NCUA Votes Down Corporate Merger Over Capital Payout

ALEXANDRIA, Va. – The NCUA Board yesterday voted in a closed meeting against approving the combination of WesCorp FCU and Volunteer Corporate CU, sending representatives of both corporates back to hammer out a new deal in the on-again, off-again merger. The NCUA Board told representatives of the two corporates they could not approve a deal to transfer $26 million in VolCorp capital to new capital accounts at WesCorp for the Tennessee corporate’s members, saying it would create a precedent for future corporate mergers. In addition, NCUA prohibits any promise of a merger dividend during the merger process. The special $26 million payout was developed in negotiations with Tennessee regulators because state law does not provide for the merger or charter change for the corporate unless there is a compelling member benefit. "We’re very disappointed," said Blake Strickland, chairman of the VolCorp board and president of Tennessee Valley FCU, after the NCUA action. "We’re looking at what our options are and we want to do what our members want us to do." An NCUA spokesman confirmed the Board would not approve the deal because it called for the payout of all of VolCorp’s retained earnings. Bob Siravo, WesCorp’s president and CEO, said “While we are disappointed with NCUA’s decision today not to support the latest proposal to merge VolCorp and WesCorp, we have to once again, regroup and refashion our strategy.” WesCorp, the nation’s largest corporate with $26 billion in assets, is in the process of acquiring SunCorp FCU, the corporate for Colorado, Wyoming and Utah. VolCorp has $1 billion in assets and serves 240 credit unions, most of them in Tennessee.