CU
Companies
2005
Your trusted partner for total solutions
Annual Meeting 2.22.06
Welcome CU Owners
• Welcome
– Brad Crandall, CEO
• 2005 overview and financials
– Brad Crandall, CEO & Vanae Pearson, CFO
• Future vision of CU Companies
– Brad Crandall, CEO
• Looking at 2006 & Beyond (Business Unit Heads)
- CU Mortgage Services, Inc. – Dean Warzala - CU Realty, Inc. – Don Rasmussen - CU Title Services, Inc. – Steve Albers - CU Preferred Investments, Inc. – Dave Murdock - CU Member Business, Inc. – Jackie Schwalen - CU Auto Resource Center, Inc. – Chuck Happach
Overview of Fiscal Year 2005
CU Mortgage Services, Inc.
CU Mortgage FY 2005 in review:
• 3,100 mortgage applications were taken during the year • 1,441 were originated by credit union employees • 48 different owner credit unions participated in our HomeLoan Express program • Total closings – 1,195 units for $186.5M corresponding to an average mortgage loan amount of $156,146 • CU Mortgage servicing portfolio grew to 6597 loans with a balance of $785.3M • Partnered with CitiMortgage for jumbo mortgage products • Financial Spotlight – Total Revenue of $4,576,120 Net Income of $300,871
CU Realty, Inc.
CU Realty FY 2005 in review:
• 483 transactions: 169 purchases and 314 listings • $105.9M sales volume • $709,800 in company commission • 40 CU Realty signs displayed in credit union offices • Clients saved $1.29M by using CU Realty’s 4.25% listing fee over selling at 7% • 61% of clients who used CU Realty to buy a home used CU Mortgage to finance that home
• 89% of clients who used CU Realty for their real estate transaction also used CU Title to close their deals
CU Title Services, Inc.
CU Title FY 2005 in review:
• 7,705 Owner & Encumbrance Reports • 1,048 Junior Policies • 1,342 First Mortgage Applications • 1,711 Closings
- 348 Seller Sides
- 907 Refinances
- 292 Purchases
- 164 Second Mortgages
• 140 Notary Closings at the credit unions ($9,250 paid to CUs) with 36 participating CUs/59 branches on first mortgages
• Added 12 CUs to the HEQ Department Products this past year
• Reduced our Metro Area OE’s from $75 to $70 • Reduced our flood certifications from $12.50 to $11
CU Preferred Investments, Inc.
CU Preferred FY 2005 in review:
• Reached $60M in assets under management • The department implemented a new revenue recognition method mid-year to satisfy SEC requirements. Commissions are now paid directly to the credit unions generating the commissions. CU Preferred did see a 16% increase in revenues over the previous calendar year. • Made a commitment to be a retirement plan provider for our owner credit unions
CU Member Business, Inc.
CU Member Business FY 2005 in review:
• Closed 46 loans in our first year of operation • Ended the year with a servicing portfolio of just over $20M • Assisted over 20 credit unions in getting business loan policies approved
• Provided three training sessions (74 attendees) to credit union management on ―understanding the write up‖
• Held two in depth SBA training sessions
CU Auto
CU Auto FY 2005 in review:
• Quick history: founded by CCFCU in 2001; acquired by CU Companies in June 2004 • Mission: to assist members in locating desired vehicles in prompt, stress-free fashion at best possible price • Structure: staff of six with four salespeople averaging 15 years in the business • Participation of 21 credit union owners • 424 total vehicles sold during FY 2005
• 265 brokered vehicles sold
• 146 used vehicles sold ·
Financials
Recap of financials
Recap of 2005 Financial Information:
• Net Income was $131,954
• Assets grew from $17.2M to $18.6M • Cash position increased by $567K
• Shareholders’ equity increased by $385,914
• Share price = $382.81
Our National Ranking
Callahan and Associates’ most recent report of national multi-owned CUSOs
Top 10 of 138 Multi-owned Credit Union Service Organizations Total Assets Rank 1 2 3 4 5 6 7 8 9 CUSO Name PSCU Financial Services CO-OP Network State FL CA Services Credit Card Services ATM Network, Shared Branching Mortgage Lending Multiple Services Trust Services Auto Lending Mortgage Lending Multiple Services Mortgage Lending Data Processing as of 12/04 221,000,000 115,749,000 114,400,000 55,997,601 24,000,000 20,814,533 19,041,825 18,582,811 17,629,671 16,306,000 # of CU Owners 525 966 26 49 28 57 3 72 6 8
Central States Mortgage Company WI ICUL-Service Corporation Members Trust Company CU Direct Corporation CUMAnet CU Companies Mortgage Center, LLC IL FL CA NJ MN MI AL
10 EPL, Inc
Compensation to Owners:
• HomeLoan Express Payments • Notary Closing Payments • Realty Sign Payments • CU Preferred Commission Earned • Advertising Reimbursements • Board Seat Fees Total Compensation to Owners: $262,664 $ 9,350 $ 15,500 $ 27,002 $138,539 $ 49,000 $749,553 $247,500
Additional Benefit: • Servicing Fees Waived (Street Value):
Book Net Income +Compensation to Owners + Waived Fees = Gross Net Income $131,954 + $749,553 + $247,500 = $881,507
Looking at 2006. . . and beyond
Looking at 2006 and beyond
CU Companies vision & branding:
• Show and communicate VALUE to the credit unions and members (through return on investment, enhanced member relationships, cost and time savings to members). • TRUST – be a trustworthy partner by always following through on what we say we are going to do. • Responsiveness – be consistently RESPONSIVE to both external and internal ―customers.‖ • Take exceptional CARE of members, credit union staff and CU Companies staff.
