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<p>WEST PALM BEACH, Fla. – From revamping internal operations to the unveiling of new products, corporate credit union CEOs say 2002 is going to be a breakout year. Credit Union Times spoke with corporate CU CEOs from around the country to find out what’s on tap for 2002, and one common theme that emerged was the launching and marketing of products they spent 2001 developing. “What we’re looking to do is expand on our e-commerce offerings. We spent a lot of time last year getting our tech solutions ready to fly,” said Joe Herbst, president/CEO of the $3.9 billion Empire Corporate FCU, Albany, N.Y. Herbst is talking about the corporate’s recent launch of bill pay, Internet banking, and online share draft retrieval. Empire and a handful of other corporates worked with e-com vendors Financial Fusion and Intelidata to get a group pricing deal for Net banking and bill pay. All of the corporates involved have either launched or are set to launch bill pay and Net banking. Empire is also unveiling online share draft retrieval for CUs to offer their members through their home banking packages. It’s an admittedly very crowded e-com space already, said Herbst, but Empire’s members said they were looking to the corporate for these services. “They indicated that they wanted us to get involved or we wouldn’t have. It’s structured as a la carte. Credit unions can use any one of these products or all of them,” said Herbst. Herbst said the groundwork for all this e-com work was done last year, with this year being more focused on getting the word out to its members. Empire also launched its ALM CUSO, MemberTradeAdvisory, in 2001, and hopes to get more CUs involved this year. “We think it can really take off in the wake of NCUA’s focus on interest rate risk,” said Herbst. Last year was also a building year for the $1.5 billion Wisconsin Corporate Central CU, Hales Corner, Wis. “2002 will be a year when we roll out some new products, whereas last year it was a developmental year,” said the corporate’s president/CEO, Mark Schroeder. At press time, Wisconsin Corporate Central announced an electronic bill payment deal with Mid-Atlantic Corporate that will allow it to offer electronic bill pay to its members. That along with the roll-out of enhanced ACH services and Net-based image retrieval will keep the corporate cutting edge, said Schroeder. “We have always been on the leading edge with technology. Our members expect it. You want to keep doing it. This keeps us in that position,” said Schroeder. Speaking of Mid-Atlantic Corporate, it is working to grow its thriving electronic bill pay business. The corporate already had bill pay marketing deals with Louisiana Corporate and TriCorp to offer bill pay to its member CUs. The addition of Wisconsin Corporate will likely help boost its 170 EBP client list. Those clients are spread out over 25 states. Though it’s been the leader of the corporate pack in EBP, it still has to keep working on the product, said Mid-Atlantic Corporate FCU president/CEO Ed Fox. “We’re looking at all of our partnerships that we use for electronic services to make sure they’re the best for us. By nature, vendors seem to out do each other. One will improve on the other. We don’t want to jump around from one to the other, but we don’t want to be tied down to one or the other forever either,” said Fox. Mid-Atlantic’s success with EBP has been unparalleled in the network. One reason may be its position on competition. Mid-Atlantic pledges to its corporate CU partners (currently TriCorp, Louisiana Corporate and Wisconsin Corporate Central) that it will not market other products and services to their member CUs. “We were willing to trade off a little on all kinds of different business for a good piece of bill pay business. We want corporates to be comfortable with us if they partner with us for bill pay. They won’t see us going after anything else,” said Fox. Fox said he’s not against corporate competition, but it was a business decision to be aggressive with a product it’s very good at vs. marketing products that CUs can look to a host of other corporates for. Mid-Atlantic also has some internal tweaking to do in 2002. Fox said the corporate will be expanding its succession plan, which right now only deals with the CEO’s departure. “NCUA brought up the fact to us that we needed some depth in the succession plan. It will include managers and supervisors, and anyone in key operational services,” said Fox. To that end Mid-Atlantic will implement a management training program to prep certain employees to step in for supervisors and managers in key departments. Jane Melchionda, president/CEO of the $1.2 billion EasCorp said EasCorp will expand its statement rendering service to be delivered via e-mail. “Because we do statement rendering, it’s a natural lead-in for us to do e-statements,” said Melchionda. She said this year the corporate will work on an e-mail version of e-statements; it already has a product for members to get their statements off the Web via Net banking providers. EasCorp is the only corporate in the nation to do statement rendering. Also on tap for EasCorp is the opening of its fourth facility. Like its headquarters, it too will be in