BLOOMINGTON, Ill. - Rarely does the industry see a merger of themulti-billion dollar asset magnitude among two credit unions - letalone a dozen of them - but if the credit unions that serve StateFarm Insurance get the green light, that fusion may become areality sometime this year. On March 1, NCUA said it received themerger application from the credit unions. Combined, the creditunions, which are located in 20 states, have $2.94 billion inassets and 136,000 members, said Tom DeWitt, president/CEO, StateFarm-Great Lakes FCU here. If approved, the new credit union, whichwould be called State Farm Federal Credit Union, would quickly moveup the ranking among the nation's top 15 largest credit unions. Thecredit unions involved are: State Farm California FCU, Bakersfield,Calif.; State Farm Central FCU, Columbia, Mo.; State Farm FloridaFCU, Winter Haven, Fla.; State Farm Great Lakes FCU, Bloomington,Ill.; State Farm Great Western, Tempe, Ariz.; State Farm HeartlandFCU, Lincoln, Neb.; State Farm Mid-America FCU, Newark, Ohio; StateFarm Mid-Atlantic, Frederick, Md.; State Farm Northeast, BallstonSpa, NY; State Farm Pacific Northwest FCU, Dupont, Wash.; StateFarm Southern FCU, Duluth, Ga.; and State Farm Texas FCU, Austin,Texas. DeWitt would be the CEO of the new CU and the other 11 CEOswould remain on as managers. Boards from all 12 CUs have alreadyapproved the merger, DeWitt said. One board member would beselected from 11 of the CUs and four board members from StateFarm-Great Lakes FCU would remain on the new 15-member board. EachCU is single sponsor-based with none of them having any selectemployee groups. "The reason for the merger is to allow forenhanced operating efficiency and improve our ability to servicemembers," DeWitt said. "Members will be able to access branchesnationwide." DeWitt said the merger will also eliminate individualcredit unions having to do any restructuring to keep pace withregion or zone realignments done by State Farm Insurance. Theinsurance giant has 12 zones in the United States and one inCanada. Several years ago, there were 26 State Farm FCUs but as aresult of the insurance company zone restructuring, there are now12 CUs and one in Canada, which will remain independent of themerger, said DeWitt, who has been with State Farm-Great Lakes FCUfor 15 years including the past 10 years as CEO. DeWitt said NCUAis currently reviewing the application and officials at regionaloffices have indicated that they might have a decision in 30 days.NCUA said it is currently doing a cursory review of the applicationbut it's too early to say when the regulator will make a finaldecision, said Cherie Umbel, spokeswoman. The application wasprobably not an unexpected jolt for NCUA since credit unionexecutives did meet with officials at NCUA's Region IV office inAustin, Texas last year for preliminary talks about the merger,Umbel said. It's still too early to tell when NCUA will have adecision because the regulator will have to look at the businessplan and the respective credit union operations. "There are many ofthem across the country," Umbel said. For its part, State FarmInsurance, considered to be among the largest insurer of cars andhomes in the United States, is supportive of the move, said FraserEngerman, spokesperson for State Farm. Founded in 1922, the $50.2billion insurance giant has more than 70,000 employees and 16,000agents throughout the U.S. and parts of Canada. Employees of thecredit unions are employees of State Farm Insurance. "We believethe merger is the right thing to do," Engerman said. "The companydefinitely supports it." The first credit union to serve State FarmInsurance formed in 1946. Since then, it really has not deviatedfrom a fairly plain vanilla product and service offering. Besidesshares and consumer loans, there's nothing else beyond that, DeWittsaid. Automated teller machine cards are currently not issued. Onehighly sought product offered through the credit unions is theinsurance company's benefits program. For now, one of the goals isto ensure that services and products are consistent at each branch,DeWitt said. Certificates of deposits and individual retirementaccounts may need to be added at some branches. Still, "it is notour intent to add more products," DeWitt said. "But (this proposedmerger) does position us to consider adding down the road." To saythe least, it seems an onerous, complex and multi-layered task tobring 12 credit unions together into one entity. All of them useseparate core systems through Harland Financial Solutions, Inc., sogetting everyone on the same page might not be as complicatedversus what it would take if there were multiple processors.Research, development and marketing systems would be shared by allof the credit unions, as will the 26 branches nationwide. The ideaof merging the credit unions has been bandied about for at leastthree years, DeWitt said. State Farm Insurance operates 25operation centers in 13 zones and over the years, the company hasrestructured its regional locations. To keep service alignment,some of the credit unions would have to merge. Among the latest waswhen State Farm Great Lakes FCU merged its Indiana and Michiganoperations into its Bloomington operations. That merger resulted inan increase of 35,000 members and assets growing to $678 million in2004, from $505 million in 2003. "Any future realignment by thecompany won't be impacted by us," DeWitt said. If NCUA approves themerger, the credit unions will move forward with holding a specialmeeting to allow members to vote. "We're not anticipating anyproblems with member votes," DeWitt said. "The key here is nothingis really changing for the members (except an improvement inoperations' efficiencies and national branch access)." DeWitt saidthe consolidation will be a good thing for the long haul. "We are asingle sponsor credit union, (State Farm Insurance) has endorsedthis and we're looking forward to having one policy to enhancemember service," he said. [email protected]