CUcorp, the Michigan Credit Union League (MCUL) fee-based subsidiary, achieved several milestones in 2006. It proved to be another year of exciting progress and growth, as CUcorp continued to provide innovative, high quality and competitively priced products and services. This success was reflected in the corporation’s strong financial performance in 2006.
Financially, CUcorp experienced record results in 2006 with gross income of $9,359,000 leading to net income before taxes of $945,713. For the fourth year in a row, the CUcorp Board of Directors voted to distribute a dividend to MCUL in the amount of $386,137, half of CUcorp’s net income after taxes. CUcorp’s net after-tax income of $772,275 provided CUcorp a 17 percent return on equity — making CUcorp one of the League’s best performing investments.
CUcorp’s achievements are a direct result of the innovative and enthusiastic work of its employees and the support of its credit union clients. In 2006, CUcorp continued to seek opportunities to provide credit unions with products, services and partnerships in areas where it has a distinct competitive advantage.
The year ended with renewed confidence that 2007 will be marked by further progress and success. Here are some 2006 highlights from each CUcorp division.
In 2006, all CUcorp divisions were re-branded to better reflect the desire to provide credit unions with solution-based products and services. Lending and Payment Solutions was re-branded CU Lending Solutions to highlight the fact that this department’s focus is on helping credit unions with lending.
CU Lending Solutions ended 2006 with a positive contribution margin of $372,524. Major factors in the success of the department included:
• Expanded product offerings to include a partnership with American Education Services (AES) to offer turnkey student loans to credit unions;
• In conjunction with CUNA Mutual Group, the CUcorp general counsel wrote a Plastic Cards Security Policy to assist credit unions with best practice information to help combat fraud;
• A total of 54,525 Stored Value Gift Cards were sold, the highest among leagues in the nation;
• Signed a marketing agreement with CO-OP Network to assist credit unions with POS, terminal driving and ATMs;
• Signed a marketing agreement with Service Centers to assist credit unions with Shared Branching solutions;
• Expanded Business Services by offering Agent Merchant Services with our marketing partner Total Merchant Services that provides free equipment to credit union business members;
• Held six Marketing/Risk Management sessions that assisted credit unions with card growth and fraud;
• Introduced Equifax Small Business Reporting, which allows Michigan credit unions to view all financial data on the small business and make an informed decision prior to underwriting a business loan;
• Held three promotions to assist credit unions with growing their credit card portfolios; these promotions generated 2,600 new credit accounts and increased Outstanding Card Balances by an average of $120,000;
• Added 25 new card programs, including 21 Platinum Preferred, the highest among leagues in the nation;
• Staff made more than 500 visits to Michigan credit unions to assist with retention and portfolio growth.
CU Lending Solutions continues to research and implement products and services that will benefit Michigan credit unions and enhance their ability to drive volume and build member loyalty.
The CUCare® Group continued its upbeat pace throughout 2006, ending the year with a record net contribution to CUcorp of over $820,000. CUcorp’s association-sponsored health care program through Blue Cross Blue Shield of Michigan (BCBSM) remains The CUCare Group’s dominant core product.
Major contributing factors to the success of The CUCare Group in 2006 included:
• BCBSM Service Fees up 2 percent over 2005;
• BCBSM Agent Commissions up 2 percent for 2006;
• Renewals from existing OPS clients remain above a 90 percent renewal rate;
• Record net contribution to CUcorp of $820,000 for 2006, up over 10 percent.
CU HR Solutions continued its partnership with on-line job posting giant, CareerBuilder®, to form a partnership for a credit union industry specific product — CUcareerbuilder.com. The program provides a minimum savings of 17 percent off the regular CareerBuilder price and is available to any credit union, league or CUSO in the nation. Over 800 credit unions and leagues used CUcareerbuilder.com in 2006, generating $110,000 for CUcorp.
Additionally, discussions were initiated with a company that could provide electronic payroll processing and HR services to credit unions throughout the country. The hope is that this program can be launched later in 2007.
CU HR Solutions continued its quest for national brand recognition in the credit union marketplace throughout the year by its attendance at various events. CU HR Solutions was represented at the MCUL Annual Convention and Exposition, the Upper Peninsula Chapter Annual Meeting and a number of chapter meetings and golf outings across Michigan. At the national level, CU HR Solutions was a presence at exhibitions at the CUNA Governmental Affairs Conference in Washington, D.C., Ohio Credit Union League Annual Meeting and CUNA Future Forum. Ads were purchased in both the Credit Union Times and Credit Union magazine. Staff also held the fifth annual User’s Meeting held in Midland for BCBSM and HR related services.
CU Growth Solutions (CUGS), CUcorp’s marketing solution for credit unions (formerly Images and Ink), continued to focus on its core offerings of design and production of credit union marketing materials. As always, high-quality customer service and satisfaction remained a top priority for CU Growth Solutions.