Looking at 2006 and beyond
CU Companies long term priorities:
• Adopting an income disbursement philosophy that reflects participation with the company. In other words, reimbursing the shareholders in a way that is relative to their activity in the CUSO. • Diversify revenue streams to weather economic changes that could impact us of company’s current primary revenuegenerating sources. • Ensure that each business unit achieves profitability and contributes to the economic and marketing wellbeing of the entire organization.
CU Mortgage Services, Inc.
Looking at FY 2006 and beyond:
• Rolled out sub prime lending channel (fall 2005) • Added the Interest First Fixed and ARMs to our ―A‖ paper product offerings (1-2006) • Adding Alt-A products (Stated, No Ratio, NINA) and a servicing retained jumbo mortgage participation program (Modeled from CU Member Business) • Expanding into North Dakota market • CU Mortgage Servicing recently received the transfer of servicing for files from PHH - 44 loans
• LOS software conversion to FICS. Target date: 3-31-06
CU Realty, Inc.
Looking at FY 2006 and beyond:
• Projecting 558 transactions for 2006 (279 listings and 279 purchases) • New promotion kicked off 2-1-06 - $750 cash back bonus to all buyers who use CU Realty to purchase a home • Comcast cable ad – three-month spring blitz in western metro • Home photo ads (full color) in both Pioneer Press and Star Tribune home guides monthly for all of 2006 • New CU Realty website launch—www.curealtymn.com • Continue the 3.95% listing fee for all credit union employees who sell with CU Realty • Bridge Loan program
CU Title Services, Inc.
Looking at FY 2006 and beyond:
• Actively pursue more CUs for the Home Equity Department • More active participation by the staff in visiting credit unions • Survey the needs and wants of our credit union ownership • Survey the value CU Title Services, Inc. brings to its ownership
• Expand the notary closing process within our ownership
• Provide additional lunch and learn seminars on recording laws and procedures • Process and implement escrow closings for purchases in the State of Minnesota to enable us to bring title services on purchases to the credit unions • Improve technology for our products, enabling better service and communication
CU Preferred Investments, Inc.
Looking at FY 2006 and beyond:
• Surpass $70M in assets • Projecting three new owner credit unions will sign contracts with CU Preferred in 2006 • Expecting to sign one new representative, bringing the total number of representatives to four
• Will offer owner credit unions with a unique, combined 401k plan. Some of the benefits of this plan are as follows:
- Investment options with premier money management firms - Local service provided by CU Preferred representatives
- Flexibility of individual plan design with reduced administration under one combined plan
- Reduced administration fees for all owners utilizing the plan
CU Member Business, Inc.
Looking at FY 2006 and beyond:
• Increase loan originations to $30M
• Expand services to more owner credit unions • Build relationships with non owner credit unions • Training/Education • Online document retrieval for all loans to be available on the website • Current Products/Services
CU Auto
Looking at FY 2006 and beyond:
• Successful fall sale moved 53 units • Increase member sales from 424 to 578 (36% increase) • Increase participation by eight credit unions • Implement member contact tracking software to enhance responsiveness and accountability • Augment core buying service with repossession disposal program for credit unions and value-added auto services discounts for participating members
• Meet on scheduled basis with credit union member contact personnel to explain program and listen for suggestions
• Conduct two car sales (May 6th and fall) on CUC premises
Thank you, owners!
Thank you for your support of CU Companies in 2005.