Exploring alternative sources of income
Partnerships, CUSOs offer credit unions creative opportunities.
Two executives shared insight on how their credit unions earn alternative income during a breakout session at the 2019 CUNA Finance Council Conference Tuesday in New York City.
Nutmeg State Financial Credit Union in Rocky Hill, Conn., partners with the Connecticut Department of Motor Vehicles (DMV) to offer drivers’ license renewals in two of its branches. Between the two branches the credit union serves more than 200 consumers a day, says Bob Bruhn, the credit union’s chief financial officer. The credit union collects $8 in income for each renewal.
“It’s increased our ROA (return on assets) by 6 basis points,” Bruhn says. “And that’s not even on an annualized basis. That’s a nice boost.”
There’s an added benefit: “We have the opportunity to cross-sell everyone who comes in to renew their drivers’ license on our credit union’s services,” Bruhn says.
The DMV would like the Nutmeg State to expand the number of locations that offer its services. “We would like to do fishing license or hunting license renewals, so we have more people coming more often,” Bruhn says.
Nutmeg State also purchased a project management consulting firm in 2018. “We’re generating income from a company that previously was an expense for us,” Bruhn says.
Randolph-Brooks Federal Credit Union in Live Oak, Texas, owns seven credit union service organizations (CUSO). The credit union only explored growth through CUSOs during the past the past 15 years, when it expanded to a community charter, says Ed Bronnenberg, senior vice president/CUSO operations. Currently, $8.7 million of Randolph-Brooks’ $92 million in income is earned through its CUSO operations. The credit union has a long-term goal of earning 15% to 20% of its income through CUSOs.
“Every credit union is vying for front-page status,” Bronnenberg says. “We’re constantly exploring what might be next, how we can help our members, and how we can help our members save money.”
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