PLANO, Texas (11/29/10)--Southwest Bridge Corporate's Member Advisory Council's Executive Committee has reviewed six potential business models and will recommend its final business model to the full council on Tuesday. According to the committee's update on Southwest Bridge Corporate's website and the bridge corporate's newsletter, eFacts
(Nov. 23), the final business model objectives are:
* Provide a full menu of services to reduce the impact on the bridge corporate's members; * Require a minimum level of capital by member credit unions; * Keep credit union ownership and control; * Ensure competitive pricing with high quality service; and * Maintain the capacity for ongoing aggregation.
The committee's final recommendation to the council will have four components:
* Consolidation with Georgia Central CU, likely by July 2011 with capital raised in May or June 2011. Governance would be determined primarily by the bridge corporate's members. The new board would select the new CEO. Headquarters and operations of the consolidated corporate would remain in Plano, Texas. * Capital formula of 0.25% of assets with a maximum cap of $750,000, a cap of $600,000 for credit unions between $240 million and $750 million in assets, and a proportional threshold for those with assets of $50 million on less. Use the resource link for more detail on the formula. The required capital would be perpetual, with no annual adjustment, and would be an investment that pays a dividend. * Continuation of all critical products offered, at the same pricing structure. These include payment and correspondent services, lines of credit, overnight PTA and Cash Management accounts, ALM, investment advisory, broker/dealer and SimpliCD. * Reduction of the consolidated balance sheet to between $2.5 billion and $3.2 billion to minimize the amount of required perpetual capital and ensure provision of sufficient lines of credit to meet settlement and access to contingency lines of credit. There will be a daily maximum cap on deposits in the PTA, but most credit unions will maintain full access. Southwest Bridge Corporate will assist credit unions with investing excess funds using a sweep account from PTA to various short-term investment options. The balance sheet will be managed with a significantly lower risk profile with strong liquidity. The reduced balance sheet does not impact other services, restrict product development initiatives or result in higher fees to credit unions.
The full Member Advisory Council will review the recommendation Tuesday, said Kerry Parker, chair of the executive committee and president/CEO of A* FCU, Austin, Texas. For more information, use the link.