🔒Southington-based fintech COCC hits $224M in annual revenue, spurred by client-ownership model

For people of a certain age, a television ad from the early 1980s may be hard to forget.

It featured a man named Victor Kiam, seated behind a desk, telling the world that he liked the Remington M3 electric shaver so much, “I bought the company!”

For Southington-based COCC, a business that provides software for banks and credit unions, a similar sort of thing happens a little more frequently.

That’s because the fintech company — which was founded in 1967 as the Connecticut On-line Computer Center Inc., but now is known simply as COCC — maintains an interesting relationship with its clients.

Just like Kiam, they own the company.

Whether it’s a new client, or an existing one that has expanded its customer base, each bank or credit union is required to not only pay a fee for using COCC’s software, but also buy shares in the company based on the number of customers it serves.

That unique relationship was intended from the start. As COCC states on its website, the company “was founded by its clients to provide them with more control over features, costs and the delivery of their technology needs.”

Many of the original founding financial institutions remain COCC clients today, it adds.

That relationship explains COCC’s April 28 filing with the U.S. Securities and Exchange Commission, which states that the company sold equity shares valued at $13.88 million.

“June 30 is the end of our fiscal year,” said Susan W. Salecky, COCC’s senior vice president and chief revenue officer. “And around April, we do an assessment of how many accounts are currently on (each client’s) system. So, if they have a certain number of accounts on the system, they’re required to purchase additional stock in COCC.”

The additional accounts could have been added organically through normal business growth, or through a merger or acquisition. Regardless, to continue using COCC’s software, banks and credit unions need to buy in.

And they have, for decades, and continue to do so.

That client loyalty was reflected in a recent survey conducted by the American Bankers Association. In it, COCC received the top satisfaction rating among so-called core banking platform providers, ranking ahead of top industry players like Temenos AG in Switzerland, London-based Finastra and Fidelity Information Services Inc. (FIS), based in Jacksonville, Florida.

“We’ve been doing this since 1967, and we thought we were doing a good job, so it’s a validation for us,” Salecky said of the survey results.

Core providers

COCC and tech companies like it essentially provide the core banking system that financial institutions use to manage their day-to-day operations and customer interactions.

According to IBM.com, the term “core” stands for “centralized online real-time environment.”

“Core banking is the hub, or back-end connection, for multiple branches of the same bank that allows customers the freedom to access account transactions in a single safe entity,” IBM states. “Core banking operations can include loan management, new accounts, deposits and withdrawals, among other financial services.”

These systems can be on-premises or cloud-based, depending on a bank’s needs.

COCC says it provides a database system that operates “in an online real-time processing environment, encompassing all deposits and loans.”

COCC’s software manages over $130 billion in client assets in 7 million bank and credit union accounts, including 2 million mobile accounts.

For fiscal 2024, which ended June 30, the company had revenue of $224 million. It projects a 7% increase to $240 million in fiscal 2025, officials said.

“Our footprint is the Northeast, Pennsylvania, Ohio, New York and New Jersey, states where we are legally licensed to sell our solution,” Salecky said. “For the most part, we still have a lot of bandwidth to grow in all of those markets.”

Recently, expansion efforts have focused on Ohio and Pennsylvania, she said, noting that “there are a lot more banks there at this point, and credit unions too.”

COCC’s clients consist of about two-thirds banks and one-third credit unions, but Salecky said the company didn’t start selling to credit unions until about 15 to 20 years ago.

Its client list includes institutions as small as Fidelity Federal Savings & Loan in Delaware, Ohio, which has just $131 million in assets, to as large as Middlesex Savings Bank in Concord, Mass., with $6 billion in assets. One of its Connecticut clients is Thomaston Savings Bank, with $1.8 billion in assets.

Big or small, though, each financial institution must buy shares of the closely held COCC stock to remain a client.

How it works

Salecky said the shares are sold only to clients, and the number of shares sold is based on the number of customer accounts held by a client.

“If you’re a brand new customer coming on, and let’s say you have 10,000 accounts on your system, they would be required to purchase five shares,” she said. “For every 2,000 accounts, that’s one share, and one share is $5,000.”

So, that new client with 10,000 accounts would be required to buy four shares of common stock at $20,000.

“We also have preferred stock,” Salecky said. “So, we have common and preferred, and that’s a four-to-one ratio. So, every four shares of common stock you have, you may purchase one share of the preferred stock.”

For existing clients, their total customer accounts number is updated each April, and if it has changed significantly, they are required to buy additional shares.

For example, she said, if a client added 3,000 new accounts, “we would then assess them two shares, because it’s in increments of 2,000 and it’s rounded up.”

COCC’s 10-member board of directors, which is led by Chairman, CEO and President Richard A. Leone, consists of CEOs from client institutions. Currently, that includes Stephen L. Lewis, president and CEO of Thomaston Savings Bank, and Nicholas K. Fortson, president and CEO of CorePlus Federal Credit Union in Norwich.

Lewis said his institution switched to COCC 12 years ago in search of better service and client support.

“The platform we happened to be on was not as modern or technologically advanced as what we moved to with COCC,” Lewis said. “All of the things our prior core provider wasn’t doing, COCC does.”

Lewis said the share-purchase requirement is critical to maintaining COCC’s high level of performance and service.

“It’s a cooperative, owned by its members, which means their long-term strategic goals revolve around clients, not around shareholders,” he said. “It’s your commitment to the organization and vice versa, their commitment to us.”

Meantime, the loyalty extends beyond COCC’s customers.

The company employs about 730 full- and part-time employees, and that number remained at or above 700 even during the pandemic.

“We’ve been at that 700 mark for the past probably four or five years,” Salecky said. “We’ve never done layoffs, and we continue to have a line of people waiting at our door to come work here.”