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MADISON, Wis. – CUNA Mutual has formed a marketing agreement with Corporate Network Brokerage Services (CNBS) for CNBS to offer CUNA Mutual’s Notes program, an investment offering for corporate credit unions. CUNA Mutual Notes was first unveiled in Oct. 2000 at an Association of Corporate Credit Unions meeting. The product is AA rated, and has had middle-of-the-road success so far with 16 corporates investing about $325 million. Don Davidson, Vice President of Credit Union System Relations for CUNA Mutual, said there are four or five corporates that are heavy investors in Notes, but most of the other 16 have done very little. He’s hoping the agreement with CNBS will help Notes get better penetration with those corporates as well as bring on new ones. “I think the CNBS name is well-respected. I think the leadership is well-respected. I think that credibility is going to help us,” said Davidson. Davidson said CUNA Mutual has excellent name recognition when it comes to investments in terms of 401k’s and pensions through its MEMBERS Capital Advisors investment arm (which administers Notes), but name recognition with the Notes product just isn’t as strong. That’s where CNBS comes in. With the new CNBS agreement, Davidson has a clear goal for the end of the year. “I think we’re a little bit behind where we want to be. I’d like to finish off by the end of the year at $500 million. Some larger corporate are starting to look very seriously at this,” said Davidson. It’s no secret that when Notes was launched, U.S. Central wasn’t exactly happy about CUNA Mutual offering investments to corporates. Davidson said the same scenario exists now. “U.S. Central took a negative view of the product. We’ve agreed to disagree. I have a great deal of respect for David Dickens (U.S. Central’s SVP/ALM) and U.S. Central, we just can’t agree,” he said. While some corporates (including the very largest) don’t invest in anything under a triple AAA rated security, Notes is unique in that it’s technically an insurance product, and is fully guaranteed by CUNA Mutual Life Insurance Company. Kevin Thompson, VP/Deputy General Counsel for CUNA Mutual, said because Notes are issued by an insurance company, investors get policyholder status, meaning if there were to be problems, they are the first to get paid. Brian Hague, president/CEO for CNBS said he’s excited any time he can offer a product that his competitors aren’t. “It gives us one more product that the competition isn’t showing. What it gives CUNA Mutual is a national distribution system that is already known by corporates,” said Hague. CNBS was out of brokering to corporates for the last five years because of a noncompete it had with U.S. Central that in turn kept U.S. Central from brokering to natural person CUs. That noncompete ended earlier this year. Hague said since the noncompete ended five corporates have put CNBS on their approved broker list. He said CNBS probably hasn’t gone as aggressively after corporates because the volume of business on the natural person side has been so large. Still Hague says the Notes program can also be a way for CNBS to get into the door of some corporates it doesn’t currently have a relationship with. “We will use it to help us prospect with some of the other corporates where we aren’t on their approved list,” said Hague. CNBS will simply show corporates the value of the Notes product as an investment as it does with other CU investment options. Since it is an insurance product, CNBS brokers can’t close the deal; they will send the corporates to CUNA Mutual. Under the marketing agreement, CNBS will be compensated based on anticipated sales volume. This isn’t the first time CNBS and CUNA Mutual have worked together. In fact, when CNBS was formed back in 1989, it was owned 70% by U.S. Central, with the remaining 30% owned equally by CUNA Mutual and what was then CUNA Service Group. That ownership structure ended in 1994. CNBS is now owned by 18 corporate credit unions. The two also often exchange professionals to speak at each other’s various conferences. [email protected]

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