Using CUSOs to generate net income
Guy Messick, partner with Media, Pennsylvania-based law firm Messick Lauer & Smith P.C., opened his 2018 CUES Directors Conference session with a wake-up call: “There is danger out there.” If your credit union wants to survive, he said, “it’s best to stay alert, engaged and ready to make changes.”
Messick has served as general counsel to the National Association of Credit Union Service Organizations and the liaison with the National Credit Union Administration, for over 30 years. He shared his CUSO expertise with attendees at Directors Conference, held in December 2018 in Waikoloa, Hawaii.
According to statistics published by NCUA, the number of insured CUs is predicted to drop below 4,000 in 2020 after a steady decrease from around 15,000 in the mid-1980s. Between 2013 and December 2018, Messick reported, more than 80 percent of mergers involved CUs in the range of $50 million in assets or lower.
“So size does matter,” noted Messick. Without it, CUs can’t achieve the economies of scale necessary to stay competitive and meet member needs.
CUs need to accomplish member expectations while also meeting revenue requirements to survive, said Messick. To start, ask these three questions: (1) Do we need more resources and scale to meet members’ expectations? (2) If yes, can we afford to generate those resources on our own? (3) If not, do we merge or collaborate?
If the answer to No. 2 is no, Messick proposes CUSOs as an alternative to merging. CUSOs can offer CUs the opportunity to make more revenue and save on operational costs while also providing access to higher levels of expertise and more services.