SALEM, Ore.-MaPS Credit Union has emerged as one of the top practitioners of leveraging CUSOs, as its eight wholly owned or multi-owned subsidiaries are contributing as much as 30% of its annual net income.
The goal, said Mark Zook, president and CEO of the $382-million credit union, is to continue to grow the income numbers. He said the amount the various CUSOs contribute depends on the year, but the long-term target is to have net income from CUSOs consistently in the 35% to 40% range.
"One of the challenges in making those numbers consistent is economic upturns and downturns," he pointed out. "Each CUSO is vulnerable in its own way to cycles. There might not be a booming year for the credit union, but it is a booming year for wireless."
Affordable Wireless
Zook's reference to wireless is to CUWireless, a wholly owned CUSO that offers affordable mobile phone plans to members. Other credit unions may contract with CUWireless to make this service available to their own members. CUW also offers a text banking product that allows members to do what MaPS terms "almost-instant" balance inquiries. CUW, likewise, provides this feature to other CUs to offer to their members.
"We have eight CUSOs that we operate here that are wholly or majority owned, and we have ownership of some that are nationally owned. The ownership picture is complicated," Zook explained. "Most CUSOs are under a holding company called MaPS Service Agency, which has its own board of directors."
David Deckelmann, VP of operational subsidiaries for MaPS Service Agency, told Credit Union Journal running this network of service organizations is helped immensely by having people who sit on both the Service Agency board and the credit union's board. "This keeps the lines of communication open and keeps everyone on the same page," he said.
Agreed Zook: "It is really important the credit union and its subsidiaries are aligned. On a daily basis a given CUSO should not be run by credit union executives, it should be run by subject matter experts. Insurance is a great example-it should be run by an insurance expert, not a lending officer who is taking on a second job."
CUWireless, Deckelmann noted, is headed by a gentleman who came from the wireless communications industry.
Mutual Benefits
Beyond CUWireless, the service organizations under the MaPS umbrella include a business lending CUSO, separate insurance services for consumers and businesses and for other credit unions, an investment advisory service for CUs, an employment and tenant background screening company, a CUSO that manages deposit reclassification for credit unions, and one that gives members a chance to invest in a share of the credit union's headquarters building.
With multiple CUSOs and an array of products and services, getting the word out can be challenging. Jill Nowacki, VP of development for MaPS CU, said for products being sold directly to members, such as cell phone plans through CUWireless, "We market just as we would any other product."
"Same for insurance," she said. "We provide statement stuffers, web graphics and newsletter articles; all the usual types of promotions to let members know what is available. And, of course, we let them know business services and loans are available."
In some instances, MaPS has sales people who are hired to handle business-to-business outreach. This means outsides sales representatives for CUSOs, such as Advanced Reporting, the background screening company. Deckelmann said having an affiliation with MaPS Credit Union "really opens a lot of doors in the local community" for its sales force thanks to a solid reputation in the community.
Added Zook, "One of the nice things about these entities, especially if they are dealing directly with members, is there are clients that are not affiliated with the credit union. Some people might have insurance through one of the CUSOs but not be a member of the credit union. We look at this as an opportunity to bring people in and make them members. When we acquired the insurance agency, it brought us 1,000 people that we were able to introduce the credit union to."
Willamette Business Group is a collaborative CUSO allows several credit unions to work together to offer all of their members access to small business loans. Zook said when a member walks into a MaPS branch seeking a business loan he or she is referred to Willamette Business Group. A representative from WBG later telephones the member, but members "do not necessarily know they are being referred to a CUSO, they think it is another department of the credit union. It is preferable that this be transparent because the person will feel more comfortable knowing it is part of the MaPS family."
