Iowa Corporate Central Credit Union and Mid-States Corporate have entered into a partnership in which Mid-States products will be marketed to Iowa Corporate's members.
Iowa Corporate initiated the partnership after its board decided that to be competitive in the future it would have to grow, either through a merger or some type of alliance. Not doing so would eventually leave the $400-million corporate behind the competition and unable to serve its members properly, according to Iowa Corporate CEO Tom Kuehl
Kuehl said Iowa Corporate prides itself on the level of quality service it provides to its members, but it was concerned a conventional merger with a larger corporate would most likely diminish those service levels.
"We didn't want to sacrifice our quality service," Kuehl said. "It seemed the right move for now."
Iowa Corporate will get access to Mid-States' expertise in investments and Mid-States will gain a much larger client base for its services. Kuehl said Mid-States can provide a higher rate of return for certificates of deposit (CDs), as it has Level 4 investment authority. To offer this service to its FOM, Iowa Corporate had to form the alliance with a larger corporate CU.
For instance, Kuehl said Iowa Corporate will stop selling certificates by year's end. Instead, Iowa Corporate will act as an agent on members' behalf and buy CDs from Mid-States.
"They have a much more sophisticated investment infrastructure," Kuehl said. "The only way we can get that is to partner with somebody."
Kuehl said the corporate's 161 members won't see or experience any change in daily operations as all personnel, including the board, will remain the same. "It's almost transparent," Kuehl said.
In addition to seeking out a larger CU with broader assets and resources, Kuehl said a big factor was the board's instructions of finding a similar "culture" to partner with. By culture, Kuehl said his CU was looking for an organization that shared the same Midwest values of Iowa Corporate.
Mid-States has $5 billion in assets and 85% of its FOM is in the core states of Illinois, Indiana and Minnesota. As the Mid-States website lists the No. 1 value as "Do the right thing, the first time, every time," it was the perfect choice, he said. "It marries the best of both worlds," Kuehl said.
Mid-States CEO David Preter echoed Kuehl's sentiments of a "win-win" situation for both organizations. Preter said his board is very specific about how he should operate: defend your territory but don't attack other viable financial institutions. Mid-States is expected to help other corporates grow and prosper without robbing its members or starting a war over new membership. Forming a new partnership with Iowa Corporate was an easy decision, he said.
"It fit perfectly into our strategic plan," Preter said. "This is a way to share each other's members and that's a benefit to everyone."
Preter said Iowa Corporate brings new members into the agreement and Mid-States can achieve new sales growth without adding any new sales force or infrastructure.
"Any opportunity we see, we just jump on. We grow without having to put any sales money into it," Preter said.
Iowa Corporate Central's Kuehl said starting June 21, his members will be able to attend nine town hall meetings held around the Hawkeye State.
