First Carolina Corporate Moves Forward with 2011 Strategies: Submits Capital Plan to NCUA, Presents PCC Offering to Members

CONTACT: Kecia Brooks
VP, Member Communications
(800) 585-4317 ∙ kbrooks@firstcarolina.org

First Carolina Corporate Credit Union, which submitted its capital restoration plan in January to the National Credit Union Administration, is moving forward to present members with its Perpetual Contributed Capital (PCC) offering.

PCC is an approved form of tier 1 capital investment, introduced with NCUA’s revised Regulation Part 704. It would give all member credit unions an ownership stake in First Carolina and ensure the capital strength to provide the vital products and services they need to succeed in today’s competitive financial arena. As perpetual capital, PCC is available to absorb possible losses from corporate operations if reserves and undivided earnings were to be depleted. First Carolina’s plan calls for participating credit unions to convert existing membership capital share deposit (MCSD) balances and invest additional money in First Carolina to help it meet NCUA’s new capital ratio requirements.  

“The objectives of the plan are three-fold,” said David Brehmer, President/CEO of the $2 billion corporate. “It will allow us to maintain our current level of high quality products and member service. It will allow us to achieve a “well capitalized” status under the new regulatory requirements for capital. And, it positions us to successfully operate as a value-added, independent corporate within a restructured corporate network and under new corporate regulatory guidelines.”

Beginning in October 2011, PCC will be mandatory for all members of First Carolina. The Corporate is targeting a goal of $60-$75 million in PCC, which will be a one-time requirement, with no planned annual adjustments. First Carolina, which submitted its offering to members Feb. 4, is requesting that members submit subscription agreements by April 29.   

To explain its capital plan and prepare for this offering request, First Carolina held 12 town-hall meetings last fall, as well as a series of webcasts, to discuss the Corporate’s strategies and obtain member credit unions’ input. Brehmer says most credit unions have attended at least one of the informational meetings and seem eager to move ahead with the capitalization process.

“With members’ support, we expect to complete the offering this spring and be fully compliant with the capital standards outlined in the new regulation by the October 2011 deadline,” he said.

In addition to meeting state and federal regulatory requirements, First Carolina’s capital restoration plan addresses all of the issues outlined in the agency’s December 2010 guidance letter. In August 2009, regulators had approved First Carolina’s plan to meet net economic value (NEV) ratio requirements – before the new corporate regulation was even published.

“Throughout our history, First Carolina has made it a top priority to provide the value-added, competitively priced products and services our member credit unions need,” Brehmer said. “With our rebuilding phase in process, we continue to appreciate our members for their support and confidence in us.”

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About First Carolina Corporate

First Carolina Corporate, headquartered in Greensboro, N.C., is a $2 billion, full-service corporate serving credit unions in four states. Founded in 1980, First Carolina is dedicated to building a stronger, more independent credit-owned financial network. For more information, visit www.firstcarolina.org.

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