CUSOs: Leveraging the Cooperative Advantage

At the forefront of cooperative innovation, CUSOs have emerged as operational, financial, and politically powerful organizations.

 
 

Collaboration. Innovation. Growth. Value. Scale. Reach. Market power. These are just a few of the terms that describe what CUSOs bring to credit unions and their members. The CUSO segment is the most dynamic part of the credit union community today, enabling credit unions to develop new capabilities and increasing the value they deliver to members.

More than $1 Billion of Capital
There are 737 CUSOs active today. The market is composed of 565 CUSOs that are wholly-owned by a single credit union and 172 that are owned by multiple credit unions. Although the number of wholly-owned CUSOs is declining as many investment-related CUSOs are integrated into their credit union owners, the multi-owned segment continues to grow. At year-end 2005, credit unions reported investments in or loans to CUSOs totaling more than $1.1 billion, a 40 percent increase from the prior year-end.

Many of the early CUSOs were established by groups of local credit unions seeking to combine scale for more cost-effective processing capabilities. Sharing ideas and resources were the foundation of these efforts. Some of these organizations have evolved from part-time, bootstrap operations into large organizations guided by a professional management team. However, sweat equity continues to play a major role in the evolution of the CUSO segment and the organizations within it.

Even in the CUSO segment’s fifth decade, the entrepreneurial spirit continues to drive it forward as promising start-ups emerge on a regular basis. There have been at least 50 new CUSOs launched over the past year in areas ranging from business services to payroll processing.

Regardless of the business, CUSOs continue to focus on improving the products and services provided to credit union members. In an increasingly competitive financial services market, the ability to distinguish the distinct value provided by credit unions is critical. Via surcharge-free ATMs, lower mortgage closing costs, expanded access through shared branching, and many other offerings, CUSOs are helping the credit union difference become more apparent.

A Key to Future Success
The key factor in the success of many CUSOs comes down to the willingness of credit union partners to share knowledge, resources and capital. From this shared risk comes shared reward, and no other competing industry has demonstrated the ability to collaborate on the scale of credit unions. How credit unions continue to leverage their cooperative advantage is more important than ever and will be a critical component of their future success, both individually and collectively.

Top 25 Multi-Owned CUSOs by Credit Union Owners
Data as of December 31, 2005
Rank
CUSO
State
Services
Number of
CU Owners
Assets ($)
1 CO-OP Financial Services
CA
ATM Network, Shared Branching
1,002
136,045,000
2 PSCU Financial Services
FL
Multiple Services
530
236,702,399
3 Credit Union 24, Inc.
FL
ATM Network
281
13,622,092
4 Encore Electronic Services Cooperative, Inc.
VA
ATM Network, Shared Branching
116
5 Financial Service Centers Cooperative, Inc.
CA
Shared Branching
114
12,500,000
6 CU Direct Corporation dba CU Direct Lending
CA
Auto Lending
78
28,425,000
7 Synergent
ME
Data Processing
74
8 CU Auto Resource Group*
MN
Auto Lending
72
18,000,000
8 CU Member Business
MN
Business Lending
72
8 CU Preferred Investments*
MN
Investments
72
8 CU Realty*
MN
Real Estate Services
72
12 CU*Answers
MI
Data Processing
70
9,402,000
13 CU Companies (CU Mortgage Services, Inc.)
MN
Mortgage Lending
69
18,500,000
13 CU Title Services, Inc.*
MN
Title Services
69
15 MEMBERS Development Company, LLC
WI
Incubator Investments
62
16 Cooperative Services, Inc.
GA
Item Processing
61
4,875,544
17 ICUL Service Corporation
IL
Multiple Services
49
51,517,220
18 CUSO Financial Services
CA
Investments
42
22,297,225
19 Callahan Credit Union Financial Services, LLLP
DC
Investments
40
3,500,000
19 XTEND, Inc.
MI
Multiple Services
40
342,000
21 Credit Union Mortgage Association (CUMA)
VA
Mortgage Lending
38
21 CUILA, Inc.
CO
Auto Lending
38
23 CUILA DBA CU Direct Connect
CO
Auto Lending
34
13,284,155
24 CU Anytime, LLC
NM
ATM Network
33
24 Members Trust Company
FL
Trust Services
33
23,468,000
* A Subsidiary of CU Companies

To read find out more about America's CUSOs, Callahan's 2006 Directory of Credit Union Service Organizations provides key contact information for all multi- and wholly- credit union owned CUSOs in over 30 service categories, it also includes updated information on every CUSO's financial, ownership and customer metrics in this year's just launched CUSO Guide Online.
 

 

 

Aug. 21, 2006


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