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Under the agreement with UT Athletics, approved by officials of the University of Texas Systems October 12, 2005, UFCU will contribute $13.1 million over 15 years towards retirement of debt obtained by UT to finance the renovation. In return, UFCU will receive rights to rename the facility "UFCU Disch-Falk Field," incorporating the existing name that honors legendary Longhorn baseball coaches Billy Disch and Bibb Falk.
The UFCU Board and executive team unanimously supported this decision after carefully assessing all related factors and fully recognizing the response, both positive and negative, that a decision of this magnitude might generate from members and the general public.
UFCU's roots go back to 1936, when a dozen faculty and staff, in the midst of the Depression, created the organization as an alternative to conventional banking for UT faculty and staff. Philosophically, UFCU's Board and management remain fully aligned with and committed to the cooperative spirit demonstrated by its founders, despite the challenges prompted by growth to 105,000 members, $700 million in assets, 13 locations, and 325 employees. In fact, the cooperative spirit has served as kindling, as the instigator of UFCU's growth and success, and has generated substantial competitive advantage. What has changed in the last 70 years, however, is the environment in which UFCU operates. Austin offers an extremely vibrant and attractive business climate, one that tends to perform well and is growing exponentially. Each year, more financial services providers of all types are drawn to Austin, making it one of the most competitive marketplaces in the country.
The decision to enhance UFCU's partnership with the University was primarily driven by the fact that, for UFCU to excel within such a competitive environment, it must continue to aggressively grow. Growth generates resources required to attract and retain talent, support innovation, and pay for systems necessary to deliver members the wide variety of contemporary services and convenience to which they have become accustomed. Growth is driven to a large extent by awareness created through well-designed and executed marketing, business development and public relations strategies and tactics. The visibility and awareness UFCU will gain through this venture during the next 15 years can serve to generate much of the growth necessary to ensure it remains vibrant and pertinent in the lives of UFCU members, something no one in this industry takes for granted.
The UFCU board and management staff consider this a financially responsible and effective manner in which to grow the organization over the next decade-and-a-half and maintain the stability and strength that allows it to be a premier provider of services to the membership, which is always the first and foremost priority.
This new agreement with UT Athletics involves a reallocation over the next 15 years of existing funds in the marketing, business development and community support budget, so the impact to UFCU financial statements and to its ability to pay and charge competitive interest rates will be transparent. UFCU loan and deposit rates continue among the best in its marketplace.
For the last 10 years, UFCU has allocated approximately $460,000, or 23 percent, of the annual marketing, business development and community support budget to a variety of very successful advertising and promotional opportunities with UT Athletics. That arrangement will expire July, 2006. Under the new agreement, marketing and business development dollars allocated to UT Athletics will increase in years one and two by $290,000 annually. For this incremental increase in expense, UFCU will for the next 15 years retain all existing campus signage and promotional opportunities and, through the UFCU Disch-Falk Field name change, will accrue substantially enhanced visibility in the university community. Payments to UT Athletics escalate in subsequent years but are anticipated to remain a fixed percentage of total funds allocated for marketing and business development in our growing organization.
UFCU has provided and will continue to provide financial and volunteer support for the Neighborhood Longhorns Program, the UT Elementary School, UT Libraries, student scholarships, the new UT Childcare Center, and a wide variety of other non-Athletics campus organizations and ventures. UFCU takes great pride in its support of the entire campus with these activities and with its three campus-area branches and extensive ATM network.
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