Members of the $252 million Midwest Corporate FCU have decided the fate of their cooperative: liquidation.
Former CEO Doug Wolf, still working at the Bismarck, N.D.-based corporate on a contractual basis, said members made the decision during April's annual meeting but haven't formally voted yet.
A test group of members are transitioning their correspondent services to Midwest Corp-owned processing CUSO ProDraft Services, Inc. Others are expected to follow later this year.
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Mergers and recapitalization were also options, Wolf said, but Midwest Corporate has historically required less capital than peers, so the NCUA's new capital requirements or a merger would have required significant capital from members.
Members should only experience two service changes: they will have to find a new source for investments, and may see a reduction in their liquidity credit lines. ProDraft negotiated with Fifth Third Bank to provide the services.
"It was the same idea as a corporate. We pooled together to negotiate the best pricing," Wolf said. "We were very explicit to the bankI if they don't hold to their prices, we will pick up and move as a group. We can because there's no capital investment."
Midwest Corporate had nearly $7 million in member shares and $8 million in retained earnings as of September 2008. According to the NCUA's April 2010 5310 reports, less than $1 million in total capital remains.
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