Divesture From CUSOs Not a Likely Trend as CUs Seek Revenue Streams
o CUSO collaboration still the norm among credit unions.
o Stressed CUSO financials, vision and management changes may lead some CUs to divest.
"CUSOs are the secret weapon of our industry," said Doug Petersen, executive vice president at the $756 million Workers' in Fitchburg, Mass. "Collaboration can enable CUs to gain economies of scale while remaining independent. CUSOs are a means to an end."
Workers' owns eight CUSOs and collaborates with two others in areas ranging from business lending and student loans to credit and debit cards to investment services. Petersen said the credit union has invested $1.76 million in CUSOs. In total, it is actually $2.45 million less capital distributions of $682,000. Workers' is also in the discussion stage of developing an information technology CUSO as well as title insurance subsidiary.
The corporates are also experiencing some CUSO shakeups. Eastern Corporate Federal Credit Union in Burlington, Mass. launched 1909 Financial Advisors LLC several years ago. Through the trust and wealth management subsidiary, EasCorp partnered with MEMBERS Trust Co. to serve its credit union clients. Maria Connelly, marketing manager at EasCorp, would not confirm if 1909 is still in operation. After checking EasCorp's website, no information could be found on 1909. It launched Vertifi Software, a payment systems CUSO, in 2009.
Competing on the scale of a Wells Fargo or Bank of America is just not realistic for credit unions, said Mark Zook, president/CEO of MaPS Credit Union in Salem, Ore. Zook is also the CEO of MaPS Service Agency Inc., the holding company for the credit union's subsidiaries. At face value, CUSOs serve as a new revenue source, a natural inclination since credit unions were designed to grab new opportunities.