HOLMDEL, N.J. -The corporate credit union network is a tight-knit group. When a merger happens, leaders either knew in advance or aren't surprised given the situations of the merging corporates. But the merger between $26 billion WesCorp and $1 billion VolCorp not only took most corporate CU CEOs by surprise, they also didn't expect VolCorp to be a likely candidate to merge into a larger corporate. "I was surprised as are most folks I talk to," said Dave Brehmer, CEO of North Carolina-based FirstCorp. Brehmer said he doesn't expect the merger to change the competitive landscape much given that WesCorp already has a presence in most states. "WesCorp will have a bigger presence in the area, but we kind of feel WesCorp on a day-to-day basis anyway," said Brehmer. Brehmer said corporates in the Southeast are very independent minded, another reason that the merger caught him off guard. "What's most interesting about the Southeast is you haven't seen the merger activity as you have in other parts of the country. We'll see if this changes that. I have always believed that the major thing that's going to cause mergers will be a rising cost of operations," said Brehmer. Greg Moore, CEO of Georgia Central CU, said he too was surprised by the merger, but agrees with Brehmer that given WesCorp already markets in many states, it's unlikely to change the competition. Moore did say however that this may give Southeast corporates a little more of a push to partner with nearby corporates for back-office efficiencies. This has been happening already, stressed Moore. Georgia Central for example partners with Southeast Corporate for data processing. "I don't think it's going to change our world too much. What was interesting to me is VolCorp runs a real productive, clean ship. They have good market share in their state and credit unions think very highly of their staff. That's why I was surprised," said Moore. As for merger mania picking up again, Moore said he's not too sure about that. "We haven't seen a merger in a couple of years. I suspect we'll probably see a few more in the near future, but I don't think 10 or so years down the line we'll be down to a handful as many people still think," said Moore. Moore and Brehmer both said it's a fact of life that their member CUs now typically deal with multiple corporate credit unions, either for diversity or to pick up a better rate or product than their home state corporate offers. State Employees CU of N.C. for example has relationships with about a dozen corporates, said Brehmer. Jim Thompson, CEO of the $376 million Kentucky Corporate FCU, runs a corporate that borders VolCorp, but he's not concerned about the added mass WesCorp will bring to the region. "If you talk to any other corporate, WesCorp is in their state now. There's already a WesCorp presence. Tennessee was a competitor before, but WesCorp is a lot bigger. It's hard to say, I don't have a real gut feeling on this." Thompson said larger corporates don't target smaller CUs. Being a state with a lot of small CUs, Thompson said he doesn't expect Kentucky to be a big target for WesCorp. However, 48% of WesCorp's members have $50 million in assets or less, so it knows how to serve smaller CUs. "We're one of those good little corporates doing our own thing. We don't charge a ton of fees and don't make lots of money. We pretty much have a full menu of products," said Thompson. Kentucky Corporate has used partnerships to offer its members all the products large corporates do. For example, it recently partnered with Mid-States for item processing. "I think everyone will watch this closely because WesCorp is so big. I believe there's a need and a niche for the small corporates," said Thompson. Leaders of Tennessee credit unions don't seem too concerned about the merger. "It appears to be a business decision made by the member elected board of directors and more than likely based on economies of scale," said Kendall G. Foster, CEO of Dupont Community Credit Union in Chattanooga, Tenn. I have every confidence that the board and management of VolCorp has the ability to make an informed business decision and keep the well being of member credit unions at the forefront." Foster's comments were indicative of what most Tennessee CEOs are saying. They will have a better feel after a series of town meetings scheduled to take place this month throughout the state. -firstname.lastname@example.org
Most Corporate CU CEOs Still Trying to Understand VolCorp/WesCorp Merger
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