NEWPORT BEACH, Calif. – NACUSO Executive Director Bob Dorsa has had seven years to work with the association and witness the growth in the number and viability of CUSOs. Now, says Dorsa, ruminating about what he's witnessed in the industry, "it's time for CUSOs to step back, assess and integrate what they've learned over these years and find new ways to act as vehicles to extend services to credit unions and their members." Founded in 1985, NACUSO was organized in California as a not-for-profit trade association when NCUA introduced expanded CUSO regulations. Dorsa remembers that he and a handful of his colleagues thought it would be a "neat idea" to form a trade association that focused on the developments in the CUSO world and the issues affecting them. The founding group was so small, said Dorsa, that the association's first annual meeting in Indianapolis only drew 22 participants. NACUSO currently counts a membership base of more than 400 CUSOs, credit unions and suppliers. Since 1993, the association has held its annual meetings in the Las Vegas venue. It had more than 500 attendees at its 2002 annual meeting. "NACUSO was not formed to be a trade association like CUNA or NAFCU. It's a niche association whose purpose has always been to be a clearing house for CUSO-related information and to support the growth and success of credit unions. Our role is to keep our ear to the grindstone and make sure CUSOs and credit unions are providing the products and services members need," says Dorsa. The NACUSO Board of nine members is now a group of 10 – Dorsa is the only surviving founding board member. He was named executive director in 1991. Besides Dorsa, the other nine members of the current board are: Dan Balagna, chairman, president/CEO, Service Centers Corp.; John Unangst, vice chairman, president/CEO, Franklin Mint FCU; Becky Nilsen, treasurer, CEO, Desert Financial Services, LLC; Pete Snyder, secretary, president/CEO, Addison Avenue Financial Partners Inc.; David Kennedy, director, president/COO, R CUSO Inc.; Thomas Davis, director, president, Davis & Co.; Ava Milosevich, director, CEO, The SELCO Group and SELCO CU; Dennis Pierce, director, CEO, Community America CU; and Guy Messick, general counsel, a founding member of Lastowka & Messick, P.C. "Now that we have a workable number of CUSOs, we have to determine how to expand what we have to engage credit unions," says Dorsa. While some in the credit union industry speculated that NCUA's expansion of federal credit unions' incidental powers last year spelled the demise of CUSOs, Dorsa doesn't see the new powers as a threat to CUSOs. In fact, he argues just the opposite is true. "Incidental powers give credit unions the authority to integrate services that have been offered through their CUSOs into the CUs' business plans. There are more arrows in the quiver for credit unions to strengthen their relationship with their members and use the products and services of CUSOs to further attract new members," he says. Dorsa continues that, "NACUSO's mission has always been to preserve and perpetutate the growth of credit unions, and that hasn't changed. There may be some financial services CUSOs have provided that wind up being folded back in to the credit union, but that's all part of the reinvention process and evolution of CUSOs." With that in mind, Dorsa adds that, "I'm not thrilled with the acronym `CUSO'. It would be more accurate for CUSOs to call themselves credit union subsidiaries. The term CUSO has no meaning to anyone but a small part of the credit union community. The term `subsidiary' has more recognition, it's broader. "If you take away the top 500 of the largest credit unions, the term CUSO is non-existent. The remaining credit unions don't comment or relate to it as being beneficial to their organization. In fact, when larger credit unions approach smaller ones about joining a multiple-owner CUSO, the smaller credit unions hear the word `merger' and think the larger credit unions are trying to take them over," Dorsa continues. Now it's financial services CUSOs turn to wait and hear what the Securities and Exchange Commission decides about CUSOs' ability to continue to be exempt from securities licensing requirements they've enjoyed under the Chubb Letter. "Credit unions will have to ask themselves what will be the rationale for retaining the CUSO. Some credit union people say it's the ability of CUSOs to serve nonmembers, but I've never seen any CUSO get considerable business from nonmembers other than incidental business." If the 1990′s were the decade of the mass formation of CUSOs, especially financial services CUSOs driven by the bull market of that period and the big broker/dealers who were going after members' wallets, Dorsa says the current decade is the time for CUSOs to focus on diversity and integrating and leveraging what they've learned. He doesn't see the products and services CUSOs are offering going away any time soon, it's just the means and methodology of delivery that may change because of technology. "Credit unions are still looking to CUSOs for economies of scale," he says. In the coming years, Dorsa predicts there will be fewer financial services CUSOs and more operational and mortgage CUSOs. He estimates there will be 600-700 CUSOs five years from now, down from the current estimated 1,000 figure. "Credit unions have to find 20 million more consumers who will become members. To do that, credit unions will have to have a broad array of products and services to offer them. CUSOs are part of that development," says Dorsa. "CUSOs will not be irrelevant in the future," he adds. [email protected]

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