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First Carolina Corporate moves forward on PCC offering
GREENSBORO, N.C. (2/18/11)--First Carolina Corporate CU is moving forward to present members with its Perpetual Contributed Capital (PCC) offering and is asking member credit unions to submit their subscription agreements by April 29. Beginning in October, PCC will be mandatory for all First Carolina members. The corporate is targeting a goal of $60 million to $75 million in PCC--a one-time requirement with no planned annual adjustments. PCC is an approved form of tier 1 capital investment introduced with the National Credit Union Administration's (NCUA) revised Regulation Part 704. It would give all member credit unions an ownership stake in First Carolina and ensure the capital strength to provide them products and services to succeed in today's financial arena. As perpetual capital, PCC is available to absorb possible losses from corporate operations if reserves and undivided earnings were depleted. The corporate submitted its capital restoration plan to NCUA in January. The plan calls for participating credit unions to convert existing membership capital share deposit 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 asset 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," he said. "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," said Brehmer. Last fall, the corporate held 12 town-hall meetings and a series of webcasts to explain its capital plan and prepare for this offering request, discuss its strategies, and obtain member credit unions' input. Most credit unions have attended at least one meeting and seem eager to move ahead with the capitalization process, said Brehmer. The capital restoration plan addresses all issues outlined in NCUA's December 2010 guidance letter, said the corporate. In August 2009, regulators approved First Carolina's plan to meet net economic value ratio requirements--before the new corporate regulation was published.


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