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BISMARCK, N.D. – The budget is getting even tighter at the North Dakota Credit Union League following a couple of credit union mergers – the outlook for 2006 is a deficit. As a trade group, “we are fragile,” acknowledged Tim Brown, chairman of the League and president of Dakota Plains CU of Edgeley. A year ago the 48-member league was rocked by a deep schism – and defections – over passage of a controversial field of membership law, which opponents claimed represented a capitulation to the banking lobby. That law, which became effective Aug. 1 for the first time set a new 75-mile limit on CUs branching from their main office. Denying it was acquiescing to banks, the league’s leadership argued the law would put to rest constant bickering over FOM applications before the State Credit Union Board and would prevent a costly court battle, reminiscent of Utah. NDCUL has maintained the new law is proving workable. However, with the loss of dues and processing income from a group of six CUs who resigned the league in February-and two more recently due to mergers-the league has tried to operate on a scaled-down budget. One proposal was to cut staff hours by four hours a week though CEOs of league members meeting last month at the annual Managers’ Roundtable rejected that idea opting instead for a review of the dues structure or a special assessment. The two latest CUs to leave due to mergers are the $4.7 Mohall CU and the $7.1 million Heartland Community CU of New England. They merged into the $52 million Dakota West CU of Watford City, a CU that pulled out of the league. The president of the Watford City CU, Denton Zubke, has long been the most vocal critic of league policy on the FOM law arguing that it deeply hurt CUs trying to serve small, rural communities; a number in dire economic straits after banks closed offices. But the North Dakota Bankers Association had complained CUs, particularly the largest, were engaged in illegal “leapfrogging” practices allowing them to branch widely – 300 miles and more – across this sparsely populated state. Over the years, the banks had frequently challenged – and sometimes lost – on CU applications before the state CU Board. But Zubke and others argued that NDCUL needlessly caved in to the banking group and angrily resigned. Subsequently, Zubke and a number of the other CUs resigning the league have since moved their processing business from the League’s Regional Services Corp. to Members Service Group, a subsidiary of the Iowa Credit Union League. “We’re very satisfied with the service,” said Zubke regarding the switch to Members Service Group, which also will take place for the soon-to-be merged CUs at Mohall and New England. NCUA, said Zubke, has given preliminary approval for the two mergers, “and now we have a hearing Dec. 14 before the Credit Union Board.” Despite the departure of Zubke and the others, the league “is united as ever,” said Brown. He declined to spell out other internal steps the organization might be taking or its total budget. However, at this year’s Manager’s Meeting, the 2005 deficit based on the loss of dues was set at $43,100. But in 2006 “a large deficit” is projected, said a league report with a notation that the loss of dues income would climb to $57,000 plus a loss of Regional Service income through Pro-Draft and Visa would reach $57,924. The travails of NDCUL has set off new talk that negotiations with the South Dakota CU League might resume on a consolidation. The two groups nearly combined last January but in a stunning reversal based, in part, on differing interpretations of net worth of their assets, the two leagues called off the merger. The groups had even picked a new board and a new name, the Mid America Credit Union League, with hopes of possibly one day inviting other Midwest leagues to join. The idea of a consolidation “has never been off the table,” said Brown adding “the door is open.” However, there has been no current discussions about a consolidation though it was mentioned in September conversations during CUNA’s Future Forum in San Francisco, with Floyd Rummel III, chairman of the South Dakota CU League and president/CEO of Dakota Territory FCU of Deadwood. Meanwhile, in a move to bolster its lobbying efforts the league has sought assistance from other North Dakota cooperatives including Farmers Union and the North Dakota Association of Rural Electric Cooperatives. Representatives from those groups have spoken at meetings of the Governmental Affairs Committee to discuss political action involvement. There have also been discussions on restructuring the Regional Services Corp., perhaps selling a portion of its stock to affiliated CUs in addition to changing the board composition to include directors who are not members of the NDCUL Board. The management was directed to present a report on RSC structure at the NCDCUL’s annual meeting in February at which time will certainly come a full airing on the status of the budget. -

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