairman, Georgia Central CU President/CEO Greg Moore, was to ensure widespread ownership of a brokered-CD program, with no one corporate dominating. "We thought it was important to have Corporate One join us. We all went into this wanting to make sure everybody had a say, everybody had a voice with the new company. We didn't want one overbearing owner. I think you'll see across the board shares are evenly spread among owners," said Moore. The income any one corporate receives from offering the product is still dependent on how successful it is with their own membership. There are no dividends planned to Corporate Exchange owners at this time. The deal also brings into the mix some larger corporates that didn't previously offer SimpliCD, such as WesCorp. -email@example.com
Corporate One to Sell Popular SimpliCD Product to Corporate Exchange
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