One of the nation's smallest corporates, the $100 million Iowa Corporate Central CU of Des Moines, is about to end its operations possibly by yearend with correspondent services shifted to the National Cooperative Bank of Washington.
Disclosure of the tentative deal with NCB by leaders of the Iowa Credit Union League represents a dynamic new phase in the operation of some of the nation's corporates including the healthiest following NCUA's Sept. 24 restructuring and seizures.
Under the nonbinding deal with NCB, which has provided funding services to CU groups including the National Credit Union Foundation, will absorb the correspondent operations of Iowa Corporate and begin servicing Iowa CUs.
"This has been a work in progress for months and our mission has been to find a replacement for the services offered by Iowa Corporate that are priced equitably for both large and small Iowa credit unions," explained Pat Jury, president/CEO of the Iowa league, who has led the Iowa negotiations with NCB. Also joining the talks held in Des Moines and Washington has been the management of Iowa Corporate.
Jury said Sara Flynn, president/CEO of Iowa Corporate who was not immediately available for comment, will decide how the process will move forward.
Jury said the state's 15 largest CUs, which currently hold 70% of the capital in Iowa Corporate, needed to "get on board" first with the NCB plan and once they accepted then the new NCB setup can be utilized and accessed by other CUs across the state.
"Our goal is to put together an operation that will cause the least amount of disruption," Jury said.
CEOs of the largest CUs met yesterday near Iowa City with NCB's top brass, Jury said. Officials of NCB were not immediately available for comment on the Iowa pact or whether it might be a business model for other leagues or CU groups across the country.
Jury said the NCB pact is an outgrowth of the league's unsuccessful attempt a year ago to buy a wholesale Arizona bank and convert it into a correspondent vehicle.A formal application to the Federal Reserve Bank of Chicago was finally withdrawn based on regulatory hurdles in a CU group buying a bank.