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BISMARCK, N.D. – In a surprise about-face, the consolidation of the North and South Dakota Leagues into a joint new trade group – six years in the making and due for final implementation Jan. 1 – has been called off apparently the result of a dispute over board representation and property equity. The decision was a stunning turnabout for the two Leagues whose managers proclaimed a year ago a bright future as a combined entity saving on duplicated salaries, facility and lobbying expenses while also serving as a model for small Leagues across the U.S. “I have some pretty bad news,” declared a clearly disappointed chairman of the South Dakota League, Floyd Rummel III, commenting on the collapse of talks last month to save the formal start-up of the Mid-America Credit Union League in 2005. Under a carefully crafted timetable struck more than a year ago, the new League with headquarters and incorporation here had selected a joint board last March, had begun interviewing for a new CEO in July and had planned to move the staff and management of a joint processing subsidiary to Bismarck at the start of 2005. The Mid-America offices were to be housed in the North Dakota League offices along with the reorganized Regional Services Corp., the surviving processor for the two Leagues, while the South Dakota League had already put its Sioux Falls headquarters up for sale. “We thought it was a done deal until we got wind of some new conditions back in August wanted by the North Dakota Board and that all turned into stumbling blocks,” confided Rummel, who also is president of Dakota Territory FCU of Deadwood, S.D. Declining to spell out specifics, he said the conditions related to “different positions on equity and capital” of the combined entity, citing a “seven point” list contained in a letter sent to the South Dakota Board. Industry sources said the new terms related to how the South Dakota League assets would be “liquidated” and converted into Mid-America. “It was a case of the North Dakota League being the liquidating organization with South Dakota League assets being considered worthless,” under the restated terms, said one industry official close to the talks. There was a great disparity, he said, “on the values on the building being sold and on tax liabilities,” maintaining that the South Dakota League was under the impression “that we were negotiating as equals.” For its part, the North Dakota League, while also remaining mum on the specifics behind the change of heart, contends the breakup is the result of “a totally different opinion on the structure going forward” particularly on whether the needs of North Dakota CUs would be fairly met in Mid-America. “The logistics of consolidation” under the originally adopted agreement have simply turned out to be faulty, said Tim Brown, who in March was elected a director of Mid-America and also was picked earlier as the new chairman of the North Dakota League. Brown, who also is president/CEO of Dakota Plains CU in Edgeley, succeeded George Economon, first vice chairman of Mid-America, and a volunteer director of North Dakota Air National Guard CU in Fargo, who signed off on the original consolidation documents. Rummel has maintained the new leadership in the North Dakota League, and its eagerness to “renegotiate an existing agreement” sunk the deal as far as his League was concerned. One industry insider said the breakup was simply the result of a “power struggle – who has the most marbles.” Though not holding out much hope for another reversal, Brown said a final judgment on the termination would be made at a special membership meeting Oct. 20 in Jamestown during the League’s annual fall “Managers’ Conference.” Just how the two organizations would proceed now in simply going it alone or possibly pursuing other state League partners though “management agreements” was unclear. Just last May the Oregon and Washington Leagues called off a similar consolidation which had been discussed for years after extensive studies though the Dakotas were obviously further along in implementation. Holding to his view espoused over the years that economies can be attained in combined League operations, Rummel said his League might “look to consolidate with Montana” or some other state in a regional compact as one option or continue as is and hire a new CEO to replace veteran Don Couch, 64,who has a contract to retire by July 2005. Under the Mid-America scenario, Couch was to retire last July but help groom the new CEO. Also, said Rummel, the South Dakota League headquarters will remain on the market since the board had long planned to move into smaller quarters in Sioux Falls. As for existing linkups, Rummel noted that the Wyoming League is currently renegotiating terms of its management contract with the Colorado League, a fact confirmed by that League which is looking for approval by the Wyoming League Board “in a few days.” One other Western States management combination which has existed for years has been that between California and Nevada. As for North Dakota, Brown said that following formal approval of the Mid-America dissolution at the Oct. 20 managers meeting in Jamestown, the North Dakota League would have to start from scratch “and begin a whole new planning area” to decide on alternatives. “This would all come in stages,” he said. Serving as interim president/CEO of the North Dakota League has been 62-year-old Kermit Larson, who has been with the 57-member North Dakota League for 16 years. Couch like Larson expressed dismay at the collapse of Mid-America with the South Dakota League CEO declaring he was “surprised the Leagues could not get together.” “Nothing is for certain in these situations until the fat lady sings,” Couch concluded. [email protected]

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