News from the Service Corporation

LSC issues more than $335,000 in rebates; Distributes $19,500 in credit/debit card challenge

The ICUL Service Corporation (LSC) recently distributed more than $335,000 in rebate checks to 733 credit union customers for their use of LSC services during the 2005 calendar year.

“Year-end rebates are a large part of LSC’s cooperative culture and further establishes credit unions as ‘stakeholders’ in the organization’s success,” said George Fiegle, LSC executive vice president and chief operating officer. “LSC’s mission is to help credit unions compete. That drives everything we do and this action dramatically underscores our mission.”

Rebates are calculated using a four-part formula:

1. The total rebate pool is determined by LSC’s performance,
2. Each product line is examined to determine the percentage of total LSC business it contributed,
3. Individual credit union contribution to revenue in each product line is calculated, and
4. Percentages earned by a particular credit union in all product lines are added to determine its share of the total rebate.

For 2005, Illinois credit unions were benefactors of the rebate pool as a result of using the following LSC products and/or services: Ad Asylum, Member Access (ATM/EFT), AutoSource, cuCheck^sm (debit cards), Gemini/Apollo (credit cards), Creditors Resource Service (collections), and Service Corp Item Processing (SCIP). In addition, credit unions from other states shared in a generous rebate pool as well from usage of LSC’s National Apollo (credit card), cuCheck^sm (debit), and ATM programs. Overall, LSC currently has agreements with leagues in 43 states to provide these and other LSC products and services to credit unions and their members.

“This is certainly the largest number of credit unions participating we've ever had,” said Fiegle. “It is gratifying to know that we were able to further help and give a little back to more than eight percent of the nation’s credit unions who received a product rebate from us.”

Since 2000, LSC has functioned as a cooperative and established rebate “pools ” to provide incentives for credit unions to partner with the LSC. In examining the LSC mission, the board and management evaluated different approaches for coming up with the best organizational structure to serve credit unions.  Since credit unions themselves are financial cooperatives, the conclusion was that a cooperative structure would be the best way for LSC to serve its own constituents.

“This is actually our eleventh consecutive year of providing either a rebate or a major price decline to credit unions that support our services,” Fiegle continued. “By continuing to operate as a true cooperative, we are ensuring that LSC will be dedicated to its primary goal.”

In other news, LSC put out a marketing challenge to more than 550 customers of its cuCheck^sm and Apollo card programs, which resulted in more than $19,000 paid out to the participating credit unions.

LSC developed the year-long challenge to help its small credit union customers become more competitive by generating more accounts and more activity, and increasing their bottom lines. To participate, credit unions needed to place orders for, and utilize, free materials marketing their card program, and then reach certain goals increasing the number of accounts, the total dollars outstanding on the accounts, or sales volume set for each program.

More than 150 credit unions placed orders for the materials that resulted in more than 480,000 flyers being sent out to individual credit union members. This included 52 credit unions that participated in the credit card program, 21 in the debit card program, and 79 that participated in both programs.

Of the 150 total credit unions that participated, 47 met the challenge and received either a $300 or $500 one-time bonus, depending on the type of program in which they were enrolled. For Apollo customers, the challenge was to increase the number of accounts by 50 or increase the amount of outstanding balances by $75,000. On the cuCheck^sm side, participating credit unions were to increase accounts by 100 or increase their sales volume by $18,000 a month.

Although only 20 credit unions met the challenge and received the $300 bonus set for the Apollo (credit) program, the increase in the number of new accounts achieved by those that participated exceeded the increase shown by non-participating credit unions. In addition, a significant increase of 3.6 percent in outstanding balances was achieved by the participants versus a .07 percent increase by the remainder of the credit unions on the program.

For the cuCheck^sm (debit) card program, 100 credit unions utilized the materials and 27 met the challenge for the $500 bonus. Participating credit unions in this program also showed a significant increase in the number of accounts and sales volume over non-participants. Specifically, the number of accounts of credit unions participating in the challenge increased by 29.94 percent versus 12.93 percent for non-participants. Similarly, participant sales volume increased by 17.54 percent versus 13.30 for non-participants.

“This is the first year-long campaign we’ve ever held and it was very successful,” said Karen Duffy, LSC Senior Vice President, Sales and Business Development. “What it’s really about is helping our small credit unions compete.”