As Corporates Look to Grow, They Start to Move in on Each Other's Territory

HALES CORNER, Wis. – With more corporate credit unions having the mantra of grow or die, corporates are likely to see more of each other in FOMs once dedicated solely to one corporate. It looks like that’s starting to happen in Minnesota. Corporate Central Credit Union (formerly Wisconsin Corporate Central CU), Hales Corner, Wis., is opening a new business development office in Bloomington, Minnesota to serve Minnesota credit unions. It will be housed within NWA FCU in Bloomington. All of Corporate Central CU’s products and services (except for item processing for now) will be offered through that office. “Any business needs to grow. Growth is in our mission statement and our vision statement. This is somewhat of a competitive issue. Two of the three sides we have states on have a large corporate,” said Mark Schroeder, president/CEO of Corporate Central CU. The large corporate Schroeder speaks of is Mid-States Corporate FCU, Naperville, Ill. The same Mid-States that just a few months back announced plans to merge with Minnesota Corporate. Schroeder said Corporate Central CU always wanted to do more partnering with Minnesota Corporate, but things haven’t worked out. “We have had a long-standing dialogue trying to do things together and we haven’t been successful at it. Our board has directed us to grow. The number of players are declining, and the ones that are remaining get bigger and bigger,” said Schroeder. Corporate Central’s plan came as a complete surprise to Mid-States Corporate President/CEO Dave Preter, who learned of it at the tailend of a trip in Minnesota talking to Minnesota CUs about the proposed merger. He called it an “aggressive” move by Corporate Central, and wondered why the corporate didn’t contact Mid-States first. “Our policy has always been not to move into another state where the corporate there is providing value to its credit unions. But our board also believes if we are aggressed upon, we need to return the aggression,” said Preter. Under that concept, Mid-States would start marketing to Wisconsin CUs in Corporate Central CU’s territory. Preter said it was too early to tell if that would happen and exactly what Mid-States’ response would be, but the corporate will definitely evaluate the situation. “It’s a shame that we have so many people talking about cooperating, and the need for corporates to work together, but a lot of that just seems to be talk,” said Preter. Preter was particularly surprised by Corporate Central’s move into Minnesota because he said Mid-States and Corporate Central have been conversing in recent months about ways they can help each other. “Instead of duplicating with investment, credit and technology products, our two staffs have been talking about ways to work together, and then this happens. I’m confused,” said Preter. Schroeder said he doesn’t want to paint the picture that Corporate Central CU was forced into expanding into Minnesota, but he said the way the corporate network is evolving the corporate didn’t have much choice. “Our board has an attitude that we want to survive and grow. Then what do you do? You have to develop new business,” said Schroeder. Schroeder did say Corporate Central CU was planning on talking with Mid-States about their new office in Minnesota. Schroeder also said Corporate Central has always had Minnesota CU members, but has held back on actively marketing in the state because of its relationship with Minnesota Corporate. He would not disclose how many Minnesota CU members Corporate Central has. Schroeder knows Mid-States will present some serious competition in Minnesota. “Once they’re fully assimilated with Indiana and work through the process of getting Minnesota on board, they’ll be a formidable competitor,” he said. George Tiedt, chairman for Corporate Central, said Wisconsin and Minnesota have a lot in common, making this a natural move. “We in the upper Midwest share many of the same values. We’re a people of solid standards, firmly grounded in the belief that service is more than a catchphrase. We are confident that we can bring that unique philosophy to Minnesota credit unions,” said Tiedt. Minnesota Corporate FCU President/CEO Lewis Lambert said talk about high standards coming from Corporate Central is inconsistent with what he’s hearing from some Minnesota CUs. “Corporate competition has been around, and we expect competition. I do though find it baffling in the way they’re going about it. Their leadership is talking about values and solid standards, and then they have someone in the field here telling Minnesota credit unions there won’t be a Mid-States office in Minnesota after the merger. That’s an outright lie. It’s simply not true. There’s some real inconsistency between what’s being said and what’s being done in the field” said Lambert. Schroeder, however, said he’s talked to his people in the field, and is confident no one is making that false statement. “I’ve talked to everyone here, and no one is saying that. We always take the high road with the competition, and we’re not going to change that now. We compete fairly and always will,” said Schroeder. Lambert said Mid-States will add business development and sales people in Minnesota after the merger, and Lambert himself and most of the current staff will remain in the Egan office post-merger. Lambert said Mid-States clearly made some mistakes with the INDICORP merger, but they won’t be repeated in Minnesota. The main defense is going to be keeping a strong presence in Minnesota. “We made the right choice going with Mid-States. The values of Mid-States are consistent with ours at every level. We’ll be a viable, competitive corporate for years to come,” said Lambert. This isn’t the first time Mid-States has seen its territory encroached upon. Corporate One FCU, Columbus, Ohio, has been actively marketing to Indiana credit unions. Mid-States picked up Indiana of course a few years back when it merged with INDICORP, the largest corporate CU merger ever. As for the merger with Minnesota Corporate, Preter said the five townhall style meetings held in Minnesota have really proven to him that Minnesota CUs are eager to see the merger go through. “They’re very excited without exception. It’s scheduled to close in April, but they’re even hoping it can close sooner,” said Preter. One issue Minnesota CUs are concerned about is the fate of the paid-in-capital they have in Minnesota Corporate. The PIC issue was a major stumbling block for the failed Southwest Corporate/Georgia Central CU merger. Preter said that won’t happen here. Mid-States currently doesn’t issue PIC, so it will redeem Minnesota CU’s PIC in Minnesota Corporate prior to the close of the merger. He also said that Mid-States plans to issue PIC under the new 704, and Minnesota CUs will be able to reinvest it in the new corporate. Another issue that surfaced is capital requirements. While Minnesota Corporate has a capital requirement of one-half percent, Mid-States’ requirement is 1%. Other corporates have their eyes on moving outside of their traditional FOM. Constitution State Corporate CU, Wallingford, Conn., for example, recently hired a former U.S. Central sales professional to help it build new membership outside of Connecticut. Constitution hired James D. Richey, who was previously a sales account manager for electronic bill pay with U.S. Central. Richey will also look at creating opportunities for products and services of Constitution and its subsidiary, SmartSource Solutions. [email protected]