Fifteen months since two of Michigan’s largest credit unions combined to form the $1.6 billion Lake Trust Credit Union, the Lansing-based CU said it was making plans for its first merger of a struggling Detroit CU, the $7 million Father Kramer CU of Center Line.
“Sure, in the days ahead we could be receiving more of these inquiries from small credit unions in Michigan that find it tough going but this is one we’ve been in discussions since last January,” explained Stephan L. Winninger, CEO of Lake Trust, which itself was formed by a major merger of its own which the former NuUnion and Detroit Edison credit unions completed in April 2010.
Father Kramer, formed in 1949, has about 1,500 members from the Knights of Columbus Father Kramer Chapter in the Detroit suburb and said it sought out Lake Trust as a favored partner as it dealt with a depressed economy.
“It’s become increasingly difficult to manage our credit union in the face of this challenging economy,” said Father Kramer CU Board Chairman Arnie Lesner.
Economic factors have “depressed our earnings and we’ve continued to see our assets decline, both of which have limited our offerings to our members,” said Lesner. The CU lost nearly $99,000 last year followed by a $21,000 loss in the first quarter, but its net worth ratios have remained high.
As it has concentrated during the past year on completing the NuUnion/Detroit Edison merger, Lake Trust, said Winninger, has not been actively soliciting prospects but on performance, “I think it was a surprise to us and others that we’ve done so well in managing the transition and earning profit in nine of the last 11 months,” said Winninger. “That has put us way ahead of our plans.”
Meanwhile, Lake Trust is currently scouting for a new CEO to replace Winninger, who at 65 is retiring at the end of the year. Leaving Lake Trust at the same time will be its president, William Thiess, the former CEO of Detroit Edison.
Winninger said he expects the Lake Trust board to pick a new CEO “some time in the fourth quarter.”
Regarding Father Kramer, the merger deal is subject to regulatory and membership approval.
In a statement, Father Kramer officials said the merger would allow its members to “gain access to additional competitively priced savings and loan products like CDs, IRAs, mortgages, home equity loans and credit cards, as well as phone banking, Internet banking and bill payer products.”