ONTARIO, Calif.-The Western States Corporate Realignment Task Force said Western Bridge Corporate CU should move forward to apply for a new charter as a stand-alone corporate credit union.
The task force previously had said a merger of Western Bridge Corporate CU and Members United Bridge Corporate CU would be the "most viable and financially-responsible option for these organizations to provide continuing quality services and affordable pricing to their members," and that such a merger should be implemented at the earliest possible date. However, the task force acknowledged, Western Bridge and Members United Bridge currently appear to be precluded from merging by NCUA's recently-adopted Corporate Consolidation Policy.
"While recognizing that the proposed merger of the two Tier 1 corporates would provide the best option and should continue to be encouraged, the task force recommends natural person credit unions support the reconstituted Western Bridge by participating in its recapitalization and its services," the task force said in a 17-page Final Report and Recommendations.
System Solution Is Advocated
Among several conclusions, the final report stated: "The task force concludes that a system solution is absolutely necessary in order to ensure that credit unions are served by an organization that has the best interests of credit unions in mind. Credit unions must be in a position to control or influence those that provide them with essential corporate services. A non-system solution (i.e., competitors or the Federal Reserve) will leave credit unions vulnerable, both individually and as an industry."
To assist credit unions in evaluating their options, the Task Force said it has prepared materials, including a spreadsheet showing the capitalization expense credit unions would be subject to from a 15-to-25 basis point assessment and an illustrative pro forma pricing estimate for a credit union of $250 million in assets.
Actions Urged
The task force said natural person credit unions should take several actions when assessing whether a stand-alone Western Bridge makes the most sense for their particular circumstances, including assessing attrition assumptions to affirm or disaffirm business model projections.
Also, it said CUs should request from Western Bridge a customized pro forma pricing comparison which: A. models the pro forma based on an individual credit union's payments and settlements volumes; B. compares pricing for all contemplated providers (e.g., The Fed, a third-party bank, Western Bridge, and any other alternate corporate a given CU is considering); and, C. compares service level, service quality, service gaps, product mix, and product limitations across all contemplated providers.
