<p>BEDMINSTER, N.J. – Affinity Financial Services President Mark Cochran is a big fan of diversity. In fact, it is the diversity and breadth of products and services offered by the four business units under the Affinity Financial Services CUSO umbrella that Cochran says allows the operational CUSO to ride out the cycles of the variety of markets AFS targets. “Having four unique CUSOs that work out cross-cyclically helps us smooth out our earnings,” says Cochran. Run as a wholly-owned subsidiary and CUSO of Affinity FCU, Affinity Financial Services LLC was formerly a corporation doing business as Premier Financial Services. In 1999, it converted to an LLC and likewise divided its four business units into LLCs: Affinity Investment Services – provides mutual funds, investment alternatives, annuities, retirement planning services. The CUSU has 10 financial counselors on staff, is licensed in 23 states, and has $185 million under management. Affinity Vehicle Services – provides auto leasing and purchasing services. CUMAnet – offers loan origination and servicing. The CUSU has about 60 credit union clients nationwide. Servicing is retained in the credit union’s name and is transparent to the member. In 2001, CUMAnet originated about $540 million in first and second mortgages. Its servicing portfolio was just over $1 billion. Members Alliance Insurance – provides life, health, property and casualty insurance. Cochran said Affinity Financial is considering offering trust services and has started looking at potential providers, as well as studying trust services models from other credit unions and CUSOs. He was noncommittal as to when AFS would begin offering trust services, except to say that, “It would not be in 2002, but sometime in the future.” Every market has its ups and downs, and Cochran said, “The variety of markets AFS’ business units are involved with balance each other out.” For example, he said 2001 was a great year for mortgages, but it was “a lousy year” for auto leasing – in 2001, the business unit did about 800 leases. That’s lower than a typical year’s volume of about 1,000-1,200 leases. Cochran attributed the year’s soft auto leasing market to competition with auto manufacturers’ subsidized leasing offers and zero percent options. Added to that, he said after September 11th’s events, “the market really went down the tubes,” but he offered that business is starting to pick up. As another example, he noted that, “Up until about five years ago, everyone touted the ideas of CUSOs offering travel services because they figured members and especially credit union staff traveled a lot. But now practically every travel CUSO that once was successful is now out of business.” The ups and downs of the economy and world events though didn’t hamper Affinity Financial’s ability to delivery diversified products to members. The CUSO received the Operational CUSO of the Year Award from NACUSO last year in recognition of its efforts. What is Cochran’s formula for running a successful CUSO? For starters, he said a CUSO has to be good at collaborating. “A CUSO can’t be an insulated business unto itself,” he said. “Every CUSO has to be willing to get the resources it needs to deliver its products and services from other credit unions, CUSOs and organizations.” Beyond that, Cochran said CUSOs have to be willing to go outside the credit union industry to find the expertise they need for their staff. Based on experiences he’s had, Cochran said bringing someone over from a credit union to work at a CUSO doesn’t always work out because “their focus tends to be narrower.” With all the changes that are going on in the CUSO landscape with products, services, and regulations, Cochran predicts some major changes in the coming year. Among them – more consolidations and mergers, and more joint ownerships. “There aren’t enough CUSOs now, but down the road, just like the banking industry, we should expect to see a lot of consolidations and mergers among CUSOs,” said Cochran. He also predicts the demise of the wholly-owned CUSO 10 years from now. Scale and volume are important to the success of a CUSO, said Cochran. “It’s the same as in any business, the more volume and scale you can deliver, the more leverage you have and the better off everyone is.” -</p> <p>[email protected]</p>

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