CU*SOUTH, a 100% credit union-owned CUSO, announced that the price of a share of Class A common stock would increase to $40,000.00 effective immediately.

“We started offering Class A shares in September 2011,” said Leo Vaulin, CEO and co-founder of CU*SOUTH. “Over the past 5 years, thanks to the enthusiastic support of our credit union client-owners, we’ve sold 38 shares. By the end of September 2016, the book value of our shares was getting close to exceeding the offering price – so it was time to move to a second offering round.”

“It’s great news for our first-round credit union investors,” said CFO Bob McDonald. “CU*SOUTH has been earning positive returns every year since our CUSO was founded, and our owners have enjoyed a generous annual dividend, as well as an appreciation in the book value of their shares.”

“We reviewed our pricing options with our board,” said McDonald. “The board agreed to open a second-round offering for a limited time, to give credit unions an opportunity to invest at a lower price, but on October 1, 2017, the per-share price will rise again, this time to $55,000.00. After this, we intend to tie the offering price to a multiple of book value at the end of each fiscal year.”

“We researched a lot of CUSO models when we designed the investment plan for CU*SOUTH,” added Vaulin. “We believed that democratic control was important for us to fulfill our mission of growing credit unions in a collaborative network. So, we made it easy to invest by setting our price at a low level, and we matched the same ‘one-share, one-vote’ model used by our credit unions. We didn’t want the market to see us as being controlled by a small subset of the credit unions we served, so we made it easy to participate in both the ownership and the governance.”

“At the same time,” continued Vaulin, “we also didn’t want any single investor to exert economic leverage. We saw this happen in the CUSO space, and it hurt the other stakeholders, including any non-owner clients. So, we capped share ownership by any single credit union at 10 shares. Our intention was to make it possible for a credit union to redeem their shares without adverse material impact to our financial model.”

“We share a great vision of our future with our credit unions—those who have been elected to our board, those who participate in share ownership, and every other credit union we serve. We appreciate and honor the trust credit unions have placed in us—with their member data and with their investments—and we continue to work to earn that trust.”