BISMARCK, N.D.-Midwest Corporate FCU has become the first corporate credit union to voluntarily liquidate in the face of daunting new capital and other regulatory requirements by NCUA.
The one-time $250 million corporate, which served 60 credit unions in the Dakotas, moved most of its member services to a CUSO it created called ProDraft Services, which will perform item processing for these credit unions. Fifth Third Bank will perform correspondent services such as wire, ACH and a line of credit, services their corporate used to perform. The credit unions are eligible to join other corporates, including Missouri Corporate CU and Corporate One FCU, as well as those with national fields of membership.
As part of the voluntary liquidation, capital shareholders of Midwest Corporate will share about $1 million in liquidating dividends.
The voluntary liquidating model is being watched closely by several other small corporates as an alternative to mergers.
Doug Wolf, former CEO of Midwest Corporate who now helps manage ProDraft, said the writing on the wall was clear for the tiny corporate after U.S. Central FCU failed, erasing about $13 million of its $15 million in capital. As a result, members of the corporate ended up losing about 85% of their member capital, he said.
ProDraft is owned by 38 Dakota credit unions, 37 in North Dakota and one in South Dakota.
