SCHAUMBURG, Ill. – Officials with Members United (Bridge) Corporate FCU said it has received ongoing commitments from as many as 1,000 credit unions nationwide and expects to raise about $75 million in new capital to enable it to emerge from NCUA conservatorship as a new entity called Alloya Corporate FCU.
“We’re one step closer to becoming a corporate,” John Fiore, chairman of the Alloya Charter Advisory Committee and president of Motorola Employees FCU, told Credit Union Journal yesterday.
Members United, the product of nine corporate mergers, was taken over by NCUA last September along with two other corporate failures, Southwest Corporate FCU and Constitution Corporate FCU–which was absorbed by Members United under NCUA’s direction. The three corporates, along with U.S. Central FCU and WesCorp FCU, failed under the weight of some $50 billion worth of toxic mortgage-backed securities currently being managed by NCUA.
The new version of the one-time $14 billion corporate will manage about $1.8 billion to $2 billion in credit union assets, mostly as a pass-thru to the Federal Reserve for overnight funds, but will handle no long-term investments, according to Fiore. “The whole idea is to handle credit unions’ clearing and settlements,” he said.
A capital base of $80 billion will allow the new corporate to maintain an asset base of $2 billion under NCUA’s new 4% minimum capital rule.
The new corporate will have between 1,000 and 1,200 members, down from the more than 2,000 served by Members United at one time. Most of the credit unions are small – more than 800 have less than $50 million in assets, said Fiore. “That’s why we need to stay in business because those credit unions need a corporate to survive.”
The capital drive was aided at the last minute by credit unions from California and elsewhere on the West Coast who see little chance of WesCorp FCU being reconstituted as United Resources Corporate FCU. “In the last week or so we’ve had California credit unions call us about joining Alloya and we’ve actually had a few California credit unions help capitalize Alloya,” said Fiore.
The NCUA Board is expected to review the Alloya charter and the proposal to merge the Members United Bridge into the new charter at its Sept. 22 meeting, according to Fiore.
Plans call for Chuck Furbee, who was hired by NCUA to manage the Members United Bridge conservatorship, to continue to head the corporate on an interim basis until a search for a permanent CEO is commenced.