Two key CUGS programs continued to grow in 2006. The Sprint/Nextel Member Discount Wireless Plan added 116 credit unions and 24,244 members in 2006 for a total of 182 credit union and 59,584 members nationally taking advantage of the discounted services. In 2006, CUcorp returned more than $200,000 to participating Michigan credit unions. Michigan credit union members saved more than $1.2 million in cell phone charges as part of CUcorp’s discount program. Additionally, 265 Michigan and Ohio credit unions participated in the Office Depot Cooperative Purchasing Plan for discounted pricing on office supplies.
While CU Growth Solutions has always been a core business for CUcorp, expansion for this business became a key priority and CUGS experienced a significant transition in 2006. Major changes in the printing business over the past several years, including Web-to-print solutions and digital printing, made it clear that tremendous monetary investment would have to be made for CUGS to remain competitive. Additionally, credit unions were expressing the need for help with their marketing strategy, tactics and turnkey creative solutions. Taking all of this into consideration, a plan was developed to create a fee-based marketing consulting business known as CU Growth Solutions.
The first step in implementing the plan was finding a printing business partner to maintain and enhance the existing production business. After a thorough search and due diligence process, CUcorp established an alliance with EPI. Through the arrangement with EPI, credit unions work through CUGS to access top-of-the-line printing capabilities. Additionally, credit unions will soon be able to access Web-to-print capabilities through the MCUL/CUcorp Web site.
In order to offer credit unions advertising, public relations and media planning/buying options, CUcorp also established an alliance with The Berline Group. As the creative force behind the Michigan Credit Union Brand Campaign managed by the MCUL, The Berline Group offers tremendous expertise and also understands credit unions. Similar to the EPI relationship, credit unions work through CU Growth Solutions to access advertising and public relations services.
After securing two key partners to expand services, CUGS needed an experienced marketer to fully develop marketing consulting capabilities. Lee Ann Mares was appointed vice president of CUGS and is working to develop complete marketing consulting services. The vision for CUGS
is to provide a comprehensive marketing agency including research services, brand consulting, marketing planning and consulting, managing tactical plans, advertising and media buying services, creative development services, turnkey template creative solutions, production and printing services, Web-to-print capabilities, forms and ad specialty products.
The year 2006 saw an emphasis on IT security in credit union exams. In response to this, CUcorp and CU Village launched a new fee-based consulting service at the end of 2006 for IT Security and Disaster Recovery. CU Village has hired a consultant to assist credit unions in evaluating their IT Security needs, develop and implement appropriate policies and procedures, or to provide related staff training. Similar services are also available for developing and implementing a disaster recovery plan, annual testing and related training. Almost immediately, two credit unions signed contracts for the service.
Regulatory compliance remains a constant challenge for credit unions. In 2006, CUcorp added an additional fee-based consultant to compliment the Web compliance program and offer new programs to support credit union compliance needs. Programs include Compliance Officer Training to help credit unions adapt an effective compliance program and develop a compliance officer; Policy Development and Customization to ensure a credit union’s policies reflect their mission, values and product offerings; and comprehensive Bank Secrecy Act Training for staff and volunteers.
CUcorp’s marketing relationship with CUNA remains strong. In 2006 CUcorp placed additional emphasis on CUNA’s Center for Professional Development (CPD), Center for Personal Finance (CPF) and Research and Advice (R&A) products, resulting in an increase of sales by 15.5 percent from $713,471 to $824,027. CPD, which includes CUNA’s management schools and conferences, led the way with a 35.8 percent increase, and subscriptions to CPF products such as “Your Money Matters” saw an increase of 11.7 percent. CUNA launched a new Web-based information portal called CU360 providing access to a wide range of industry-related information and statistics. The MCUL added its support by providing a subscription to CU360 for all Michigan credit unions under $35 million in assets.
The Credit Union Dealer Indirect Lending and Leasing (CUDILL) program continued to post remarkable gains in 2006. Loans submitted were up by nearly 440 percent and loans funded increased 390 percent. By the end of the year, dealers had submitted 7,636 loans to participating credit unions through the CUDILL system. Credit unions funded 1,774 loans valued at more than $26.4 million. CUcorp’s partner ILT continues to be responsive to the needs of the credit unions and has introduced an interface to Route One and will complete an interface to Dealer Track early in 2007. These two systems are common in dealerships for submitting applications to captive finance companies and other financial institutions, and now also to credit unions utilizing CUDILL. In conjunction with the CUNA Mutual Group, CUcorp provided IRA training for some 177 credit union staff representing 96 credit unions. Six sessions were held during the year in Marquette, Grand Rapids and Midland.
