Southeast's New Capital Plan
Southeast Corporate Federal Credit Union disclosed its new business and capital plan to its members at press time, shoring up its balance sheet with $80 million in capital.
The Tallahassee, Fla.-based corporate told Credit Union Times it is filing its NCUA business plan under the agency's new Part 704 rules.
In a statement coinciding with a webinar held this week informing its 400 members of its plans, President/CEO Brad Miller said Southeast Corporate's new business plan "includes a recapitalization effort focused on continuity of services preservation and protection of member capital."
In working with other corporates and unidentified industry partners, Miller said the plan calls for Southeast Corporate "to consolidate back-office operations and processes to lower costs, increase efficiencies, and provide best of breed products and services."
The plan includes moving from a current 64% operating coverage ratio (noninterest income as a percent of operating costs) to 90% within three years. "This greatly reduces our reliance on investment income and means less risk to member capital," Miller said.
Within one year, Southeast Corporate plans to reduce the size of its balance sheet by approximately $1 billion and raise $80 million in new perpetual contributed capital to support a $2 billion balance sheet going forward.
"This will produce a strong business case that builds member value while continuing to efficiently and effectively provide needed payments, settlement, and liquidity services to members," said Miller. Southeast plans further operating efficiencies through partnering arrangements that further aggregate payment volumes.
In addition, Southeast Corporate plans to recapture 20% of the balances that leave the balance sheet in existing and new off-balance-sheet products that generate fee income.
"Existing member capital shares will be returned to members at the end of the three-year notice period, less any additional other-than-temporary-impairment not covered by retained earnings that the corporate may need to take during this time period," a statement read.