Empire Corporate and CorpStar announce merger plans; would bring number of corporates to 34

<p>ALBANY, N.Y. – And then there were 34 – corporate credit unions that is. The $4.5 billion Empire Corporate FCU, Albany, N.Y., and the $118 million CorpStar FCU, Sioux Falls, S.D., have announced merger plans. If the deal goes through that will bring the total number of corporates to 34. Empire is the nation’s third largest corporate (excluding U.S. Central) behind WesCorp and Southwest Corporate. CorpStar (formally South Dakota Corporate FCU) is the second smallest corporate ahead of just LICU FCU, which only has $5.7 million in assets. While Empire has members in 16 states, the bulk of its members come from the Northeastern states of New York, New Jersey, Rhode Island, Connecticut and Pennsylvania. All of CorpStar’s 62 member credit unions are located in South Dakota. Geographically Empire and CorpStar are about 1,300 miles apart, but that doesn’t bother Empire Corporate President/CEO Joe Herbst. “I don’t think it’s an issue with the technology. We already have some experience with that. Rhode Island is noncontiguous with New York. We have branches in New Jersey and Rhode Island. We don’t jump in the car to go visit them. Technology allows us to do that,” said Herbst. Herbst said Empire will keep CorpStar’s office in Sioux Falls open, but the CorpStar name will be removed and its services will be rebranded with the Empire name. Empire has used mergers to grow in the `90s. In 1996 it acquired Rhode Island Central CU Corporate and in 1997 Garden State Corporate Central CU, which served New Jersey CUs. Herbst said this merger, while not large, gives Empire an opportunity to bring more services to South Dakota credit unions and will provide Empire with more economies of scale. Herbst believes that Empire can penetrate deeper into South Dakota CUs than CorpStar did because of its expanded product line. “We’ll be able to deliver more right away, especially on the investment side,” said Herbst. Empire also brings advisory and broker/dealer services via its two CUSOs. South Dakota CUs will have to wait on those two products however, while Empire works on the licensing requirements for the state. Similar to what Georgia Central CU did when it put out a request for proposal for a merger partner, CorpStar invited corporates to visit the corporate and present a merger proposal. Four corporates in total were invited. “They (Empire) really had the resources and the expertise in the back office that we wanted, especially the item processing knowledge,” said Ron Peters, CEO of Midwest Partners FCU, Sioux Falls, and chairman of CorpStar. Though a small corporate, CorpStar offers its member CUs item processing. Herbst said Empire will be able to integrate its online share draft access system for South Dakota CUs. This will allow South Dakota CUs to offer online share draft image retrieval to their members. Peters said CorpStar decided to merge because it just couldn’t meet the product demand as a small corporate. “Our credit unions now want all the products and services, and the best investment rates. We’re a small corporate, and we just didn’t have all that,” said Peters. CorpStar made headlines last August (CU Times, August 8) for announcing plans to offer its members data processing services. CorpStar formed a relationship with ITI, a Fiserv subsidiary, to offer its Premier II core offering. The move to data processing was driven by CorpStar’s former president/CEO William Wood. Wood joined CorpStar in just October of 2000. He resigned at the end of this February. Peters said he left to pursue greener pastures. There was no word on where he wound up. Wood’s plan to get into data processing never materialized. Peters said as of press time no credit unions were signed up for the service. “It’s there, it’s part of the corporate. It’s up to Empire if they want to continue,” said Peters. Herbst said he wasn’t sure if Empire would continue with the solution. Peters said after Wood resigned the corporate thought it provided a good opportunity to seek out a merger. The two corporates are putting this deal on a fast-track to say the least. They hope to have the merger finalized by May 31, very quick in merger time. Peters said there is going to be a mail ballot sent out sometime in the next few weeks. A majority of those credit unions voting must approve the merger for it to move to the next step, which is NCUA approval. [email protected]</p>