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VACORP transitions services from U.S. Central
LYNCHBURG, Va. (8/20/10)--VACORP FCU has ceased processing domestic wire transfers through U.S. Central and begun processing directly through the Federal Reserve Bank, and is planning to withdraw more services. Don Chapman, VACORP president/CEO, said in a letter to member credit unions on VACORP's website that the corporate will work with members to "transition them away from using U.S. Central's cash concentration and automated deposit transfer services" and actively pursue "alternatives to U.S. Central's securities safekeeping and international payment services. "These actions, as well as others we will undertake in the future, will continue to ensure that VACORP and our members have viable, cost-effective alternatives to U.S. Central's products and services regardless of the final outcome of the National Credit Union Administration's (NCUA) conservatorship of U.S. Central," the letter said. The corporate noted that VACORP never purchased toxic or legacy assets, so NCUA's resolution of the legacy assets issue "should have no direct impact on VACORP or its members." The Lynchburg, Va.-based VACORP will conduct several town hall meetings and webcasts in late October and early November to discuss its business plan. "The critical component of the plan will be the willingness of our members to convert their existing Membership Capital Accounts (MCA) to Perpetual Contributed Capital (PCC)," the corporate said. "VACORP is only asking for the existing MCA to be converted to PCC." Chapman said the corporate needs a commitment of about $16 million to PCC to meet what the corporate believes is NCUA's minimum Tier 1 risk-based capital ratio of 4%. "VACORP and its members have been adversely impacted over the last two years by the investment decisions made by U.S. Central," said Chapman. Like other corporates, VACORP was required to write off all of its capital at U.S. Central. That reduced VACORP members' capital by about 66%, he said.
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