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Remain a wholly-owned CUSO or invite other credit unions to share in the ownership and become a multiple-owned CUSO? That is a business decision each credit union has to make based on its own set of conditions and objectives. Deciding to offer services nationwide requires an assessment of the business capabilities and infrastructure to do so. Prior to embarking upon a divergence of a wholly-owned CUSO to a multi-owned CUSO, it is essential to consider the success of your current business and culture. Will the reputation of your current business carry you into new waters? The partners you recruit need to have similar values, financial stability and the same commitment to the course the business is on. Establishing corporate values and a mission that all partners agree to is equally important. It requires a clear business plan and strategy that must be supported by all partners. Business Partners, a multiple-owned CUSO began life as Telesis Partnerships, a wholly-owned subsidiary of Telesis Community CU, Chatsworth, Calif. to offer member business lending services. The strategic plan was to develop the CUSO to the point of autonomy and sell interests in the business, creating a nationwide member business lending cooperative. The decision to become a multiple-owned CUSO was just a matter of determining when the right time to sell was. The decision to sell was based upon a thorough review of the opportunities opposed to the risks. One important consideration was to maintain a fast-to-market approach as more MBL CUSOs entered the market. Another factor was deciding what territory to offer the services to by conducting a thorough assessment of the business capabilities and infrastructure to do so. TCCU transferred its core business to CU Business Partners, LLC (Business Partners) in July of 2003. With the sale came a name change that was more reflective of the services offered in addition to the departure from the wholly-owned environment. Would this new brand propel the business into the future? Prior to the sale, the business was servicing 63 credit unions nationwide and servicing assets of $350 million. Today, Business Partners, owned by 12 credit unions and one corporate credit union, is servicing member business lending assets of over $1.1 billion in 29 states for 133 credit unions nationwide. The key to the success of Business Partners has been the understanding of the “power of we” and the choice of partners that are committed to the business and understand that business lending in credit unions is here to stay. Recognizing the importance of credit union partnerships in the financial industry will empower your business. Our partners’ commitment to providing quality and affordable services has benefited their members who might not have otherwise received such business assistance. When a credit union has the opportunity to buy into an established business, they forgo the development and start up delays. This allows the credit union to begin offering the services of the business with the fast to-market philosophy of an already proven business unit. The financial benefit is extremely important in a multi-owned business as it allows a credit union to utilize the services as needed without investing in the costly infrastructure in a “go it alone” environment. In a wholly-owned environment you do not have the same leverage. Your direction and course is often charted to support the sole owner of the business. The operating agreement between the owners is the key to any successful venture. The agreement establishes the boundaries by which the business will be managed and should include some key points. It’s critical to determine which owner will maintain operational control of the new business. In the case of BP, it was clear that TCCU would be the managing member operating BP as a limited liability company. A successful transition in this area is vital to maintain business continuity and service levels in this ever-changing market. Other important factors contained in the agreement should be revenue sharing as well as options to sell an investment in the business. This ability to sell is critical in the event a credit union’s goals and philosophies have changed and the credit union can no longer support the values and terms of the agreement. The strategic rewards of a multi-owned cooperative are clear: standardization, consistent quality, competitive advantages with combined resources, financial support and varied product offerings, diversified risk (credit, economic) through geographical diversification, leveraged expertise and significant ALM benefits. Credit unions learn from each other in this environment by utilizing best practices. Some risks to be analyzed include the financial aspects, economic risk and reputation risk of all concerned, as well as regulatory scrutiny. Being a nationwide lending CUSO requires that you understand the credit union industry concerns at large, including regulatory concerns for both federal and state chartered credit unions. Given the regulatory environment credit unions play in today, this is no small task. To be successful in this atmosphere, it is critical to hire the appropriate expertise to assure compliance. Of considerable concern is the support you will receive from the management of all credit union owners. Their understanding and support of the business will be essential as the credit union begins to use the services of the CUSO. This factor alone may determine the new partner’s ability to contribute to the revenue of the business and therefore make their credit unions’ investment worthwhile. Determining whether to remain wholly owned or multi-owned is a decision that should not be concluded without due consideration. The success of the business could be drastically affected based upon your partnering choices. In the case of Business Partners the choice was clear. The members, the credit unions and the business would be best served by encouraging credit unions to pool their collective resources to serve their members needs while having access to a turnkey member business lending operation in a multi-owned CUSO environment. The goal: to create a nationwide member business lending cooperative, for credit unions, by credit unions was accomplished.

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