CU Village experienced both sales and earnings growth in 2006. Sales revenues were up 14 percent as CU Village posted $177,214 in net earnings after taxes and equity portfolio results. CU Village remains on solid financial ground. CU Village highlights from 2006 include:
• Overall Web site business grew by 21 percent, with a large percentage of the new and redesign business one-time fees coming from custom Web site projects using the CMS. The projects ranged in value from $10,000 to nearly $100,000;
• The CU Village content management system (CMS), which was originally launched in 2005, saw significant improvement in 2006. In addition to a much improved user interface, the product now includes multilingual content handling, public security access control, polling, an events calendar, ad banner management, personalized content handling, automatic menu and site map generation and rates management system;
• An IT consulting position was hired to assist clients with their security and technology policy and disaster recovery planning needs; the position will also assist CU Village itself in these areas. The service was launched in response to the call of credit unions small, medium and large for
• Helped a number of clients utilize multimedia to improve the overall impact of their Web sites and communications; at the 2006 MCUL Annual Convention and Exposition, CU Village produced a video introduction used on the event’s Web site and multimedia presentations, including video production, used at the meeting. This helped Polish & Slavic FCU record and produce video used on its site, among other multimedia projects for other clients.
• The InfoSight on-line regulatory compliance product managed for League InfoSight had a solid year, with 14 leagues representing 17 states using the product. In late 2006, CU Village won a bid to be the provider of content management system services in 2007.
There was a great deal of activity in 2006 among current and new partners for CUcorp, resulting in a very successful year.
CUcorp sales staff continued to focus on building and expanding relationships with credit unions throughout Michigan. A key priority continued to be working closely with credit unions in order to provide solutions to their specific needs and strategic objectives.
CUcorp sales staff made more than 1,000 visits to Michigan credit unions and attended dozens of chapter events and annual meetings, including the MCUL and Ohio League annual conventions. CUcorp also continued to work closely with the MCUL Education Department to support its efforts and take advantage of sponsorship opportunities, which included special events such as the MCUL Annual Convention & Exposition, MCUL Marketing Conference, Lending Conference, Executive Summit and the Government Affairs Conference. These sponsorships allow CUcorp to support both the MCUL and credit unions by providing funding to keep costs down for participants, and enable MCUL to bring in the best conference and education session speakers.
CUcorp’s partnership with the CUNA Mutual Group continues to be a win-win-win for CUNA Mutual, CUcorp and especially Michigan credit unions. The year 2006 marked the beginning of CUNA Mutual’s three-year plan to build a new CUNA Mutual. Before CUNA Mutual began its transformation, the company invested time listening to and learning from credit unions in Michigan and throughout the country. By the end of 2006, CUNA Mutual was already a more effective and efficient organization and began investing more to build future capabilities. CUNA Mutual also delivered more in benefits to credit unions and their members by becoming:
• More efficient — reduced internal expenses while investing in the future;
• More effective — improved portfolio performance by 100 basis points and improved results of the funds they manage for credit unions, employees, and members;
• Easier to do business with — implemented single point of sales contacts for credit unions to enhance the quality, timeliness and consistency of back-office service; a new state-of-the-art Customer Operations Center was also built to improve service to credit unions;
• Stronger — strengthened its products to ensure they bring only the best-in-value products to credit unions and members.
CUcorp and AAA partnered in early 2006 and launched a new program called Members Together. Members Together was created with three main objectives — first, to provide credit unions with an opportunity to use one of the nation's strongest brands to attract and retain members; second, to create a flow of product referrals to credit unions from the 1.7 million AAA membership base in Michigan; and third, to generate fee income to committed credit union participants.
CUcorp and AAA worked closely together and with credit unions to launch the new vision AAA had for credit unions in Michigan. The AAA Advisory Committee was formed with credit union representatives from around the state and six town hall meetings were held the first half of the year. These meetings gave credit unions the opportunity to hear first-hand the direction AAA was taking, as well as provide feedback and register concerns. Credit unions were overwhelmingly supportive of the changes and looked forward to reestablishing a more cooperative reciprocal relationship with AAA.
CUcorp’s partnership with Mortgage Center took off in 2006. Together, CUcorp and Mortgage Center staff presented to nearly 40 credit unions and added six credit unions as clients. Mortgage Center continues to offer an array of mortgage options and outstanding service to both credit unions and their members. As a wholly owned Credit Union Service Organization (CUSO), Mortgage Center has provided innovative mortgage programs for more than 15 years and serves more than 60 credit unions and their members.
The Accel program was also a big success in 2006. Forty-seven Michigan credit unions are partnered to provide their members financial education and counseling services. Through these 47 credit unions, nearly 940,000 members have access to an array of financial counseling services and resources, including a toll-free information line, budgeting assistance, credit report counseling, housing counseling and the debt management program.
The overdraft privilege program through John M. Floyd & Associates continued to perform well. Five new credit unions were added to the program and CUcorp income increased by nearly 125 percent. By the end of the year, 45 credit unions were participating.
In conjunction with the CUNA Mutual Group, CUcorp provided IRA training for some 245 credit union staff representing 130 credit unions. Six sessions were held during the year in Escanaba, Mt. Pleasant and Livonia.