Ken Ross – Michigan Credit Union League Q1 2018 Update
Hello, and thank you for joining us for the Michigan Priority Report for first quarter of 2018.
To start, I’d like to announce that for the third consecutive year, the Michigan Credit Union League has reached 100 percent affiliation. On behalf of myself, MCUL CEO Dave Adams, and the entire MCUL & Affiliates organization, we sincerely thank you for choosing to align yourself with the Michigan Credit Union League, and as always, I welcome any feedback or suggestions on how we can improve and serve you better.
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The first quarter of the year is always full of activity for the League. In February, MCUL and a team of Michigan credit union leaders visited Washington, D.C. for the CUNA GAC. This year, we had more than 150 in the Michigan delegation, which I’m pleased to say was one of our best turnouts ever. Just a few weeks later, in April, credit unions from across the state joined us in Lansing for the MCUL Government Affairs Conference. 120 credit union advocates discussed data breach, lienholder notification and the need to prevent expansion of payday lending in Michigan with our state legislators. Once again, thank you to all the credit union leaders who attended — taking the time to personally engage with our elected officials enables us to move our agenda forward.
As you know, these important advocacy events happened against the backdrop of major developments with regulatory relief. On the heels of the CUNA GAC, the Senate passed Senate bill 2155 — the Economic Growth, Regulatory Relief, and Consumer Protection Act. While things are moving fast, as of today, Senate bill 2155 has advanced to the House and is in committee. Over the past month, our advocacy and communications teams have been developing op-eds, news releases and coordinating letters to local newspapers from credit union leaders. We’ve worked closely with CUNA to raise the profile of this issue and create momentum to get this bill passed as quickly as possible.
We’ve also been working closely with the Michigan banking community. Early in April, MCUL, the Michigan Bankers Association and the Community Bankers of Michigan issued a joint letter to members of the House urging them to pass common-sense regulatory reform. And in early April, Michigan Bankers Association President and CEO Rann Paynter and I flew to D.C. to meet directly with members of our congressional delegation.
While we are mindful of the desire by House members to try to get as much relief as we can to the President’s desk, we remain focused on the need to not lose the progress we’ve made so far on Senate bill 2155. We simply cannot miss this opportunity for regulatory reform, and I encourage everyone to continue to contact your members of congress until we get a bill to the President’s desk.
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Here in Michigan, an MCUL-backed bill concerning mandatory lienholder notice by tow truck companies was voted out of the House Financial Services Committee in April. This bill was drafted largely in response to a surge in credit unions reporting delayed notice of abandoned vehicles. This legislation would prohibit towing and storage fees from accumulating until the notice that a vehicle has been abandoned has been received by the credit union.
Data breach continues to be a hot issue and the good news is that WE HAVE A BILL up for hearing finally! We have a bi-partisan piece of legislation in the state senate and now we need to turn up the pressure on our Senate and House members to lock down their support for this package.
The legislation will require an individual, agency or business that has a breach to notify financial institutions that a breach has occurred without delay. The legislation also establishes a cybersecurity council, which would provide annual reports to the Governor and legislative leaders. We expect at least two hearings in April. At that point, we hope to have it out of Senate Banking and onto the Senate floor. After more than a year of work, we have a chance to get this the Governor’s desk and we now need YOU to contact your State Senate and House members to encourage their support.
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In an election year, the importance of grassroots activity and PAC fundraising is all the more important. We’ve started off strong with our annual State PAC pin programs, with 1,300 pins sold so far in 2018. This is impressive, and we need to keep the momentum going. And for our Federal PAC, the Grand Raffle campaign will kick off in the month of May, so look for materials coming to your credit union in the next few weeks.
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Taking a look at cooperative advertising, the CU Link campaign will run year-round in 2018 for the first time EVER. The new "Strength in Our Numbers" campaign began running in January with streaming video, cable television, streaming radio, digital advertising and social media. Our 2017 social media campaign touched 2.7 million viewers — 27,000 of whom engaged with posts and 28,000 clicked to find more information.
To help credit unions leverage CU Link’s multimillion dollar annual spend, our communications team launched a new and easy-to-use CU Link integration portal during the first quarter. You can now visit that at MCUL.org/Integration.
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The Michigan Credit Union Foundation is sponsoring the 2018 High School Personal Finance Challenge in partnership with the Michigan Council on Economic Education. Every high school in Michigan has been invited to participate, and 800 students have already registered to take part in the online qualifying round. Once qualified, the top schools from across Michigan will head to the state finals competition at the Federal Reserve Bank of Chicago-Detroit in April. Attendees at the state finals will put personal finance concepts into action during a Financial Reality Fair conducted by Michigan credit unions.
