CU*NorthWest (CUNW), a 100% credit union owned cooperative CUSO, distributed more than 75% of 2016 net earnings to its owners as directed by the board of directors. Those cash returns amounted to a 12% “rebate” on base processing fees paid by the customer/owner throughout 2016. In addition to those direct cash returns, the cooperative had extended over $60k in free services (paid by CUNW) to all customers regardless of stock ownership – those services were purchased and paid for by CUNW for its clients in the coming 2017 fiscal year. Those purchased services were designed to drive more business for the CU*NorthWest credit unions—an action also directed by the CUSO’s board.
The CU*NorthWest Board of Directors is made up of CEOs from credit unions who own stock in the CUSO. CUNW is structured as a pure cooperative and mirrors the governance model of credit unions in nearly every way. “I am so proud of our board and the cooperative spirit they displayed in this process,” said Greg Smith, CEO of CU*NorthWest. “They not only took care of stockholders, but also recognized the non-stockholder customers as we have always believed that paying a monthly invoice is also a function of investment in our firm. Bringing their business to CU*NorthWest is far more important than being a stockholder – which has always been optional.”
Each year following the completion of a third party financial audit, the CUNW Board of Directors evaluates the net bottom line and makes decisions on how to best extend those returns to owner/customers. CU*NorthWest had a record fiscal year in 2016 (ending 9/30/2016) and not only paid the budgeted return but was able to add an additional “bonus return” on top of that. In addition to the dividend distribution, the firm better than doubled its retained earnings and saw the stock book value increase by nearly 17%.
“The board and management of CU*NorthWest have a driving philosophy when managing the cooperative’s income,” said Chuck Papenfus, current board chair, CEO of Inland Valley FCU in Fontana, California, current board member and immediate past chairman of the California Credit Union League. “We seek to balance returns in four areas: maintaining a healthy balance sheet (retained earnings); stock value growth (book value); direct cash returns to owners (dividends); and price reductions or extra services for all customers regardless of ownership.”
Jennifer Oliver, CEO of South Bay Credit Union in Redondo Beach, California, and also a board member at CU*NorthWest added: “Our goal in the board room is to generate value for both our customers and owners. It is simply what a cooperative does. Just as we work to serve our members with everything focused on them, so CU*NorthWest is focused on driving value and returns to its members (us – credit union clients of CU*NorthWest). CUNW has been able to generate returns while still lowering prices for the last 3 years and providing product enhancements and new capabilities of the core software suite with no additional cost for modules.”
Todd Powell, CEO of Spokane Firefighter Credit Union in Washington state, vice chair of the board and the first contracted client/owner to CU*NorthWest stated: “This is exactly why credit unions should do business with a cooperative. When we formed CU*NorthWest we hoped to be this successful and to see those hopes realized is very rewarding. The power of the cooperative business model quickly became obvious—as credit unions we all run cooperatives and see every day the difference it can make in our members’ lives. CU*NorthWest has certainly made a difference for our organization and our members.”
CU*BASE® GOLD is the only core processing solution available from a cooperative CUSO. CU*NorthWest and founding partner CU*Answers—both cooperatives—are nearly identical in structure and approach. They continue to work together as a part of the larger cuasterisk.com national network of credit unions and CUSOs.