Mich.-based CenCorp to Merge with Alloya Corporate (Misc News: April 10, 2012)
Alloya Corporate FCU and Central Corporate CU have announced plans to merge into one corporate credit union that would serve nearly 20 percent of the nation’s credit unions, primarly in the Midwest and East Coast.
The boards of the two corporate credit unions announced Tuesday that they had signed a nonbinding letter of intent to merge.
The combined corporate would continue under Alloya’s federal charter, and would operate under the Alloya name. Current CenCorp CEO Bill Walby would become CEO of Alloya with the headquarters in Warrenville, Ill., where Alloya is based. 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 of Warrenville and Albany, N.Y., as well as CenCorp’s offices in Southfield. A spokesman added that staff reductions are expected throughout the system over time as operations are consolidated, but most staff reductions would be done through attrition.
“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,” Walby said. “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.”
Alloya CEO Chuck Furbee said the amended corporate regulations of 2011 have caused all corporates to closely examine their business plans.
“With the enactment of the amended corporate regulations in 2011, corporates have needed to orient their business plans to the new paradigm,” Furbee said. “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 plans to stay with Alloya through the merger process and plans to work with Walby to "define the envisioned leadership team and functional organization of the new corporate."
The next step after the completion of due diligence would be the execution of a definitive merger agreement by both corporates. The merger would be subject to the approval of the members of CenCorp and regulators.
Alloya was chartered in 2011 by the Members Advisory Council of Members United Bridge, one of the bridge corporates established by NCUA after five corporate credit unions were conserved by the federal regulator. It serves more than 1,100 natural person credit unions with 165 employees.
CenCorp was chartered in 1937 by the Michigan Credit Union League shortly after the league’s founding. Throughout its history, it passed back and forth between MCUL and independent control. It serves more than 300 natural person credit unions with 50 employees.