Georgia Corporate and Southwest Bridge Announce New Name
A new name, a new home, and a new deal. All of that now appears to be coming out of the combination of Georgia Corporate with Southwest Bridge. The new name, the two corporate credit unions recently announced, will be Catalyst Corporate Federal Credit Union.
"Choosing a name that represents the forging of a new corporate entity is an important step forward," said Greg Moore, CEO of Georgia Corporate, in a prepared statement. The new home will be in Plano, Texas, where Southwest Bridge is currently based, said Amy Fuller, chief operating officer of Georgia Corporate, in an interview.
As for the combination, what now appears to be happening is that instead of a merger, as earlier announced, Georgia Corporate will acquire Southwest Bridge in a purchase and assumption, said Fuller.
All that is contingent upon approvals from the NCUA, which are expected mid-year, said Fuller.
Catalyst also needs around $130 million in perpetual contributed capital shares, said Moore.
Assuming those approvals are given and the capital raised, executive leadership of the combined entity will primarily come from the top officers of Southwest Bridge, said Moore, who added that the board of directors for the new corporate will conduct a search for a president/CEO.
The immediate next step, said Moore, is that "we hope to receive a favorable response in February from the Office of Corporate Credit Unions to the strategic business and capital plan submitted jointly by the two corporates. Then we will distribute a capital offering circular to the membership of both corporates, and management of the two entities will host town hall meetings throughout March to present the plan and answer members' questions. The capital subscription period will be from March to June. Meanwhile, we will be working on our integration plans and developing the application that will ultimately go to the NCUA board of directors for approval in the second quarter."
As for the why of the Georgia Corporate-Southwest Bridge tie up in the first instance, Moore offered an analysis of why this is an ideal marriage.
"Both organizations were committed to reducing the size of the balance sheet in order to minimize our members' capital requirements. Less dependence on the balance sheet also means taking less risk, which is something that credit unions generally have said they wanted to see going forward," she said.
"For Georgia Corporate, we recognized that the ability to reduce the balance sheet was contingent on gaining scale. Through our member-driven planning process, it became apparent that economies of scale would be necessary for an organization to cover most of its operating expenses from fee income rather than spread income. This movement away from reliance on spread income also supports the goal of having a very low-risk balance sheet. Our research showed that Southwest Bridge Corporate had the highest coverage ratio in the nation."