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Economy prompts Members United Corporate changes
WARRENVILLE, Ill. (12/10/08)—Members United Corporate FCU Tuesday announced general budget reductions, a 20% reduction in staff and a return to a “back-to-basics” business approach—all stemming from the continuing market dislocation and a weakening economy. The staff reductions include Members United President David A. Preter, former CEO of Mid-States Corporate. “Members United has seen a reduction of approximately $6 billion in assets from its peak of $15 billion in March of this year due to the continuing market dislocations,” said Corporate CEO Joseph P. Herbst. “Members United has funded the liquidity needs of our members and will continue to do so,” Herbst said. “However, this reduction in the size of our balance sheet affects our ability to cover expenses at current levels and grow retained earnings. Clearly, we need to make changes to protect member value. “Following the merger between Mid-States and Empire corporates, Members United experienced tremendous growth,” Herbst stated. “Responding to that growth, the corporate assembled an extremely talented staff to support its operations and to position it for further growth in the future. But as 2008 draws to a close, that situation has changed.” The corporate will reduce its operating budget from initial 2009 projections by roughly $10 million through reduced spending on programs, infrastructure and product development, outside commitments and direct subsidies. Staff reductions, which will occur at all levels and locations, will trim expenses by about $5 million. Commenting on Preter’s departure, Herbst said, “Along with the other employees who will be departing, Dave will be sorely missed. I am sure he will remain a force in the credit union industry. I have no doubt he will make a great CEO in the future.” Preter said, “I leave Members United knowing that this decision is in the best interest of the members and that they are in very capable hands. I am very proud of the people at Members United and of the organization we have built over the years.” Members United also will look at its business operations in general. Its back-to-basics approach will focus more on its core markets and traditional product offerings. While these changes are still being finalized, Members United expects to implement them in the near term. While the corporate expects 2009 to be a challenging year, Herbst assured member credit unions in a letter announcing the changes, “While this is a difficult time, we remain committed to providing you the high level of service that you have become accustomed to.”
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