Midwest Corporate Will Liquidate, Transition Members to CUSO
Members of the $252 million Midwest Corporate FCU have decided the fate of their cooperative: liquidation.
Former CEO Doug Wolf, still working at the Bismarck, N.D.-based corporate on a contractual basis, said members made the decision during April's annual meeting but haven't formally voted yet.
A test group of members are transitioning their correspondent services to Midwest Corp-owned processing CUSO ProDraft Services, Inc. Others are expected to follow later this year.
Mergers and recapitalization were also options, Wolf said, but Midwest Corporate has historically required less capital than peers, so the NCUA's new capital requirements or a merger would have required significant capital from members.
Members should only experience two service changes: they will have to find a new source for investments, and may see a reduction in their liquidity credit lines. ProDraft negotiated with Fifth Third Bank to provide the services.
"It was the same idea as a corporate. We pooled together to negotiate the best pricing," Wolf said. "We were very explicit to the bankI if they don't hold to their prices, we will pick up and move as a group. We can because there's no capital investment."
Midwest Corporate had nearly $7 million in member shares and $8 million in retained earnings as of September 2008. According to the NCUA's April 2010 5310 reports, less than $1 million in total capital remains.