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SAN ANTONIO, Texas – After 20 years of being CUNA’s endorsed share draft provider, Clarke American and CUNA Strategic Services Inc. (CSSI) have gone their separate ways and not renewed their national endorsement agreement. The endorsement contract expired on June 30, 2002. Don Dolan, vice president and general manager of Clarke American’s Credit Union Division told Credit Union Times that while Clarke American enjoyed working with CSSI and plans to continue working with CUNA, “a uniform endorsement agreement doesn’t work effectively in today’s marketplace. “Individual credit unions and leagues have unique challenges and needs that require the delivery of unique services from providers. Our charter isn’t to serve all credit unions the same way. The boiler plate documentation under the endorsement agreement we had with CSSI didn’t allow for enough flexibility,” said Dolan. To “better” meet those needs, Clarke American has introduced a State League Endorsement Program and will pursue having direct individual agreements with Leagues, rather than garnering their endorsements through CSSI. Mike Fay, vice president of sales and marketing for Clarke American’s Credit Union Division will be responsible for the growth and development of the State League Endorsement Program. Clarke American’s discontinuance of its national endorsement agreement with CSSI is an independent strategic business decision by the company’s credit union division. It does not impact any national endorsement agreement that Clarke American’s banking division may have with a banking association. While news about Clarke American’s decision was officially announced after June 30, the company’s decision was not a surprise to CUNA. Dolan said Clarke American had discussions with CSSI in the beginning of the year to brief them about the direction it was moving and what it was considering. Dolan said Clarke American left its national endorsement relationship with CUNA “on amicable terms,” and the company looked forwarded to continuing to work with CUNA. Wes Millar, vice president of strategic alliances for CUNA & Affiliates described the decision as “mutual. There were some things we wanted that they couldn’t give, and things Clarke American asked for that we couldn’t satisfy. In the end, we both put together an exit strategy, it was very congenial.” Clarke American also met as early as late 2001 with league and credit union representatives and explained to them that Clarke American was looking at having a different and more direct endorsement plan with the leagues and why. Before Clarke American and CSSI reached their mutual decision not to renew their endorsement agreement, Clarke American had endorsement relationships with 28 leagues for share draft printing services. “We’ve been very forthcoming with the leagues. We visited with them and explained how we want to work with them,” said Dolan, noting that thus far their responses have been “favorable.” At press time, Dolan said Clarke American had already completed new endorsement agreements with several leagues – he said the names of those state leagues were confidential – and was actively engaged in discussions with others. “Boilerplate language is not in credit unions’ or leagues’ best interests,” said Dolan. It was over this issue that Clarke American and CUNA “went in different directions,” said Dolan. That was true also with regards to the commissions Clarke American paid CUNA and leagues for their endorsements. Neither Dolan nor Millar would comment on how much in commissions were paid “because of contract privacy terms,” but Dolan said with only a few exceptions, there was uniformity with the commissions that were paid as well. Millar agreed that league endorsement contracts were “uniform in concept,” but he said each agreement was negotiated independently within the guidelines of CUNA’s strategic alliance policy and was based on how a respective agreement could add value to each league’s affiliated credit unions. “If you get to the bottom of general endorsement agreements and where they’ve gone in the past five years, you see that these types of broad endorsement agreements are beginning to fall out of favor. You generally have fewer broad endorsement agreements today than you had five years ago,” said Dolan. Ironically, Clarke American does not have the largest share of the credit union check printing market – CUs account for 20% of the company’s business. Liberty Check Printers, Roseville, Minn. has the largest credit union check printing market share – 74%. CU market share data for Deluxe and Harland was unavailable. Dolan said Clarke American’s Credit Union Division realized by its decision that it opens the doors for other check providers to enter into endorsement agreements with CUNA, but he was not concerned with that possibility. “We may no longer have the label of being CUNA’s national endorsed provider of checks and related services to credit unions, but we believe we’ll have more league endorsements than other providers will,” said Dolan. At press time, John Pensec, communications director for Harland said the company expected to “make an announcement in the next couple of weeks” about its relationship with CUNA. Meanwhile, on CUNA & Affiliates’ Web site under menu item “products and services” and “strategic alliances,” there is an entry that reads, “NEW Share Draft/Check Printing Alternative Coming Soon!” Millar confirmed that “an announcement will be made in a couple of weeks.” One name that definitely will not appear there is Liberty’s. Founder and Chairman David Copham said the company did meet with CUNA and CSSI in the past to discuss endorsement opportunities, “but we have determined that the endorsement agreement is not something we will pursue at this time.” Copham emphasized that Liberty’s decision “in no way reflects dissatisfaction with CUNA or CSSI. On the contrary, we will continue to look at ways to support the entire credit union movement.” He cited three factors that prevent Liberty was exploring the endorsement option further – Liberty has become a multi-dimensional product and services provider for CUs; the company has not received demand from CUs to seek the endorsement; and Liberty “has a responsibility to our customers and employee-owners to look very carefully at all of our financial commitments.” Regardless of which share draft printing vendor’s name ultimately appears there, Millar said leagues will not be caught in the middle between having to choose between Clarke American and the CUNA-endorsed vendor. “We will respect a league’s decision and realize that they have to make the decision that’s in the best interests of the credit unions in their state.” [email protected]

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