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Corporate America LaCorp to explore merger
IRONDALE, Ala., and METAIRIE, La. (1/21/11)--The Boards of Directors of Corporate America CU and Louisiana Corporate CU (LaCorp) have signed a letter of intent to pursue a merger of the corporates, pending completion of due diligence and regulatory approval. If approved, the result will be a $3.9 billion Corporate America CU, with headquarters in Irondale, Ala. The combined corporate will serve 514 member credit unions in 26 states. Plans call for Louisiana member services and potentially credit union service organization (CUSO) operations to be housed in LaCorp's Metairie, La., facility. Corporate America President/CEO Thomas Bonds will serve as president/CEO of the combined organization. LaCorp's staff will remain in place and continue to serve credit unions in Louisiana. The merger "will benefit both Louisiana and Corporate America members," said Bonds. "This business combination is a natural fit as our memberships are similar, and our product and service offerings will benefit our combined membership going forward." According to LaCorp President/CEO David Savoie, credit unions that currently are members of LaCorp would be asked to convert their existing membership capital shares (MCA) and paid-in-capital (PIC) to perpetual contributed capital (PCC), which will be required by the revised National Credit Union Administration corporate regulation, Part 704. No additional capital investment would be required from these members. Credit unions that are associate members of LaCorp could retain membership in the combined organization by purchasing PCC in a competitive contribution amount with a competitive yield. The two corporates' mutual desire to provide high-quality member service, proximity of their organizations and shared knowledge of the regional market make merging a logical next step--one that carries significant benefits to credit unions, Savoie said. "I believe there is a tremendous advantage in combining our corporates because we would be able to handle both the correspondent and credit needs of any-sized credit union at the same institution," Savoie added. "Unlike some of the CUSO/bank partnership ideas now being floated, our members would not need to rely on banks for their credit or payment processing needs." The corporates are in the information gathering and due diligence phase. Both agree they will proceed with the merger only if there is a sound business case for it. They have discussed the possible merger with their regulators and are staying in close contact with both federal and state agencies, they said. Ensuring continued high-quality member service is the No. 1 priority for both LaCorp and Corporate America, Savoie said. "For us to move forward, the analysis must indicate that members will benefit in all significant areas--product offerings, pricing, convenience, cost-effective operations and member service," he said. "We already have a strong working relationship--in many ways, David and I share a similar credit union background. That's a definite plus," said Bonds.
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