Woburn, Mass. Melchionda said the facility will be dedicated to its statement rendering business. With NCUA focusing more on ALM, Melchionda said she expects EasCorp’s ALM CUSO, ALM First (located in Dallas), to grow in 2002. That CUSO already manages about $3 billion in assets. “I think that gets lost in the shuffle. Everyone looks at asset size, but with our advisory service we’re pretty much responsible for about $4 billion,” she said. Over in Hawaii, the $420 million PacCorp is looking to create partnerships and strategic alliances to meet more of its members needs. “We’ve started the groundwork to offer ALM modeling and validation, ACH origination, and automated payroll processing and settlement services,” said Rand Yamasaki, president/CEO of PacCorp. Another of PacCorp’s goals is to develop a methodology to profile its members and develop an incentive program to reward and encourage patronage, said Yamasaki. “Building relationship value is the key to maintaining a solid relationship with our member credit unions,” he said. The corporate will also roll out an in-depth training program to augment core competencies of staff members. At the $155 million Louisiana Corporate CU, Metairie, La., President/CEO Dave Savoie said in 2002 the corporate wants to embrace its role in serving small to mid-sized CUs. “Because our primary market is a state that consists of a relatively large number of small to medium sized credit unions, we have developed a unique ability to meet the service needs of these institutions. We know that the management of our member credit unions are the real experts at the retail credit union business and we are not a corporate that would presume to tell them how to run their business or that they have a duty to their membership to pick the corporate,” said Savoie. Despite the consolidation in the network over the last few years, Savoie thinks there’s a place for smaller corporates such as Louisiana Corporate. “One thing that the PC and Internet revolution has taught us is that the old thinking about economies of scale does not always apply in today’s environment. The technological revolution was not brought to us by old guard firms like IBM, but by newcomers like Intel and Microsoft. These companies were smaller and had the flexibility to respond quickly to their members’ needs,” said Savoie. 2002 will be spent communicating Louisiana Corporate’s advantages said Savoie. Pete Pritts, president/CEO of the $850 million FirstCorp, Phoenix, said one clear goal for his corporate is working on promoting its coin and currency service. Many corporates offer coin and currency, but FirstCorp’s is unique in that there are no banks in the picture. “We have vaults established throughout Nevada and Arizona. We get cash directly from the Federal Reserve without involving banks,” said Pritts. The service is relatively new in Nevada, so Pritts hopes to up penetration in 2002. The $1 billion Constitution State Corporate FCU hopes to be an innovator in 2002. The corporate formed a CUSO last year, SmartSource Solutions, that is designed to be a sort of think-tank that will partner with other corpoates to bring products to market. For example, in about 30 days SmartSource will release a new product called CU Boardroom. “It’s an online virtual board room for credit unions to present information, chat online, do real-time voting, push documents back and forth. It’s a real nice tool for credit unions with a lot of communication with their board,” said David Addison, president/CEO of Constitution State Corporate. Addison said the corporate hopes to do more of the same in other areas. “We want our CUSO to be sort of an incubator,” said Addison. At the $6 billion Southwest Corporate FCU, Dallas, strengthening its new corporate identity rolled out last year; launching its electronic bill pay service; and continued promotion of its share draft processing center in Jacksonville, Fla. are three top priorities for 2002. Southwest said it is adding a third sorter to its share draft facility in Jacksonville. Over at the $17 billion WesCorp, president/CEO Dick Johnson said he is committed to working on helping corporates get a bigger share of the $50 billion CUs are investing outside of the network. “We need to explain that these investments are costing the industry some $100,000,000 in lost reserves (capital). I arrive at this amount by assuming that a corporate can improve the yields being earned on these investments by some 15 to 25 basis points-let’s say 20 basis points on average,” said Johnson. “The second reason, as I see it, is that these investments are also providing cheap money to our competitors. For instance, take the FHLB. They issue securities to fund loans to their members-primarily banks and thrifts. They lend money cheaply because they raise money cheaply-taking advantage of their government status. Typically, when the FHLB issues, let’s say, a callable security, they issue it only when their funding target of 25 basis points UNDER LIBOR is met. So the investor is earning 25 bps under the wholesale market for the investment.” Maybe the most important reason, said Johnson, is to keep more money in the CU industry to meet CU liquidity needs. [email protected]</p>

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