The $1.5 billion Southeast Corporate Federal Credit Union didn’t meet its $75 million perpetual contributed capital goal, but the amount members pledged - $68 million - was good enough for merger partner Corporate One Federal Credit Union.
The two announced Thursday that Columbus, Ohio-based Corporate One’s board, rather than wait for a June 29 deadline extension, decided to proceed with the merger despite the missed PCC goal.
According to a release, Tallahassee, Fla.-based Southeast Corporate’s $68 million PCC maintains Corporate One’s well capitalized status when combined with existing capital. Post-merger, the $5.7 billion Corporate One will have more than $357 million in total regulatory capital, of which $213 million is PCC.
“The board looked at this transaction very closely and agreed that the PCC commitments from Southeast’s membership were sufficient to maintain Corporate One’s ‘well capitalized’ Permanent Leverage position as defined in the new NCUA corporate regulations. Our first obligation was to protect the capital of Corporate One’s loyal membership, and maintain our exceptionally strong capital position,” said Jerry Guy, Corporate One board chairman and president/CEO of the $700 million KEMBA Financial Credit Union in the Columbus suburb of Gahanna, Ohio.
Guy said the board also sought a solid business model result from the combined resources of the merger entity.
“Furthermore, we wanted to protect the credit union system from another black eye caused by a corporate credit union failure and the resulting loss of capital that would leave the credit union system. I’m proud to say we’ve accomplished these goals with this merger,” he said.
With the Southeast capital offering now closed, and with Southeast’s membership having voted to support the merger last month, the merger will become effective on July 1.
“The goals of this merger were to preserve Southeast members’ capital, provide them with continuity of services and protect and enhance the value of the franchise of Southeast Corporate, a franchise that remains valuable thanks to the continuing support of its members,” said Lee Butke, Corporate One president/ CEO. “With a successful capital raise behind us, we can now focus on providing those solutions that our members need with the benefits that they deserve.”