COLUMBUS, Ohio-Having emerged from the recession in a strong capital position, Corporate One FCU believes corporates will be able to play key roles in helping natural-person credit unions reach their strategic objectives.
"Credit unions are challenged in many different ways," said CEO Lee Butke. "They are challenged to make money. They are going to make more money on loans than their investments, so that is where they strategically need to concentrate. I put the position forward that we can help them be their back office. We can make them be efficient so they can succeed in serving their members and work on things that are more strategically compelling."
Processing share drafts with the Federal Reserve is not compelling, asserted Butke. "Growing loans and membership, building relationships in the communities, those are the strategic imperatives for credit unions. We provide a value proposition that frees up credit unions to focus on their strategic imperatives."
Overall, Butke sees the corporate system as a large collaborative aggregator of both dollars and transactions. "That is our skill-set, plain and simple." The technology and experience corporates have in item processing and settlements present significant advantages over a CU working directly with the Fed, offered Butke.
"For example, we have what we call our least-cost routing engine, where we take credit unions' Check 21 items and least-cost-route those out to many of the different banking organizations, Chase checks go to Chase, Huntington to Huntington, and B of A to B of A. We support, maintain, and send a very large volume of dollars through that allows us to get a very cheap price."
Cheaper Than The Fed
It's a much more efficient and cheaper option than going directly to the Fed, continued Butke. "You go with the Fed and you now have to store all of your check images. We have terabyte on terabyte of image storage that is kept for seven years and backed up. It's simpler too. You don't have to worry about creating a storage process for your images."
Butke added that Corporate One may also outsource its cloud computing capabilities. "These are just examples of some of the things we have always been doing that can help credit unions stay focused on the tasks that really drive their business. These are things they don't need to wake up to and deal with every day."
Corporate One is not moving in the direction of shrinking its balance sheet, having $266 million in capital today that will allow it to manage at least a $3-billion balance sheet. "That is a fairly sizeable book of capital," noted Butke. "We don't see much of a balance sheet differential from where we were before (the corporate crisis)."
Butke pointed out that balance sheet helps Corporate One support item processing and the same full line of services it has provided CUs for years. "It supports everything, including innovation." At the end of May, Corporate One's reserves and undivided earnings were 1.21%, interim leverage ratio was 8.32%, Tier 1 risked-based capital ratio stood at 11.89%, and total risked-based capital ratio was 19.41%.
Butke acknowledged that the success and steady strength Corporate One has demonstrated during the economic downturn has caught the attention of credit unions across the country, and that more are becoming members from outside the Buckeye State. "Now that the offers from some of the other corporates are out, we are seeing more credit union make decisions," said Butke. "But I suspect that as board meetings are held later this month and in August we could see a great deal of interest."
