Missouri and Midwest Corporates to Merge: Prelude to Midwest Regional Corporate?

ST. LOUIS – A merger between Missouri Corporate and Midwest Corporate falls far short of Missouri Corporate President Dennis DeGroodt’s hopes of a Midwest regional corporate, but is this just the beginning? The $925 million Missouri Corporate CU and $207 million Midwest Corporate FCU recently announced their merger plans. The CEOs of the corporates say the deal was an outgrowth of meetings held to explore the idea of forming a Midwest regional corporate. DeGroodt first advanced that idea last year and he invited six corporates – Kansas Corporate CU, Nebraska Corporate Central FCU, Iowa League Corporate Central CU, Minnesota Corporate FCU, Midwest Corporate FCU and Treasure State Corporate CU – to attend meetings on the subject. Careful observers of the corporate network will notice that the list of six isn’t what it used to be. Minnesota Corporate is already in the midst of a merger with Mid-States and Nebraska Corporate Central is no more, having merged with SunCorp. Now with Midwest Corporate merging with Missouri Corporate, that leaves Iowa League Corporate Central, Kansas Corporate and Treasure State Corporate as the only remaining corporates of the original six. Is this latest deal a prelude to one or more of these corporates joining with Missouri and Midwest? DeGroodt hopes so, but says there are no other deals even remotely in the works and the most important thing right now is getting this merger done, and done right. If anything, DeGroodt said the few meetings held among the Midwest corporates on the possibility of forming a regional corporate, helped spur this deal. “As we began to talk both of us noticed how similar we were in terms of culture and philosophy. We never looked at this whole effort from an economies of scale viewpoint, we’re more focused on where our organizations are going philosophically and culturally,” said DeGroodt. Philosophic and culture similarities of the Midwest region was one reason cited by DeGroodt for forming a Midwest regional corporate – another major one was representation. “Both states will have representation. We’re going to write that into the bylaws,” said DeGroodt. “Also there will be a local operation center in North Dakota. That we feel very strongly about.” The merger is expected to close by November. It marks another merger of corporates from non-contiguous states, which used to be a big deal but is no more with recent deals like Empire and South Dakota and Mid-States and Minnesota. Midwest Corporate CEO Doug Wolf hopes the way this merger is structured in terms of representation can be a model for future mergers, and maybe even help facilitate mergers with this new corporate by showing other corporates via written bylaws exactly what they would be getting. Though the bylaws haven’t been written, Wolf said they will define how states served by the corporate get representation on the board. It may be by number of corporates, so any state with, for example, 30 or more credit unions would get seats on the board. The important thing said Wolf is that those guidelines be written into the bylaws now and be abided by for any future mergers. “We’re hoping to structure this so that if other corporates feel that our philosophical way of doing business is similar to theirs, they can easily be brought in,” said Wolf. “So even though it’s just the two of us, we’re setting up the premise of this regionalization. The concept hasn’t gone away.” Wolf said he truly doesn’t see this as a merger, but creating a new organization. So what will the name be for this new corporate? Though Midwest would seem to make more sense given the regionalization aspect, both CEOs said that is an option but nothing is definite. Another option would be to create an entirely new name. The two corporates are also evaluating whether or not to go with a state or federal charter. What they do know is the headquarters will be in St. Louis, with an operation center in Bismarck, N.D. Titles and such of the two leaders have also not been decided. In the Mid-States/Minnesota merger, those corporates bucked the trend a bit by having Dave Preter as the overall CEO of the corporate, yet current Minnesota Corporate President/CEO Lew Lambert as President of Minnesota Operations. That merger is not completed as of yet. If this merger and the Minnesota/Mid-States mergers go through there would be 31 corporates in the network, down from 37 in 2000 and 45 in 1994. Interestingly, both leaders say from a product standpoint the new corporate’s offerings won’t change much. They have pretty full product lines, and have used partnerships to offer products they can’t on their own. Midwest offers Corporate One’s SimpliCD program, Mid-Atlantic’s bill payment product, and is a member of Corporate Network Brokerage Services. Missouri Corporate has partnered with U.S. Central’s ISI to offer brokerage services. Neither corporate offers item processing on their own, but work closely with their respective leagues (which offer it) to bring it to their members. Wolf said this was one of many merger opportunities it has had in recent years. “Over the last year and a half we’ve been approached by other corporates seeing if we’re interested in merging. But we didn’t want to do what everyone else has, this is really going to be a new corporate, not the traditional merger. And we didn’t go out soliciting requests for proposals.” In another potential merger, the boards of Southeast Corporate and Corporate America CU have agreed to explore a merger, though nothing official has been decided as of yet. [email protected]