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NORTHVILLE TOWNSHIP, Mich. – Credit union league dues are dropping 40% in Michigan, satisfying all but a small fraction of the Michigan Credit Union League’s membership that wanted an even-steeper reduction. The league’s board voted late last month to cut dues an average of 40% for 2003 with a commitment for similar reductions coming in the years ahead. Members received a 100% dues rebate in 2001 and a 40% rebate in 2002 as the league began to spread around the proceeds from MCUL’s sale of its stock in the NYCE Corp. electronic funds transfer network purchased by First Data Corp. in 2000. The league collected $25.8 million for its share in NYCE. The two years of dues rebates reduced that windfall by $3.2 million, allowing the league to add $22.6 million to existing reserves, which gave the league about $41 million in capitalization. “We feel very secure being a part of the MCUL knowing that we have a strong capital position,” said David Dykwell, vice president of marketing for First Resource CU of St. Joseph and chairperson of the league’s Southwestern Michigan chapter. “It gives us the assurance that we can be powerful in the future in terms of delivering services and benefits to member credit unions.” The plan ratified by the board differs significantly from a draft proposal released in June 2001, when the board voted to sell the NYCE stock. That plan included a more modest dues reduction and allocated two-thirds of the gain to other purposes, including product and service development, cooperative advertising, contributions to the national and international credit union movement and an investment in “fee-based initiatives” for Michigan credit unions. Opposition to that plan bubbled up quickly, with some league member credit unions asking that the entire $25.8 million be divvied up at once among the league’s members. At that point, the league created four task forces to look at different aspects of the issue and offer solutions. When tax advisers counseled that returning the gain on the sale of stock could cost the league its tax-exempt status, the opposition tempered its viewpoint. “I have to commend (league president) Dave Adams,” said Dykwell. “He put the league in a listening mode and allowed plenty of time for feedback and suggestions.” Not everyone agreed. “The fact we got a little economic relief is fine,” said Dennis Moriarity, president of Unity CU in Warren and a leader of the opposition. “I just don’t think it’s enough.” Moriarity and others seeking a greater dues reduction spent $15,000 on a tax opinion that said the league could rebate a larger portion of dues without jeopardizing its tax status and sought to put a resolution before the annual convention last June that would have mandated a 60% dues rebate. But delegates at the business meeting scheduled at the tail end of the convention shot his proposal down. “I really wanted a debate at the annual meeting,” he said, complaining that the business meeting was scheduled at a time when attendees were anxious to adjourn. “There was enough money involved that the credit unions should have a discussion about it.” While he concedes he “got my head handed to me,” Moriarity said he is not unhappy about the outcome. “If we had left it to management, I don’t think the credit unions would have seen a nickel,” he said. League president and CEO David Adams noted that some sort of dues reduction was in the concept draft from the beginning. He conceded, however, that the other elements of the plan were “tempered by input from our membership. There was a much greater desire for dues reduction but that doesn’t mean we’re not going to consider those things.” As adopted, the new structure reduces dues by an average of about 40%. However, credit unions with assets of less than $40 million will receive slightly greater reductions and credit unions larger than $40 million will receive a dues reduction of a few percentage points below 40%. The MCUL Board will review the dues formula each year and make adjustments as necessary, said Robert Mackay, MCUL chairman and president of Berrien Teachers CU of St. Joseph. “Given the soft economy and the pressure on many credit union financials today, I’m sure this cost reduction will be welcomed by Michigan credit unions.” Dianne Addington, president of T&C FCU of Bloomfield Hills, Mich., and chair of the task force that reviewed tax consequences of the various payout options, said her large credit union will see a slightly smaller decrease, but she applauds the board decision. “Even though T&C will be paying a little bit more, it’s still more equitable,” she said. “For the small credit unions, it’s going to help them quite a bit.” -

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