WARRENVILLE, Ill. And SOUTHFIELD, Mich. (4/11/12)--The boards of Alloya Corporate FCU and Central Corporate CU have signed a non-binding letter of intent to merge the two corporates.
In an announcement Tuesday, the Warrenville, Ill.-based Alloya and the Southfield, Mich.-based CenCorp said the action allows for ongoing discussions, due diligence and joint planning. The new organization would serve nearly 20% of the nation's credit unions, primarily in a 10-state region spanning from the Midwest to the East Coast.
The combined corporate would continue under Alloya's federal charter and operate under the Alloya name. CenCorp's current CEO, Bill Walby, would become CEO of Alloya with the headquarters located in Warrenville. Board and committee representation would reflect the combined membership.
Given the geographic distribution of the combined memberships, the boards envision significant operations to remain in Alloya's current locations in Warrenville and Albany, N.Y., as well as CenCorp's Southfield, Mich. location.
"While very successful in its own right, the current and future operating environment for corporates has prompted CenCorp to consider alternatives, including merger, that would enhance member value and better serve its members," said Walby. "A merger with Alloya would create enhanced value for both memberships in the form of significantly increased scale, additional revenue growth, reduced operating costs, and additional financial strength," he added.
"With the enactment of the amended corporate regulations in 2011, corporates have needed to orient their business plans to a new paradigm," said Chuck Furbee, Alloya's CEO. "This merger would result in a corporate credit union with core markets in 10 states. With a strong reputation for service through a local presence in the regions served, the combined corporate will be staffed by an experienced team that is dedicated to serving the needs of the membership first and foremost," Furbee said.
Credit Union Association of New York President/CEO William J. Mellin said the association supports the planned merger, noting that the "unification of these two corporate credit unions is in the best interest of our credit unions here in New York and beyond. It will provide long-term strength and viability, not to mention long-term value and a continued service presence in New York."
The merger also "will help ensure the health and well-being of the credit union movement, as it provides a stronger credit union-owned solution to service credit unions--one that will bring more efficiencies and lower costs to natural person credit unions." The partnership would put into practice the cooperation advocated by not-for-profit financial cooperatives, Mellin added.
After due diligence is completed, the next step would be to execute a definitive merger agreement by both corporates. The merger would be subject to approval of members of CenCorp and regulators.