On Sept. 1, MnIPC, a wholly owned subsidiary of the Minnesota Credit Union Network, completed its purchase of ProDraft Services LLC, a Bismarck, N.D.-based CUSO that provides correspondent and EFT processing solutions.
The move significantly expands the firm’s footprint into neighboring North Dakota and complements a nationwide expansion effort that began several years ago.
“The acquisition of ProDraft allows MnIPC to increase volume, pricing power and overall efficiencies,” said John Ferstl, vice president of the Minnesota Credit Union Network’s Network Service Corporation.
Together, the combined companies said they will move forward under the MnIPC name.
Purchased by Midwest Corporate Federal Credit Union in 2007, ProDraft was converted into a CUSO in 2009, with ownership shared among 38 credit unions in North Dakota. It established a business relationship with Fifth Third Bank to offer correspondent and EFT processing solutions.
Negotiations to purchase ProDraft had been in the works for about a year, said Michelle Carlson, vice president of MnIPC. The cost to purchase ProDraft was not disclosed.
Like others in the industry, ProDraft felt the impact of the corporate credit union system meltdown. Its parent company, Midwest Corporate, was liquidated in 2011 after it lost nearly $13 million in capital behind the collapse of U.S. Central. Following the liquidation, Doug Wolf, the former Midwest Corporate president/CEO, was hired as vice president of ProDraft.
When asked whether there would be any leadership changes at ProDraft as a result of MnIPC’s acquisition, Carlson said negotiations have been discussed.
Carlson said because checking processing is dependent on volume, the merger could potentially keep pricing down for credit unions. The acquisition may also lead to more partnerships with correspondent banks, she noted.
ProDraft has 37 clients while MnIPC serves more than 100 credit unions.
The $18 million Catholic United Financial Credit Union has had a relationship with MnIPC since 2001, said Terri Maloney, president/CEO of the St. Paul, Minn.-based cooperative. Maloney said she’s impressed MnIPC is able work across several operating systems.
“I could’ve gone anywhere else, including the Federal Reserve. I think smaller is better because you get the attention you need,” Maloney said.