WESTERVILLE, Ohio — To say that Primary Financial, a CUSO owned by 27 corporate credit unions, including U.S. Central, had a record-breaking year in 2008 is an understatement. SimpliCD, a turnkey certificate investment service that is the organization's only product, quadrupled its previous record volume and launched two new trailblazing variations of SimpliCD late last year: the country's first credit union-issued 529 savings certificates and an expansion into service institutional natural person credit union members. Credit Union Times discussed 2008′s success with President/CEO Mark Solomon.
Credit Union Times: Could you please quantify SimpliCD's 2008 success?
Mark Solomon: First, I have to give credit to the selling efforts of the corporates. They really got behind the program in '08, and it caused our volume to quadruple. We had $2 billion outstanding at the end of 2007 and more than $8 billion at the end of 2008.
CU Times: You only have one major competitor. Is there a barrier to entry you've managed to leverage?
Solomon: The barriers of entry from a cost standpoint are not that great. But, we have the clear advantage that corporate credit unions have relationships with probably 99.9% of all natural person credit unions. So I don't think anyone can reach credit unions in the manner that we can. But, being able to reach a marketplace that others can't is only as good as the service and product behind it. Plus, we have tremendous relationships with issuing financial institutions across country because we've been around a long time and we always deliver on our promises.
CU Times: Who made the decision to use corporate employees as your sales department?
Solomon: It's been a part of company since its inception at Corporate One. At the time, I was Corporate One's [chief financial officer], and we knew the product had universal applicability across the entire credit union network; however, we didn't have relationships with all those credit unions. So, we cultivated relationships with other corporates to remarket the product instead.
CU Times: Did SimpliCD remove enough assets from corporates' books to help their capital positions?
Solomon: Sure. Granted, it's not as simple as saying our $6 billion outstanding gained would have all gone on corporate books instead; certainly, some would have, and more assets would have further stressed capital ratios. It's been a great tool for the corporates; they can assist in member investing but don't have to hold it on their balance sheet.
CU Times: What's in store for 2009?
Solomon: One week doesn't make a year, but our volume in the first week of January is twice that of January '08, and that month our volume was more than twice our highest ever. I'm not suggesting we will double what we did last year, because we simply can't sustain that volume. But, at least for first quarter, we anticipate a hectic pace to meet needs of our owners as they meet needs of their members.
The new institutional product is also a big focus. So many things are working in our favor as far as that's concerned. With the continued uncertainty in the financial markets, the government guarantee has universal applicability. Credit union issuance will continue to grow as other liquidity sources go away, so I think that will be another growth engine for us in '09.
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