Southeast, Southwest Merge To Become 3rd Largest Corporate
Southwest Corporate FCU and Southeast Corporate FCU have agreed to merge, continuing a consolidation trend that has shrunk the corporate network from 44 to just 26 in the past decade.
The union, which was prompted by Southwest Corp's need for a new replacement following former CEO Francis Lee's move to head up U.S. Central earlier this year, will create a corporate serving more than 1,500 credit unions with more than $14 billion in assets, making the merged entity the third largest corporate behind Wescorp and U.S. Central. Bill Birdwell, CEO of the $4-billion Southeast Corp based in Tallahassee, Fla., will head up the merged corporate whose future name is yet to be determined.
Unlike most corporate mergers, which typically have been in the works for months before a letter of intent is signed and were preceded by an active search for a merger partner, Southeast and Southwest was almost a matter of happenstance.
With Lee's departure from Southwest, the $10-billion corporate was engaged in a search for a new CEO. That search led to Southeast CEO Bill Birdwell, but Birdwell, countered with an even bigger offer of his own.
No Interest In Hopping Around
"I really wasn't interested in going from one corporate to another," Birdwell told The Credit Union Journal, noting he has worked at a number of corporates, including Volcorp and Southwest Corp prior to joining Southeast. "Even though Southwest is a larger corporate (than Southeast Corp), I am very happy where I am. But I thought what would be special would be if, instead of just going from one corporate to the other, we make this an opportunity to really create more value for members, something we can all get excited about."
Birdwell said neither of the two corporates were actively courting a merger. "It was just an opportunity. It wasn't something we were seeking out or they were seeking out," he explained. "But it was a unique window of opportunity, and as such we needed to move quickly or not at all."
Indeed, talks between the two boards have only occurred in the last six weeks or so, he noted. "It was very quick, but everything just fell into place," Birdwell commented. "It's just one of those things that just feels right, like it was meant to be."
Southwest's charter will be the surviving charter, so Southeast's members will have to approve the marriage.
What also makes this merger different from most is the fact that the CEO of the corporate that is losing its charter, Southeast, will become the CEO of the merged entity-and that there was no turf battle between CEOs for the top spot.
"We were looking for a new CEO, and we are happy that Bill Birdwell will fill that bill," said Jody Beck, acting CEO of Southwest.
Creating the third-largest corporate is no small feat. "Size is just one thing we will gain," Birdwell offered. "As a wholesaler, economies of scale are very important. But also, Southwest had some things we didn't have. With $14 billion in assets and all the expanded powers, we will be very competitive. We both have different products and services from each other, so the membership of both corporates will be getting more."
The two corporates said they expect to have regulatory approval from NCUA as well as the approval of Southeast's membership, in a few months.
"Of course, that also depends on what distractions we may have," Birdwell noted. "Hurricanes, for example, can really redirect your priorities, but I would think that possibly [the merger could be accomplished] by fourth quarter this year or more likely first quarter of next year."
At press time, the actual letter of intent to merge had not been signed, though both corporates expected that to happen by the end of last week.
At least three other corporate mergers are currently in the works: Empire Corporate FCU (New York) with Mid-States Corporate FCU (Illinois); Corporate America CU (Alabama) with Louisiana Corporate CU; and WesCorp FCU (California) with Volunteer Corporate FCU (Tennessee).