<p>ST. LOUIS – Missouri Corporate Credit Union says it is hoping to get Midwest corporate credit union leaders together to discuss the possibility of forming one regional Midwest corporate that would ideally combine seven Midwest corporates into one. In a letter dated June 12 and sent to the CEOs of six Midwest corporates – Kansas Corporate CU, Nebraska Corporate Central FCU, Iowa League Corporate Central CU, Minnesota Corporate FCU, Midwest Corporate FCU and Treasure State Corporate CU -Missouri Corporate President/CEO Dennis DeGroodt invites the leaders to attend a meeting sometime in July or August to discuss the possibility of creating one large Midwest regional corporate credit union. But that’s not the only letter DeGroodt sent out. He also sent a letter to the CEOs of all Nebraska credit unions outlining his vision for a Midwest regional corporate and asked them to consider that possibility before they vote for or against Nebraska Corporate Central FCU’s merger with SunCorp. DeGroodt said the board of Missouri Corporate has been discussing the possibility of a regional Midwest corporate for some time, and it decided to speed up the process in light of the proposed Nebraska Corporate/SunCorp merger. “This is not about trying to get Nebraska Corporate to call off the merger with SunCorp so they can merge with Missouri Corporate. I want to be clear about that,” said DeGroodt. “All we want is for everyone to take a look at this and think about it,” he said. DeGroodt said Midwest credit unions and corporates have similar philosophical and even business needs based on the region they operate in. If Midwest corporates start to get picked off from mega corporates outside of the Midwest, issues that are core to Midwest CUs may not get as much attention, he said. “It gives us here in the Midwestern part of the country the chance to form our own corporate and really make it the way we want it to be, especially in terms of representation in guaranteed board seats, guaranteed representation on committees,” said DeGroodt. “In the past merged corporates may be provided a board seat or two, but they lose them in an election after terms are up.” Dave Osborn, president/CEO of Anheuser-Busch Employees CU, St. Louis, Mo., and a member of the Missouri Corporate Board said regional corporates are the future and Missouri Corporate wants to get the ball rolling before it’s too late. “We may lose Nebraska. We already lost South Dakota. If we lose another Midwest corporate then sooner or later we don’t have anything left to build from. We’ll be faced with choosing between a large corporate in Illinois, Colorado, Texas or somewhere else where we would be a smaller player,” said Osborn. Osborn said he doesn’t want to see the day when his CU relies on a corporate in some other region of the country. “Is a corporate CEO from California going to come down to one of our chapter meetings? These things are still important.” Osborn believes corporates need a model closer to the Federal Reserve Bank system where each region has a bank. What would happen to the CEOs of all the corporates that Missouri Corporate is suggesting merge? Osborn said the talks hadn’t gone that far, but one possibility could be sort of branch managers in each state, with one CEO over the corporate who the boards would elect. He said the key would be that the boards of the corporates would make these types of decisions. Like DeGroodt, Osborn also wanted to stress that the letter to Nebraska was not an effort to stop that merger so they could merge with Missouri, but an attempt to present the Midwest option before it’s too late. Mike Keim, president/CEO of Nebraska Corporate Central FCU, wasn’t happy that Missouri Corporate reached out to his members through the letter, but understands Missouri Corporate wanting to do what it thought was in its best interest. “We in Nebraska will deal with any ramifications that arrive (from the letter). Having talked to at least half of Nebraska’s credit unions since the merger was announced, I know they’re excited about it, and I haven’t heard one single negative comment,” said Keim. What about board representation? Keim said SunCorp is expanding its board to include one seat for Nebraska. The current SunCorp Board has nine members. SunCorp President/CEO Eric Kenealy said the board is planning to amend its bylaws to make the board no less than nine members and no more than 13. One seat will be added immediately for Nebraska if the merger goes through. Kenealy said DeGroodt and others are on the mark about the importance of governance issues when corporates are merged. “That’s a huge issue, an important issue, especially for corporates that want to be regional corporates,” said Kenealy. He said SunCorp’s current nine member board has four members from Colorado, three from Utah, one from Wyoming and one from Idaho, covering all of its core states. Kenealy said there’s also asset diversification on the board, ranging from $30 million to $1.5 billion. But Osborn said board make-ups can change quickly and corporates can’t be guaranteed their states will be represented. Kenealy said the board has been able to keep diversification on its own, and he doesn’t anticipate a bylaw that would require a seat on the board for specific states. Keim said he wants credit unions to understand just how carefully Nebraska Corporate has been in finding a merger that would work. “Over the course of the six years I’ve been