TALLAHASSEE, Fla.-While Southeast Corporate FCU announced last week it was merging with Corporate One FCU, discussions about finding a merger partner had been ongoing since July.
At that time, the $3-billion Southeast Corporate FCU said, it began to recognize that its bid to recapitalize was in jeopardy, and that a back-up plan was in order.
"We knew we were asking a lot from our members [$80 million] to recapitalize, but we were optimistic in our plans," said Brad Miller, president of Southeast Corporate. "But we have always been direct and honest with members that if we did not achieve the level of capital that we required and did not maintain the level of business that we built into the business plan, that we had full intention to move to a merger scenario. Through this entire process we were trying to create the best value proposition for our members."
Both corporates have national fields of membership with primary markets in the Great Lakes and Southeast regions. Corporate One, based in Columbus, Ohio, is one of the few big corporates to survive the corporate meltdown and has $4.9 billion in assets and 775 members. Southeast serves 400 credit unions. The tentative merger agreement is subject to NCUA approval and then approval from Southeast members.
Miller said Southeast looked at virtually all of the corporates within the system, sending out a detailed list of questions to prospective partners. Miller stated there were three overriding criteria to make the final decision: preserving and protecting existing member capital, maintaining continuity of services and minimizing disruption, and providing a corporate that delivers long-term value.
"We had no intention kicking the can down the road for the next couple years," stated Miller.
The short list included four choices, shared Miller, not disclosing names. Miller hopes that the merger, once approved, can be completed in 90 to 180 days. The next step is to get a final merger plan to NCUA.
The Final Decision
Synergies between the two organizations helped sway the final decision, noted Miller. "We have similar operating system platforms and the product and services are closely aligned. From share draft, branch capture, and Check21 platforms we are the same. We are very similar in cash ordering and vault services. . .down the line the key services to maintain continuity. I see very few integration problems."
Efficiency has always been high on Corporate One's list and played an important role in the credit union returning to profitability ahead of most other corporate after the system-wide collapse. CEO Lee Butke said the acquisition of Southeast will enhance efficiencies for member CUs. "This (merger) is not about scale, not about size, but about the ability to create efficiencies."
Butke noted that the merger will also help Corporate One expand its business. "Southeast has two compelling products we do not offer, one is its business services CUSO and the other is its registered investment advisory firm."
The deal will also allow Corporate One to extend its strong ATM, debit, and credit card program throughout the Southeast. Headquarters will remain in Columbus and Miller stated that he believes Southeast's presence in Florida will remain.
"We may look at rightsizing office space, but that was part of our plans anyway," said Miller. The member-facing and contact points will stay very much intact, he added, noting that it is too soon to discuss other changes. "But I will say that the only person for sure who does not have a job in this scenario is me. And I am fine with that. It was important to me that I was not a necessary part of the equation when choosing a merger partner. I wanted to do what was in the best interests of our members and was not concerned how I would end up."
