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SIOUX FALLS, S.D. – Credit unions in North and South Dakota begin voting next month on a long-running plan to consolidate their two state Leagues, but the final package could set a pattern for League structure across the U.S. That was the forecast this week of Donald P. Couch, the president and CEO of the South Dakota Credit Union League, who suggested state Leagues for economic and practical reasons could one day be organized along the lines of the Federal Reserve System and its network of 12 district banks. “It seems logical that we might follow the Fed and set up business districts tied to data processing and check clearing operations,” argues Couch whose state League offices and operations are slated to close some time in 2004 and move to Bismarck, N.D. That is the site of the headquarters of the current North Dakota League. Under the `single League’ consolidation plan, the two trade groups would retain autonomous boards and identity for legislative purposes, but service and product operations would be housed under one roof. The 63-year-old Couch, who said he and other members of the two League boards have been planning a consolidation strategy for seven years, noted that a search committee to select a new CEO of the combined Leagues is not expected to begin until after the complicated plan is ratified by the 120 CUs in both states. Members of the South Dakota League are slated to hold a special meeting here Nov. 22 with the North Dakota group convening in that state during the week of Nov. 10. Final consolidation of the two Leagues may take as long as a year to complete given two service corporations are to be combined, assets sold and staffs relocated, said League officials. But Couch maintained developments in the Dakotas could represent a harbinger of things to come for small state Leagues with dwindling membership in the face of mergers and economic forces. “With corporates and credit unions themselves merging, why should we in the Leagues be exempt?” asked Couch. His views are not entirely shared by other League officials in the American Association of Credit Union Leagues. AACUL officials maintain the Dakota venture is just one approach of many that are being tried across the U.S. with bi-state management the more common practice. Often cited are pacts in which a stronger state league manages operations for a smaller, less populous league as in California running Nevada and Colorado managing Wyoming. On the East Coast are Massachusetts managing Rhode Island and New Hampshire, and Virginia doing the same for the District of Columbia. CU Association of the West – set up by California, Washington State and Oregon – is still another version of combining services but with emphasis on education programming and eventually joint processing. Still Couch pointed to other states in the Midwest and West which he said “are susceptible to the same conditions as we are” and might be ripe one day for a joint operation. He cited Montana and neighboring Nebraska, for instance. But Scott Sullivan, the president and CEO of the Nebraska League, said his league is healthy, and sees no motivation to consolidate, adding “we simply don’t buy into the concept” put forward by Couch. “That doesn’t mean we don’t partner with other leagues,” said Sullivan, noting the common practice of Leagues to share a wide variety of products and services. Sullivan said he has had no discussions about joining the Dakota consolidation and does not see “a regional approach” being considered for now. He said he found it hard to understand how the regional idea can work well in government affairs since Leagues face off routinely with state lawmakers. Tracie Kenyon Karls, president and CEO of the Montana Credit Union System, said she has received “no indication by my membership” that a merger or consolidation is either “imminent or necessary.” Members of the Montana League seem “pleased with the quality of products we’re providing.” “We really do have as many ideas” for consolidation, managing and merging “as we do individual states,” said Scott Earl, the current chairman of ACCUL and president/CEO of the Utah League of Credit Unions. The state League combinations, he forecast, will continue to focus on “individual circumstance” as well as “demographics.” Earl said the examples of League and CU sharing are definitely on the upswing as evident in shared branching involving League service corporations as well as measures to consolidate backroom operations to reduce expenses and produce economies of scale. Nonetheless, Couch says that “when I look into my crystal ball, I think Leagues getting together is inevitable.” He added that, “we simply can’t operate the way we did 10 years ago.” The Fed bank approach in the Upper Midwest, he noted, would be practical for data processing since CUs in the Dakotas, Minnesota and Nebraska use services linked to the Federal Reserve Bank of Minneapolis Phyllis Crawford, the chairman of another small western League, New Mexico, which just last week picked a new CEO, said apart from partnering, her trade group has no current interest in teaming up with another League. “We’ve had California come after us a lot but we’ve said no,” said Crawford, maintaining her League is financially healthy and offers at least one national product that is a successful income producer – CU Succeed, a youth education package. The New Mexico League, said Crawford, who also is president of Navajo Mine Credit Union, Kirtland, “is happy and well situated” and is finding partnering with other Leagues like Alabama and Colorado on services missing in her state works fine. “What’s the point of reinventing the wheel?” she asked. “We’ll stay independent, but one day it may come to a point where we would look at merging,” predicted Crawford. Meanwhile, Floyd Rummel III, the chairman of the South Dakota League and president of Dakota Territory Federal CU of Deadwood, said the consolidation of the two Leagues might not be completed until December 2004. He said the decision to close the Sioux Falls office and move to Bismarck is based on several factors. “Bismarck is more centrally located and it would have been too costly to move the share data processing in Bismarck to Sioux Falls,” said Rummel. The meetings next month, he noted are for the memberships of both Leagues to consider a letter of intent approving the combination. Rummel also said despite the closing of the Sioux Falls office the lobbying contact with South Dakota lawmakers would remain as would rep visits by consultants who make on-premise visits to League members. The South Dakota League retains a lobbyist who travels to Pierre, the state Capitol, with the South Dakota Legislature only in session six weeks a year, a rare phenomenon among states where sessions can drag on much longer. In addition, South Dakota has only federally chartered CUs, though “there have been rumors that the banking lobby next year might push for the state franchise tax” to be imposed on CUs. – [email protected]

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