at Nebraska Corporate, we’ve publicly talked to at least eight corporates about some kind of merger. There have always been some sticky situations whether it be infrastructure, local presence, or representation. SunCorp was really finally a right fit for us,” said Keim. In addition to the board seat, SunCorp is maintaining Nebraska Corporate’s office in Omaha and will add some of its board members to its committees. There’s apparently already some history on the possibility of a Midwest regional corporate. For years corporates in the Midwest have met a couple times of year to discuss issues. The core group has been Iowa League Corporate, Nebraska Corporate, Minnesota Corporate, Midwest Corporate and Treasure State Corporate. A study was commissioned last year by these five corporates to explore the possible creation of a Midwest corporate. Keim said if DeGroodt had seen the results of that study he may not be pushing this issue. “Each of the boards of those five corporates voted against the creation of a regional corporate. It showed we still wouldn’t have the infrastructure or critical mass to make it worthwhile,” said Keim. Keim said the time, money and expertise to put together the kind of corporate DeGroodt is suggesting would take years. All five corporates signed a confidentiality agreement, so no one aside from those five have seen the study. Doug Wolf, president/CEO of Midwest Corporate, and someone who did see the study, said the study wasn’t cut and dry against a regional corporate. “We didn’t ask the consultant to make a recommendation for or against. A majority of the corporates just didn’t think there was enough of a benefit at that time,” said Wolf. But DeGroodt said that study was done before two Midwest corporates – South Dakota and Nebraska Corporate (merger pending) – we’re involved in mergers. “Our position is it’s a different landscape now. That study isn’t as relevant given what’s going on now,” said DeGroodt. DeGroodt noted that just this year Kansas Corporate CU and Missouri Corporate CU have been invited to attend the kinds of meetings those five corporates that sponsored the study have had over the years. Tom Kuehl, president/CEO of Iowa League Corporate Central CU said he doesn’t think this discussion should be out in the open. “I don’t think it’s appropriate for it to be discussed publicly before we even meet about it. Anytime you’re trying to pull together five or six separate entities, there’s going to be a lot up for debate,” said Kuehl. “What’s the management structure? Who is on the board? There are just so many questions to be answered,” said Kuehl. “This can go a lot of different ways, some good and some bad,” he said. As for the importance of having a corporate that is in touch with Midwest philosophy and other aspects, Wolf pointed out that there are some definite bonds among Midwest CUs. “Before the Empire merger with the South Dakota corporate just about all the states in the Midwest had their own corporate still. Although they weren’t as large, there was a feeling of having a closeness, having control,” said Wolf. “In the Midwest there’s a similarity in that it’s sparsely populated with credit unions and there’s a lot of business and agriculture lending that’s common throughout.” Wolf said he can’t blame DeGroodt for thinking about this issue since there have been corporate mergers from states all around Missouri, including Oklahoma’s corporate, Indiana’s corporate and South Dakota’s corporate. The key now is will DeGroodt be able to get the six other corporates to attend this special meeting in July or August to look at a regional corporate. For his part, Wolf said it’s likely Midwest Corporate would attend, though he stressed it hadn’t been presented to the board yet. Kuehl predicted that the Iowa League Corporate Central CU would also likely attend the meeting, saying the board is always looking at opportunities that could help members. DeGroodt is seeking three reps from each corporate – the CEO and two members from the board. This story broke at press time, so calls to the corporates in Kansas and Montana were unanswered as of publication. Minnesota Corporate President/CEO Lewis Lambert was on vacation and unavailable for comment. Nebraska Corporate Central FCU of course is involved in its own merger. As for the effects of DeGroodt’s letter to Nebraska CU CEOs asking them to rethink the merger with SunCorp in lieu of a regional corporate, the letter was just hitting CEOs’ desks at press time, so it was too early to tell. Keim did point out that he and Kenealy would be conducting town hall-style meetings on June 26 and June 28 to address any questions Nebraska CUs have about the merger. Kenealy said SunCorp has been working for two years to form a Rocky Mountain/Great Plains regional corporate. “We have an item processing center in Salt Lake City and Denver. We’ve been building infrastructure and human resources. It takes a lot.” He also agreed that there are philosophical differences between various regions of the country that should be considered, but didn’t see many differences between the Rocky Mountain states, the Great Plains, and the Midwest. “I grew up in the Midwest. Those three regions have a lot of similarities,” he said. Keim noted that since the NCUA Board isn’t meeting in August, Nebraska CUs may not vote on the proposed merger until September. [email protected]</p>

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