TALLAHASSEE, Fla. and PLANO, Texas – There have been more corporate credit union mergers announced in the past six months than there have been in the past few years – merger mania is back in the corporate network. The latest to announce are the $10 billion Southwest Corporate, Plano, Texas, and the $4 billion Southeast Corporate, Tallahassee, Fla. This is the largest corporate credit union merger ever, pairing the nation's second largest corporate with the fourth largest. Southwest has been without a CEO since Francis Lee left to become CEO of U.S. Central last year. During its executive search, Southeast CEO Bill Birdwell was approached by the recruitment firm about the Southwest job. Birdwell said he was perfectly happy at Southeast, but told the recruiter it was good timing for a merger. "I have been at a lot of corporates and I am very happy where I am. But I did tell them I think it makes good business sense if we consolidated," said Birdwell. The merger wheels took off from there and the corporate boards began to explore the option. If the deal goes through, the new corporate would retain the Southwest charter and be led by Birdwell, who would move from Florida to Texas. "For me it's going home. I have family there. I grew up in Texas. It's kind of like putting on an old pair of shoes," said Birdwell. But to Birdwell this merger is about the credit unions. "Scale in our business is huge. What this will allow us to do is reduce cost and expand market share, which will translate into better pricing," said Birdwell. He also noted that the each corporate has some products the other doesn't. For example Southwest has some extensive card services programs, Southeast doesn't. Southeast however offers member business solutions through its Member Business Services CUSO; Southwest has yet to enter business services. Southwest also has significantly more expanded powers from NCUA, with Part I, II, IV and V powers, whereas Southeast has just applied for Part I. Interestingly, both corporates have item processing facilities in Jacksonville, Florida. Southwest had an item processing presence in Florida because prior to Birdwell joining Southeast, it did not offer item processing services. Thus Southwest, although based in Texas, saw market opportunities in the Southeast. Birdwell quickly added item processing to the corporate's product menu when he was named CEO of Southeast. Birdwell believes down the line the two facilities can be combined into one, creating further savings – a move that makes more sense given the expected proliferation of electronic image exchange. "We're both on the same item processing system; it would be very easy to integrate," he said. Birdwell said this merger didn't just happen, some very careful, detailed financial analysis was done. "We used a scoring system that was actually developed by Callahan & Associates, which we modified to fit the retail side. We found it would have a positive impact on operations and create an organization that could significantly impact the credit union movement in general and the corporate network in general," said Birdwell. Birdwell said members of both corporates can expect the same if not better service levels. "We don't see any degradation in service at all, we both focus on service and have similar cultures in that regard." Birdwell said paying out capital is not in the merger plans. He said this is a consolidation, not one corporate acquiring the other. "There are going to be significant benefits to the member credit unions. There's no reason to pay out capital," he said. He noted the strong capital positions of each corporate, with Southwest at a 6.47% capital ratio and 2.9% retained earnings, and Southeast at 5.86% capital ratio and 2.91% retained earnings. Southwest Corporate Interim CEO Jody Beck called this merger a "natural fit" and expects the economies of scale to help the new corporate serve members. Greg Moore, CEO of Georgia Central CU, a corporate that is very close with Southeast Corporate geographically and cooperatively, was surprised. "I didn't see this one coming, but it makes sense. You have two strong corporates, strong financially and strong from a staffing standpoint. Together they will create a stronger more efficient corporate. I don't think it's a bad thing-and I think in a way it may create strong opportunities for us because we have such a strong partnership with Southeast Corporate," said Moore. Georgia Central and Southeast Corporate are co-owners in a data processing CUSO as well as a business services CUSO. They both run on an Open Solutions core system housed out of a Southeast facility. The new corporate will likely not retain either the Southwest or Southeast name. [email protected]