DETROIT -The downbeat Michigan economy is helping trigger asharp rise in mergers of small Michigan credit unions with oneDetroit area CU taking on four CUs in a consolidation trend showingno signs of letup through the remainder of 2005. By one count,there have been 10 Michigan mergers of small CUs, a numberconsidered noteworthy during a period of sluggish earnings andheightened member demands for tech-savvy services. “If there isanother spike in interest rates, there could be more,” forecastJames Dahl, chairman of the Michigan Credit Union League andpresident/CEO of the $430 million Communications Family CU ofSaginaw. In the first five months, the biggest consolidation sofar-in terms of numbers-is being undertaken by the $760 millionCredit Union ONE of Ferndale which has already merged three CUswith a vote slated June 13 on a fourth. The three merged CUs for CUONE include: the $16 million Suburban Family CU, Farmington; the$18 million North Oakland Community CU, Waterford; and the $8million Health Services CU of Clinton Township – with the $13million Bloomfield Hills Schools CU pending. “There are some smallcredits unions in our state that are struggling now with earningsand finding it harder to keep up with technology,” observed GaryMoody, vice president and chief counsel of CU ONE, long identifiedas a CU willing to take on merger partners. Small CUs simply findtheir ability to grow “very difficult,” he said. For months, Moodysaid, CU ONE has been approached by small CUs throughout the stateon merger interest and on that score “for the good of the movement”the Ferndale CU will entertain consolidations where there is a fit“and it is good for the members.” “I've been in credit unions 40years and I'd say there are now 15 to 20 large credit unions outthere making solicitations whereas there used to be five,” saidDahl. The Michigan economy, beset by the troubles of GM and otherautomakers, “is not exactly the best and with spreads narrowing”small CUs are finding it difficult to build earnings. Though not inan aggressive mode to merge CUs, Communications Family like othersits size “is always open” should small CUs approach the Saginaw CU.Dahl said a factor in recent merger activity is traced torecodification of Michigan law last year easing communityrequirements. For example, Communications Family, with aseven-county community charter can now solicit members statewideemployed in the telecommunications field in a TIP-like format. The“mixed charter” combining occupations and communities was part ofthe new Michigan law, said Dahl. Dahl said many Michigan CUs aremoving to diversify their membership “as the landscape haschanged.” There is considerably more discussion these days of CUcombinations of both similar size as well as with largerinstitutions as CU executives “continue to read the writing on thewall,” Dahl concluded. In addition to the four CUs being merged byCredit Union One, other mergers this year identified by the Leagueinclude: the $68 million West Michigan CU, Grand Rapids, and the$25 million Northwestern Area CU, Cadillac; $191 million CatholicCU, Saginaw, with the $1.2 million St, Francis Xavier Cabrini CU,Vassar; the $72 million PAC CU with the $483,000 St. Ladislaus,both of Hamtramck, and Spartan Stores CU, Wyoming, with the $2.8K-V Employees of Grand Rapids. Also in the group are the $6 millionCU Federal CU of Detroit merged with the $65 million ABD FCU ofWarren, and the $48 million Eagle Country FCU, Crystal Falls intoCrystal Falls into the $421 million Covantage CU of Antigo, [email protected]

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