RICHARDSON, Texas — When Texans Credit Union's senior team and board strategize at planning sessions, one topic seems to always top the priority list: how to aggressively reach out to the membership segment that represents one-eighth of the financial institution's $2 billion in deposits.
To make that happen Texans completed the merger of OBS Financial Services, Inc. on Dec. 20, a registered investment advisory and asset management firm. Whitehouse, Ohio-based OBS serves 52 community banks and trust firms nationwide, providing them with trust, retail, and separately managed account services. Terms of the deal were not disclosed.
"One of the biggest focuses is going after that part of the business with members because it increases wallet share," said David Addison, president/CEO of $2 billion Texans. "Instead of being just a depository institution, we want to be able to offer our members more."
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With the acquisition, Texans is looking to build on the success of Texans Financial, its investment services subsidiary launched in 2001 currently managing $400 million in assets. Of that amount, $110 million is fee-based funds, Addison pointed out. Fee-based products tend to help credit unions and banks offer managed accounts to the "mass affluent," described as those with as little as $100,000 to invest. But salespeople often find it hard to keep up their asset accumulation data for reporting, making such products difficult to integrate into the product mix.
OBS' expertise in fee-based services was one of the reasons Texans sought out the alliance, Addison said. Texans Financial had also already built a strong retail component and was looking to add a wholesale piece for long-term growth. After looking at a few local firms in Dallas "that were good mostly on the retail side," OBS's wholesale niche looked attractive.
To help guide the transition between OBS and Texans is a familiar name in the credit union industry. John Henry, previously senior vice president of CUNA Mutual Group's MEMBERS Financial Services, Sales, will serve a co-president of OBS along with Chris Campbell, the company's co-founder.
"If you look across the wealth management industry, you'll see a real shift to fee-based," Henry said. "Texans is one of the leaders in that space. Credit unions are on the cusp of the movement."
Billions of dollars in commission products will migrate to fee-based investment services, stemming mainly from rollovers and baby boomers, Henry forecasts. Wirehouses like Merrill Lynch and Morgan Stanley and independents such as LPL Financial have already made the shift, he added.
Texans' purchase of OBS is among the credit union's latest acquisitions. In January 2007, it bought Dallas-based Curley Insurance Group and renamed it Texans Insurance Group. In 2003, it formed the highly successful Texans Commercial Capital, which manages more than $630 million in commercial loans.
"Over the last couple of years, we have been systematically adding lines to sustain long-term growth," Addison said.
As for the OBS buy, Henry said the first quarter of 2008 will be spent working more with Texans Financial. Exploring partnerships with other credit unions may come in the second quarter. Addison said the timing of the OBS acquisition could not have been better.
"It looks like an offensive move but it's really a defensive move," Addison said. "I see middle-of-the-road adopters. Some of our strongest relationships that have deposits with us have relationships with Texans Financials. This is a very powerful lever."
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