With materials, guidance and funding from MCUF, 14 Financial Reality Fairs have been conducted, or are scheduled, by Michigan credit unions this year. These have, and will, help more than 1,800 students prepare for their financial future and become familiar with credit union services.
MCUF is also sponsoring the Money Smart Kids Read initiative. This is expected to reach 8,000 families through library story times. These coordinated activities provide credit unions with an easy way to connect with their community for financial education. Getting involved is easy – if your credit union would like to host a teen Financial Reality Fair or a Money Smart Kids Read, give us a call or visit our website.
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Finally, I want to remind you that that our Annual Convention will be held on June 6-9 in Traverse City. This year’s event will feature many networking opportunities like the popular Corks for a Cause Networking Extravaganza on June 6, the CUSG Welcome Reception on June 7, the Children's Miracle Network Live Auction on June 8 and the CUES Networking Lunch on June 9.
The event will feature daily keynote presentations at Center Stage including "The Hero Effect: Being Your Best When it Matters the Most" with author Kevin Brown, and "Seamless! Crime, Big Data and the Cashless Future" with Anders Sorman-Nilsson [pronounced Soar-min Neal-sin]. We’ll also hear from CUNA CEO Jim Nussle along with a special message from US Senator Debbie Stabenow.
I look forward to seeing you in June in Traverse City.
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We’ve covered a lot this quarter. If you have any questions or feedback, please don’t hesitate to reach out. At this time, I’ll turn things over to CU Solutions Group President and CEO Dave Adams.
Dave Adams – CU Solutions Group Q1 2018 Update
Thanks, Ken.
CU Solutions Group closed 2017 on a strong note and we’ve carried that momentum through the first quarter of 2018. To begin, CUSG ended the first quarter with net income of $1.3 million on total revenue of approximately $11 million. While revenue was right on our quarterly target, net income was better than plan due to strong growth from our Sprint Credit Union Member discount program through the quarter. We’re bullish on all of our product sales this year and expect total revenue and net income to be ahead of plan for the year. CUSG’s balance sheet remains strong with assets totaling $83 million, including cash and marketable securities of $50 million. Shareholders’ equity totaled $69 million. In summary, year-to-date results are positive, with better than budgeted results and all divisions performing well.
Starting with an update from our Technology Solutions division, in February, CUSG announced that its fully integrated LifeSteps Wallet mobile banking enhancement suite was released to Flint’s Security Credit Union, making its statewide debut. Just weeks later, in April, CUSG announced the app’s national launch with the Houston-based PrimeWay Federal Credit Union.
By adopting the app, PrimeWay Federal Credit Union and Security Credit Union join a product development community of credit unions whose feedback will help enhance its next generation. We’re hearing strong, positive feedback on both releases and we’re excited to move forward with more clients as we work toward our goal of 50-70 LifeSteps Wallets sales in 2018.
In other technology news, CUSG partnered with technology leader, AudioEye, in late 2017. AudioEye uses patented technology, expertise and proprietary processes so your website’s interface is accessible to all people, regardless of their ability. It’s one of the only digital accessibility services that audits a website and applies necessary changes to fix accessibility issues while ensuring the site is ADA compliant. As a result, you can broaden your audience reach and attract new members, as well as boost engagement with current members. Since partnering with AudioEye in November, we’ve generated more than 60 new ADA clients, and that number is growing quickly.
Also in the first quarter, Technology Solutions published its first of ten planned batch updates for its content management system. The most recent update includes data auditing upgrades, new ADA tools, and several major design upgrades. Showing sustained growth, website design and hosting sales for the quarter are currently 34 percent above where they were at this time last year.
Technology Solutions continues to work with partner Access Softek to boost sales and performance of Mobile Finance Manager (MFM) and Orpheus. The latest discussions with Access Softek management were intended to create a stronger conduit between MFM and LifeSteps Wallet.
Switching focus to CUSG Marketing Solutions, The Sprint Credit Union Member Cash Rewards program continues to show strong month-over-month growth. Through March, more than 600,000 lines have been paid resulting in more than $45.5 million in cash rewards deposited into credit union member accounts.
These numbers are strong and growing. January through March of 2018, more than 276,000 lines were registered by credit union members. That’s a 257 percent increase compared to January through March of 2017! We have a new value proposition for credit union members and for credit unions and we’re excited to see continued growth in this program for 2018. That is good news for our shareholders, our customers and of course for our important partner, Sprint.
