EasCorp's investment advisory CUSO tops $4 billion mark

<p>DALLAS – An asset surge of $1.5 billion in the last 12 months has helped EasCorp’s investment advisory CUSO become one of the largest such firms in the nation. ALM First Financial Advisors, LLC, located in Dallas, now has $4 billion under management. Its assets jumped from $3.155 billion as of year-end 2001 to $4 billion as of March 31, 2002. While credit unions and corporates have grown by virtue of a liquidity surge, ALM First Financial’s sharp growth is due more to an expanding client base, said Alan Bernstein, Senior Vice President for EasCorp. In 1998, the firm had just 43 clients. Today that number is 79. Bernstein said as credit unions have grown and CU-approved securities have become more complex, there has been a commensurate growth in the need for advisory services. The bulk of ALM First’s clients are larger, ranging from $50 million into the multi-billion dollar range. Most clients have investment portfolios of at least $25 million and up, said Bernstein. Clients are concentrated in the New England region, but there are clients from all corners of the country. As of year-end 2001 EasCorp had about $1.2 billion in assets, which is not even half of ALM First’s assets under management. Is the successful CUSO taking away dollars that would go to EasCorp’s balance sheet? “We have been asked by our colleagues if we’re not cannibalizing our own balance sheet. Credit unions are going to be seeking diversity anyway. They’re going to do this anyhow. Certainly we want them to do this through our world-class service,” said Bernstein. Bernstein said you only need to look at where CUs are investing to know this is true. About 36% of their investment dollars go into agency securities. WesCorp President/CEO Dick Johnson has been saying for years that CUs are investing too much outside the corporate network, estimating that figure at about $50 billion annually. The firm’s Dallas address (EasCorp is located in Massachusetts) can be explained by its genesis. EasCorp contracted with Southwest Corporate FCU, based in Dallas, for technical assistance with advisory services. Two of ALM First’s principals, Emily Hollis and Tom Manley, are former Southwest employees based in Texas. ALM First hired them when they were no longer employees of Southwest. ALM First was originally formed as a jointly-owned CUSO with INDICORP in 1995, but as a result of a management change at INDICORP, EasCorp purchased INDICORP’s share of ALM First within the first year of operation. Bernstein said a good advisory service gets to know the credit union’s policies. ALM First has 11 employees, four of which are portfolio advisors. “A portfolio advisor assigned to a credit union is analyzing risk exposures for types of ALM modeling that gets done. They have a very good sense for their credit unions’ policies,” said Bernstein. ALM First’s pricing is based on assets under management. A CU is charged a flat rated based on portfolio size. While ALM First does not actually conduct transactions, it has relationships with the major Street firms to carry out transactions on behalf of credit unions. [email protected]</p>