FAIRHOPE, Ala.–CU*South, a 100% credit union-owned CUSO, announced that the price of a share of Class A common stock would increase to $40,000.00 effective immediately.
“We started offering Class A shares in September 2011,” said Leo Vaulin, CEO and co-founder of CU*South. “Over the past five years, thanks to the enthusiastic support of our credit union client-owners, we’ve sold 38 shares. By the end of September 2016, the book value of our shares was getting close to exceeding the offering price – so it was time to move to a second offering round.”
“It’s great news for our first-round credit union investors,” said CFO Bob McDonald. “CU*South has been earning positive returns every year since our CUSO was founded, and our owners have enjoyed a generous annual dividend, as well as an appreciation in the book value of their shares. We reviewed our pricing options with our board. The board agreed to open a second-round offering for a limited time, to give credit unions an opportunity to invest at a lower price, but on October 1, 2017, the per-share price will rise again, this time to $55,000.00. After this, we intend to tie the offering price to a multiple of book value at the end of each fiscal year.”
“We researched a lot of CUSO models when we designed the investment plan for CU*South,” added Vaulin. “We believed that democratic control was important for us to fulfill our mission of growing credit unions in a collaborative network. So, we made it easy to invest by setting our price at a low level, and we matched the same ‘one-share, one-vote’ model used by our credit unions. We didn’t want the market to see us as being controlled by a small subset of the credit unions we served, so we made it easy to participate in both the ownership and the governance. At the same time, we also didn’t want any single investor to exert economic leverage. We saw this happen in the CUSO space, and it hurt the other stakeholders, including any non-owner clients. So, we capped share ownership by any single credit union at 10 shares. Our intention was to make it possible for a credit union to redeem their shares without adverse material impact to our financial model.”
Separately, CU*South announced it has completed the conversion of Frederiksted FCU to its CU*BASE hosted core platform. Frederiksted FCU serves members on the western end of the Caribbean Island of St. Croix in the US Virgin Islands.
“We’re thrilled to offer CU*South’s software and services to Frederiksted’s members,” said CU*South CEO Leo Vaulin. “This is our first credit union in the Caribbean, and we enjoyed meeting the members and learning about the Crucian culture and lifestyle. It’s a truly delightful island and the people are very open and generous – it’s a perfect place for credit unions to thrive!”
“CU*South replaced a PC-based core product that was limited in feature-functionality by the vendor’s pricing structure,” added Starla Honea, director of CUSO development. “Every time the credit union wanted to offer a new product or service, they were confronted with a per-module up-front cost. We were able to offer a cloud-based solution that included everything. Now Frederiksted FCU has access to the same tools as CUs many magnitudes larger.”
Business continuity and disaster recovery were critical considerations to Frederiksted’s CEO, Patrice Canton, according to the CUSO. “Moving to a cloud based solution means that if anything happens to our island in the event of a major hurricane our members will continue to have full access to their accounts at a time when they need it most.”
That ease of connectivity created great buzz with the credit union’s members. “The credit union’s old vendor offered a home banking product, but members didn’t use it because they felt the features were too primitive,” commented Jeana Dunaway, CU*South’s client service manager and education coordinator. “The first week after conversion, we had so many members coming in to learn about all the new things they could now do for themselves. They were so excited! Both the credit union staff and our CU*South support team felt great about offering these new improvements!”