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WASHINGTON -Callahan & Associates is finalizing the production of its new CUSO directory, but already early top line data show interesting trends in the CUSO market. Callahan EVP Jay Johnson said his first impression of the data is there is “tremendous activity” in the CUSO market, and “that’s a reflection of the way credit unions are trying to work together and are seeing the benefits of collaboration.” Callahan’s Directory of Credit Union Service Organizations will be available in its entirety the end of the month. Of the various markets credit unions have both wholly- and multi-owned CUSOs in, preliminary data shows the fastest growing market is business lending. Over the past two years, 23 new business lending CUSOs have been formed, and Johnson says 15 of those are multi-owned. “That’s partly due to the fact that business lending is one of the newer areas that credit unions are getting involved in,” he offers. “That’s a very positive sign that credit unions are combining their skills to get into a market quickly that would otherwise take them a long time to get in on if they did it on their own,” Johnson added. One particular statistic Johnson finds interesting concerns the 16% of “other” wholly-owned CUSOs. He opined that this reflects some of the new “mixtures” of businesses credit unions are focusing on as being the next “big thing” that credit unions will be involved with. He cited, by example, San Antonio FCU which has a wholly-owned manufactured housing CUSO; and USC FCU that is the sole owner of a student lending CUSO. Among the four lines of businesses that Callahan sorts CUSOs into, one number that jumps out is the 64% of wholly-owned CUSOs that are in financial services. Johnson predicts that number will decline slowly as a result of the SEC’s directive requiring credit unions to move their investment services under the credit union’s roof. But tempering that decline will be financial services CUSOs’ involvement offering trust services. But aside from wholly-owned financial services CUSOs, “if you look at where the real market impact has occurred, you see that in virtually every case it’s a multi-owned CUSO initiative,” says Johnson, citing multi-owned CUSOs such as CU Direct, Prime Alliance Solutions and the CO-OP Network. Looking ahead, Johnson said he expects there will be continued growth in the number of CUSOs, especially in new and innovative lines of business. “New evolutions in markets will lead to CUSOs continued growth. There are so many areas that credit unions are involved in now that in a collaborative effort they could form a CUSO for,” said the Callahan executive. -

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