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DETROIT -The downbeat Michigan economy is helping trigger a sharp rise in mergers of small Michigan credit unions with one Detroit area CU taking on four CUs in a consolidation trend showing no signs of letup through the remainder of 2005. By one count, there have been 10 Michigan mergers of small CUs, a number considered noteworthy during a period of sluggish earnings and heightened member demands for tech-savvy services. “If there is another spike in interest rates, there could be more,” forecast James Dahl, chairman of the Michigan Credit Union League and president/CEO of the $430 million Communications Family CU of Saginaw. In the first five months, the biggest consolidation so far-in terms of numbers-is being undertaken by the $760 million Credit Union ONE of Ferndale which has already merged three CUs with a vote slated June 13 on a fourth. The three merged CUs for CU ONE include: the $16 million Suburban Family CU, Farmington; the $18 million North Oakland Community CU, Waterford; and the $8 million Health Services CU of Clinton Township – with the $13 million Bloomfield Hills Schools CU pending. “There are some small credits unions in our state that are struggling now with earnings and finding it harder to keep up with technology,” observed Gary Moody, vice president and chief counsel of CU ONE, long identified as a CU willing to take on merger partners. Small CUs simply find their ability to grow “very difficult,” he said. For months, Moody said, CU ONE has been approached by small CUs throughout the state on 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 40 years and I’d say there are now 15 to 20 large credit unions out there making solicitations whereas there used to be five,” said Dahl. The Michigan economy, beset by the troubles of GM and other automakers, “is not exactly the best and with spreads narrowing” small CUs are finding it difficult to build earnings. Though not in an aggressive mode to merge CUs, Communications Family like others its size “is always open” should small CUs approach the Saginaw CU. Dahl said a factor in recent merger activity is traced to recodification of Michigan law last year easing community requirements. For example, Communications Family, with a seven-county community charter can now solicit members statewide employed in the telecommunications field in a TIP-like format. The “mixed charter” combining occupations and communities was part of the new Michigan law, said Dahl. Dahl said many Michigan CUs are moving to diversify their membership “as the landscape has changed.” There is considerably more discussion these days of CU combinations of both similar size as well as with larger institutions as CU executives “continue to read the writing on the wall,” Dahl concluded. In addition to the four CUs being merged by Credit Union One, other mergers this year identified by the League include: the $68 million West Michigan CU, Grand Rapids, and the $25 million Northwestern Area CU, Cadillac; $191 million Catholic CU, 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 $2.8 K-V Employees of Grand Rapids. Also in the group are the $6 million CU Federal CU of Detroit merged with the $65 million ABD FCU of Warren, and the $48 million Eagle Country FCU, Crystal Falls into Crystal Falls into the $421 million Covantage CU of Antigo, Wis. [email protected]

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