Fee Income, Net Income Up at U.S. Central; Operating Expenses Increase by $1.3 Million

LENEXA, Kan. – The $40 billion U.S. Central Credit Union appears to have started 2003 off strong based on its first quarter financials. The corporates' corporate reported fee income of $4.1 million, up $0.4 million from the same period last year. The increase was driven by a rise in ACH transactions, an increase in securities safekeeping fees due to volume, a boost in fee income from Corporate Network eCom products, and other sources. U.S. Central also reported net income of $19.4 million, compared to $18.9 million last year. Its financial instruments generated $3.2 million in net gains, compared to just $1.8 million last year. Operating expenses went up in the first quarter from $12.2 million for the three-month period ending March 31, 2003, compared to $10.9 million for the same period last year. An increase in salaries and benefits, data processing expenses, professional and outside service fees and other factors fueled the increase. U.S. Central's staff increased by four to 231 total full-time employees. Partially offsetting the operating expense increase was a $0.2 million reduction in office and occupancy expenses, and travel expenses were down $0.3 million. In some non-financial news, U.S. Central also reported that 11 corporates have signed on for its major system conversion. For years, U.S. Central used an EDS-driven system, but it's moving to Symitar. Corporates have the option of converting or not converting their existing system that allows them to see their business with U.S. Central. If they don't convert, they will still be able to view their U.S. Central relationships through an interface. The corporates' corporate also reached a record asset level of $41.4 billion during the first quarter, setting the mark on March 3. U.S. Central President/CEO Dan Kampen reiterated U.S. Central's goal of helping keep more of CU's investable funds in the corporate network. He said U.S. Central will utilize "strong investment offerings and creative corporate partnerships" to get that done. Just recently U.S. Central made history with its Transferable Certificate which for the first time ever will result in CU funds being on U.S. Central's books. The goal of the certificate is to keep more of CUs' investable funds in the system. It can help CUs with diversity because even though they purchase the certificate via their corporate, they are purchasing a U.S. Central certificate, not one from their corporate. U.S. Central stayed very liquid in the first quarter, with $6.6 billion invested in overnights, and another $29 billion in marketable securities. It has lines of credit of $2 billion available with intra-day and longer terms, and can borrow up to $1.5 billion under committed repurchase agreement facilities. -pgentile@cutimes.com