First quarter 2001 a record for CNBS; suite of Web-based products unveiled

OVERLAND PARK, Kan. – Corporate Network Brokerage Services, a broker/dealer owned by 19 corporate credit unions, said that its second quarter 2001 results topped its previous record-setting 2001 first quarter results. CNBS President/CEO Brian Hague would not provide figures – saying he didn’t want to reveal his cards to competitors – but he did say that the quarter was a record in terms of revenue, volume, and net income. One factor driving the record revenue is an increase in fee income at CNBS. “We’ve tried to increase fee income so it covers fixed expenses. Even if we have a lousy year on the transaction side, we break even or make a profit overall,” said Hague. CNBS derives fee income from ALM services, investment reporting, advisory services, its Investment Institute Series, and other sources. Increased investment holdings by CNBS’ investment advisory clients also helped boost the fee income. Hague said the record in transaction volume for the quarter, which ended June 30, is significant given the seasonal pattern of credit union liquidity typically results in revenues peaking in the first quarter. Hague doesn’t attribute the record results to rising liquidity this year, and he disagrees with the constant talk about there being a “ton of liquidity this year.” For those that want to look at the loan-to-share ratio, Hague pointed out that the 76% loan-to-share so far this year is historically very high. “Except for 2000, that represents the highest loan-to-share ratio in the history of CNBS,” he said. “Some of it (the record) I do attribute to it (the increased liquidity), some I don’t. A lot of it has to do with the things we’ve done in the last three years to position our firm to be less sensitive to the cyclical nature of credit union liquidity,” said Hague. Those things include the increased fee income and cutting expenses. Fee income was also higher due to continued growth of the firm’s investment and risk management reporting products, as well as increased investment holdings by CNBS’ investment advisory clients. CNBS has also unveiled a suite of Web-based products, known as C.U.R.E. (Credit Union Risk Evaluator). It includes a bond accounting and investment portfolio analytics solution, as well as an asset liability management solution. “It’s geared for smaller credit unions, to allow them to tap into ALM services at a lower price,” said Mike Dixson, Senior Vice President, Client Strategies for CNBS. Dixson said the Web-based products allow credit unions to view and update reports daily from their own desktop PCs. The bond accounting and advanced investment portfolio analytics solution is priced between $150-$250 a month, based on portfolio size, and the ALM solution is either $4,000 annually (12 reports) or $3,000 quarterly (four reports). CNBS still has a paper-based ALM solution known as Maestro. As for the remainder of 2001, Hague said things don’t look good for the economy. “The worst for the U.S. economy may be yet to come. Continued labor market weakness and poor earnings performance by companies across sectors will strain consumer borrowing further, in spite of the Fed’s aggressive rate cuts.” Hague noted that consumers are currently devoting 14% of take-home pay to servicing revolving debt, while the savings rate remains negative. “That cannot persist, particularly in the face of a global slowdown.” [email protected]