WAUWATOSA, Wis. – CSMC, Inc., doing business as Central States Mortgage, is five months away from celebrating its 22nd birthday, and there's one thing for sure – what started out as a privately owned company is now one of the most successful multi-owned CUSOs in Wisconsin and is no longer just about mortgages, but has morphed into five market areas and eight business subsidiaries.

For its first 13 years, Central States had no credit union shareholders, but was privately owned by people who managed the Wisconsin Credit Union League's mortgage program as well as mortgage services for several Wisconsin credit unions. The company was actually called Midstates, and it had a division called Central Mortgage. The two names were merged in 1991. After developing an expertise and relationships with credit unions, the company held a stock sale in 1997 and sold 51% of its shares to credit unions and the Wisconsin league. The CUSO is now 72% owned by the league and primarily Wisconsin credit unions, as well as two CUs in Illinois – Du Page CU, Naperville, and Sherwin Williams Employees CU, South Holland. Over the last nine years, the CUSO has evolved to the form most credit unions associate it with now. In 1997, it started out with three lines of business – a mortgage company in Central States Mortgage; a title company in Premier Title; and an insurance and financial services subsidiary in Central States Insurance and Financial Services. CSMC, Inc. now also includes a real estate brokerage company for residential real estate, Homesale Realty; an affiliate that sells and leases commercial real estate, Equity Commercial Real Estate; an auto leasing and sales subsidiary, CU Fleet; Direct Mortgage Funding, that does wholesale and correspondent lending operations; and Interstate Financial, a retail, subprime lending operation.

Consider the following statistics:

* In 1977, Central States had 40 employees and $2.7 million in revenue. In 2005, CSMC had more than 500 employees and independent contractors, $76.8 million in revenue, and $114 million in assets.

* Central States and Direct Mortgage Funding funded over 7,700 loans for over $1.1 billion in 2005.

* Premier Title acted as the closing agent and title agent on over 8,800 transactions in 2005, and is the largest issuing agent in Wisconsin for Stuart Title Guarantee.

* According to Wisconsin's Department of Transportation's monthly report, CU Fleet is typically either in first or second place as the largest independent leasing company that's not part of a national franchise. * CU Fleet is also the first or second largest independent car dealer in Wisconsin. * Homesale Realty for each of the last 12 months was the sixth largest real estate company in the Multiple Listing Service reports in Wisconsin. CSMC President Dick Jungen attributes the company's success to its willingness to be flexible in new businesses. He admits though that “depending on who you ask, some say we're not flexible enough, and others say they're happy we keep our eyes and ears open for new opportunities.”

He adds, “Our overriding strategy is to create a unique group of companies to serve credit union members.” Despite the diversity of its business lines though, Jungen says there is a common thread through all of them, “We're lending money to members for their business or personal needs and providing ancillary products and services to complete the transactions for them. We can help them find a car and get it leased or financed. If they want to buy a house, we can help them find one and finance it for them.” Jungen says he considers Central States to be a leading edge company.

“We step outside the box in every area. Most mortgage banking companies just do mortgages, real estate companies just do real estate. They don't marry themselves to products and services to get the whole job done like we do.”

Looking ahead, Jungen says most of the growth in the future for CSMC will be “organic growth.” Instead of starting new subsidiaries, the CUSO plans to expand its mortgage business – it currently has offices in eight states and is licensed to do business in 13 states.

The CUSO has marketing agreements with more than 300 credit unions in the Midwest to provide them with a variety of mortgage services, and has joint venture marketing agreements with the Wisconsin, Iowa and Illinois credit union leagues as their endorsed mortgage company partner.

Central States also has a mortgage marketing partnership with CU*Answers' Xtend CUSO in Michigan to provide mortgage services for that CUSO's 31 shareholders. -

egbarr06@bellsouth.net

Instant Insights /

Central States Mortgage Not Your Plain Vanilla CUSO Anymore

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