The June 8 issue of Credit Union Times contained a very comprehensive article titled, "Pay to Play: Comparing Capitalization Requirements." The timing of this article couldn’t be more appropriate as credit unions across the county are performing due diligence on potential new service providers, both inside and outside the corporate credit union system.
Unfortunately, a few errors in the body of the article relating to Corporate One’s capital formula and strategy misstated our simple and easy-to-understand capital requirements. Therefore, I’d like to clarify a few of the most important points.
Corporate One’s capitalization formula is 0.9% of a credit union’s assets, capped at $900,000. So, for example, if a credit union has $10 million in assets, the capital requirement is $90,000. For $20 million in assets, the capital requirement is $180,000; for $30 million it’s $270,000; and so on, up to $100 million in assets, at which time the cap of $900,000 would come into play. It’s that simple.
In exchange for the capital purchased with Corporate One, the credit union has access to all of our services, including investments (both on- and off-balance sheet), a line of credit, a full array of correspondent and payment solutions and many other services. Our capital plan is not based on usage of services, does not fluctuate with settlement activity, and we will not be monitoring the credit union’s activity with us and then requiring it put up even more capital as it grows. As I said, Corporate One’s plan is simple: one formula, one time to purchase capital and access to all the services we offer, including the all-important line of credit.
Corporate One’s capital formula has not changed in more than 10 years. That’s because our basic business model has not changed. Yes, we all have been humbled at what has happened within the credit union system within the last few years, but we are very fortunate to have weathered the crisis without having impaired our members’ capital. This is why credit unions across the country have already contributed more than a quarter of a billion dollars in regulatory capital with us ($268 million as of today). This simple fact leaves us in a position to continue providing the full spectrum of products and services that credit unions have needed in the past and will continue to need.
Senior Vice President
Marketing and Operations
Corporate One FCU