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DULUTH, Ga. -Corporate credit unions are not letting competition get in the way of cooperation with a newly brokered CD CUSO. Twenty-four corporate credit unions and U.S. Central have joined forces to form Corporate Exchange, a new CUSO that will offer natural person credit unions a brokered CD program known as CD Select. It’s going to be similar to the popular SimpliCD offered by a Corporate One CUSO, and therein lies the unknown – where does this leave SimpliCD? Leaders of Corporate Exchange are hoping that Corporate One will agree to merge its SimpliCD program into Corporate Exchange’s CD Select. SimpliCD has been wildly successful in this competitive market with 16 corporates (see sidebar) acting as co-agents and offering SimpliCD to their members. SimpliCD reaches some 1,500 credit unions. “I’m optimistic. Lee (Butke, Corporate One’s CEO) has been working diligently with the board of Corporate Exchange trying to put a deal together. I’d like to see it happen. Combined we’d have a premier product made better with all this corporate participation,” said Greg Moore, CEO of Georgia Central CU, and chairman of the new CUSO. Moore is Georgia Central’s relatively new CEO who came from U.S. Central. U.S. Central helped put together the business plan, and the CUSO’s sole employee is currently work out of U.S. Central’s Lenexa, Kansas headquarters as part of a shared service agreement between Corporate Exchange and U.S. Central. So what will Corporate One decide? According to Paul Hixon, Corporate One’s Assistant Vice President, Marketing & Communications Manager, Corporate One is in early discussions with Corporate Exchange about future plans, but it is certainly not opposed to the merger concept. “Our vision for the program (SimpliCD) has always been to distribute it to as many credit unions as we can. That’s why we had the co-agent agreements,” said Hixon. With 24 corporates already signed on with Corporate Exchange (including some of the co-agents of SimpliCD), Corporate One may be feeling the pressure to sell, but Hixon said Corporate One doesn’t see it that way and wants to do what’s best for everyone going forward. “I’m sure whatever the final arrangements are going to be, it will be successful,” said Hixon. Moore said Corporate One would of course be compensated for SimpliCD given the years it has taken to build, and the expertise it brings to the table. “We’ll have to purchase the business from them and they will participate long term in the revenue stream from the new company,” said Moore. The bigger picture said Moore is having a CD program that is truly run by the corporate credit union network. He feels Corporate Exchange can achieve 100% participation from corporates. “The SimpliCD product is managed well and is a great, great product. Our goal was to come up with a program that is a network program that would give widespread ownership and control,” said Moore. Moore’s corporate, Georgia Central, is a major user of SimpliCD. Moore believes brokered CDs are an important investment alternative for corporates to have in their arsenal. The formation of Corporate Exchange started back in July. “One of the strategies we embarked upon is developing our own independent program that would compete with SimpliCD. Second was a strategy to work with Corporate One trying to come up with a program that would basically merge both of our products together,” said Moore. Corporate Exchange has already raised over $5 million in capital. It has sold 108 of 120 shares with each share being worth $50,000. “We could have sold more, but we capped it because we didn’t really feel we needed any more than $5 million,” said Moore. Since voting will be determined by number of shares, the more a corporate owns, the larger voice they will have within Corporate Exchange. The board of directors has already been formed (see sidebar). Kathy Garner, president/CEO of Northwest Corporate, and vice chair of the new CUSO, said there may be a lot more shared corporate CUSOs going forward. “I think these kinds of models, these CUSOS, where corporates buy in if they want to, is the model of the future,” said Garner. Northwest has already contributed to this model with its business services CUSO that started as solely owned by Northwest, but now includes FirstCorp and Empire Corporate. Garner said this new CUSO is better off being run by corporates, rather than having U.S. Central take the lead. “It takes U.S. Central out of any political problems they might have if they were doing it and corporates didn’t like it. With this corporates are buying into it and taking the risk,” said Garner. U.S. Central will play a key role in the operation of the CUSO. The sole employee, Victoria Tran, who was a project manager at Sprint prior to joining Corporate Exchange, is working out of U.S. Central’s and U.S. Central will play other roles. As for its ownership stake, U.S. Central purchased one $50,000 share. “Our role has been to help facilitate their joint efforts. The owners of Corporate Exchange believe it makes more sense to handle this project from a central point, that being U.S. Central,” said Kampen. He said as the business grows, U.S. Central can help aggregate and facilitate through back office functionality, something corporates depend on them for. Southwest Corporate was also looking into forming a similar CUSO, but has instead joined with Corporate Exchange and is sharing some of its research and expertise. The corporate is known as one of the most sophisticated on the investment side. [email protected]

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