CUNA Loses Money Again, But Believes Future is Looking Brighter

WASHINGTON-CUNA’s unrestricted net assets fell $2.3 million last year, according to the organization’s annual report. This was the second year CUNA posted a major loss. CUNA also reported a slightly more than $1 million loss in 2001, after having netted more than $5 million in 2000 following the sale of CUNA Services Group, according to CUNA Senior Vice President of Communications Mark Wolff. A large chunk of last year’s losses could be blamed on the difficulty CUNA had in leasing its old and excess office space, with a tab of $1.2 million at year-end 2002. CUNA’s old office space was located just blocks from the White House, an unpopular spot following the Sept. 11, 2001 terrorist attacks. That space, as well as the excess space in CUNA’s current office, has since been rented out. In fact, CUNA is looking at a positive operating line of $548,000 by then end of this year. The slow economy also held CUNA Network Services’ income down. While revenues climbed 36%, the increase was not as high as initially anticipated. As a result, CNS has to recalculate its market value, which showed a $3.8 million net loss. Regarding CNS’ viability and members’ confidence in it, Wolff commented, “CNS is a young company in its first year, operating in what we all know has been a difficult economy. We think our members will take that into account when considering its financial performance. As we noted in our annual report, the company is just getting started. Sales and revenue are increasing, it’s adding partners, and it continues to expand its product offerings. We think our members will also appreciate that the array of online and security-related services CNS provides will help credit unions better compete in today’s high-tech world.” CNS added over 500 new credit unions that use its services in 2002 for a total of more than 1,000 credit unions employing at least one of its products. CNS is projecting more revenue and increased partnerships in the coming year. Wolff pointed out that on the bright side, CUNA and CUNA Strategic Services Inc. were expecting a $600,000 operating loss, but instead achieved a small net gain of $71,000 for 2002. Operating revenues came to $42.5 million in 2002, with the dues income ($17.1 million) as the largest source, up 7.24% over 2001. “Our philosophy of using dues dollars only for core trade association services has ensured that credit unions continued to receive the highest value in these core services,” CUNA Treasurer Don Larsen, president and CEO of Community CU in Tacoma, Wash., said in the annual report. Additionally, CUNA Professional Development training and education revenues totaled $8.3 million, representing a 23% increase. Fortunately for CUNA, its dues restructuring of 1999 built up the group’s reserves and helped absorb these losses. “As part of our dues restructuring one of the goals from that was to increase our reserve level,” Wolff explained. CUNA has relied on that member equity to cover losses. Reserves stand at almost $9.6 million for 2002, according to the report, down from nearly $11.9 million the year before. “We are focusing on being the most efficient, credit union organization that returns value to all of its members” CUNA President and CEO Dan Mica said in the report. “The changes and plan we put into place in 2002 are aimed at substantially increasing the association’s performance into 2003 and beyond.” CUNA is taking many steps to make up for lost ground, Wolff said. One key component of the effort was the massive reorganization of CUNA’s fee-based services. “It’s the biggest reorganization on that side of our operations in 30 years,” he explained. CUNA has taken advantage of technology by offering more audioconferences and Webinars, as well as other distance learning tools, which has been crucial in post 9-11 America. In addition, CUNA has shifted many of its paper-based products online, which reduced costs, and centralized its marketing for efficiency. [email protected]