“We see this merger as a model for the future of strong, viable corporate credit unions,” said Brad Miller, CEO of Tallahassee, Fla.-based Southeast Corporate, in announcing the decision of his corporate to pursue a merger with Columbus, Ohio, based Corporate One.
Feb. 16, 2012 -- NCUA Approves Corporate One-Southeast Merger
In late August, Southeast had disclosed its failure to reach a $80 million capital goal. The 400-member corporate had revealed at that juncture that it would pursue a merger.
Thus, the merger announcement did not come as a surprise.
In an interview, Miller indicated he had been talking with potential merger partners as early as mid-July and that he had established key objectives in any merger.
“We wanted to preserve our member capital, subject members to the least possible disruption and expense in a conversion to a new corporate, and we wanted to create long-term value,” he said. “With Corporate One we believe we hit it out of the park.”
As early as May, Corporate One had announced it had achieved well-capitalized levels per NCUA specifications, and, elaborated Miller, another key criterion in seeking a merger partner was that the corporate bring solid capitalization to the table. Corporate One did that, said Miller.
Miller added that Corporate One and Southeast already use some of the same technologies, such as core systems, and he expected that members would find the transition to be comparatively quick and easy.
On paper, the merged corporate may emerge as the largest–assuming most of Southeast’s 400 members decide to join with Corporate One’s 775. But Lee Butke, CEO of Corporate One, said, “It’s not about scale. That misses what is important. It’s about efficiency, plain and simple. Southeast is bringing new products and services that will enhance what we offer our members.”
As for whether the resulting corporate will indeed be the biggest by member count, Butke said, “We won’t address that.”
Miller elaborated that as his members decide to join Corporate One, each will be faced with a different capital commitment decision. “Some may have sufficient capital with us so they do not need to commit more dollars. Others may have to,” said Miller. “We need to go through this on a member by member basis.”
Butke added: “We aren’t embarrassed to ask for capital. For a corporate today, capital is king.” The Corporate One capital plan requires members to contribute 0.9% of assets, with a cap set at $900,000.
Miller indicated that the merger, which requires NCUA approval, could be accomplished as soon as 90 days, but it might take as long as 180 days. “Our members want a resolution as quickly as possible,” said Miller, who indicated he held an informational webinar with 140 members the day the merger was announced and said he planned informational member meetings to commence before the close of September.
In assessing the merger’s appeal from his perspective, Butke said, “The Southeast region has been very hard for us to penetrate. There has been a lot of member loyalty to Southeast Corporate.” Asked how many of Southeast’s members he expected to retain, Butke said, “Every one of them.”
“This is about building a great business together,” said Butke, “and that is what we plan to do.”