In January, the team began depositing the first set of Sprint Loyalty Rewards into member accounts. Members receive these loyalty rewards on an annual basis as long as they have an active and in-good-standing Sprint account and remain a credit union member. To date, more than $2.3 million in loyalty rewards have been paid to members.
While we’re still collecting data from TurboTax, early indicators from our partner Intuit are also strong. Outperforming other partners by roughly four percent, CUSG came into 2018 as Intuit’s top affinity partner in the financial services sector. Hoping to widen that four percent gap, CUSG’s TurboTax program has, so far, generated an increase of six percent in year-to-date revenue compared to last year. Similar to the Sprint program, helping Intuit in the marketplace, and helping credit unions serve their members with a strong discount on TurboTax Online, CUSG generates good income as a reward for our important coordinating role with this program.
Finally, Love My Credit Union Rewards added several new partners in the first quarter. New credit union member discounts will soon be rolling out with AllState roadside assistance, Tourico discount travel and CLC identity theft protection. Again, more details will be available in the coming weeks. These programs are all integrated with Sprint and TurboTax offerings in CUSG’s LifeSteps Wallet product.
Gas Station TV is off to a great start in 2018. As many of you will remember, GSTV and CUSG made a major push with our International Credit Union Day promotion in 2017. Largely driven by this campaign, we’ve generated seven new GSTV clients early in the year, and revenue totals are roughly double what they were at this time in 2017.
Save to Win kicked off 2018 with a total of 112 credit union clients spanning 11 states. The states of Texas and Wisconsin recently passed prize-linked savings laws which opens several new, considerably large markets.
Finally, in March, Marketing Solutions launched the Just Getting By social movement. The Just Getting By movement is designed to inspire honest conversations about money, and address the need for free, easy-to-access financial education. The self-titled documentary is being delivered via YouTube, Facebook and other social media channels – credit unions and consumers in general are encouraged to watch the film at JustGettingBy.org. The related campaign for Just Getting By is designed to provide attribution for CUSG, drive new business to CUSG’s social media management services and generate revenue by way of financial literacy content for credit unions. Credit unions and other organizations can get involved by visiting the website as well.
Finally, CUSG’s Performance Solutions division is building on momentum that spans well beyond the first quarter of 2018. While the team is indeed up 20 percent for the first quarter of 2018 compared to the first quarter of 2017, its actually added five times the revenue in the past two years than it added in the previous five years combined! Of course, this is driven by the support of our some-550 Performance Pro clients and our more 750 Compease customers. We appreciate those relationships and work hard to cultivate them.
Unique within CUSG, sales from Performance Solutions are being driven by both the credit union and non-credit union sectors. On the credit union side, new sales have come from credit unions with asset sizes spanning less-than $100 million, to more than $1 billion. On the non-credit union side, we’re attracting CUSG’s newest and largest clients, such as Red Lobster, which has more 3,500 employees at more than 700 locations worldwide.
While the team continues to focus on core solutions Performance Pro and Compease, it’s also focused on building new, innovative ideas into its product line. It’s newest solution, Planning Pro, was launched in the Michigan market in the first quarter, and has so far enjoyed an excellent reception. In our most positive projections, we had hoped to close on 20-30 percent of our product demos — that’s exactly what’s been generated. As we continue to work with our first 20 credit union clients in Michigan, we’ll begin to develop an approach for a national rollout in 2019.
We are also making progress with the development of a new governance product that will house board governance policies, shared policies and best practices. We will have more on this product next quarter.
Finally, the team is also nearing completion of its highly anticipated release of Performance Pro 4.0. While our technology team finalizes programming and development, attention is now turning to the style and user interface. Our goal is to launch a disruptive product that will potentially cannibalize some of our existing business. This will allow us to win more market share across the board. More details will follow through the second and third quarters of 2018.
Before turning things back over to Ken, I’d like to make everyone aware of a new column I am working on with CU Insight called CUSG CEO Connect. In this monthly series, I offer strategic insights into the areas of credit union technology, marketing and HR performance. The column, of course, can be read on CU Insight’s website, and we also have corresponding videos available on CUSG’s website. I encourage you to read the columns, watch the videos and provide any of your own insights and feedback on the content.
That’s all for CUSG’s update through the first quarter. If you have questions or suggestions on how we can better serve your credit union, feel free to contact me or any member of CUSG’s leadership. Thanks again, we’ll see you next quarter.
Ken Ross – Conclusion
That’s all from MCUL & Affiliates for the first quarter of 2018.
We appreciate your support for all that MCUL, CUNA and CUSG do to help credit unions become stronger and more successful.
Thank you once again for watching; we’ll see you next quarter.