COLUMBUS, Ohio – If everything goes as planned, Central Ohio will have a new second-largest credit union by the third quarter 2006. Kemba Financial CU and Core One CU have been engaged in merger talks since June 2005, and letters of intent to merge have been filed with both boards. Gerald Guy, president/CEO of Kemba Financial stresses the reasons for the merger have nothing to do with whether the credit unions are financially sound. As of Dec. 31, 2005, Kemba had $290 million in assets and 41,500 members. Core One had $132 million in assets and approximately 12,000 members. The largest credit union in the region is Nationwide FCU with $523 million in assets. Telhio CU is currently the second largest with about $394 million in assets. So why merge? For one thing, the 49-year old Guy explains that Core One's President/CEO Jeffery Swartz is 58 and is ready to retire. In addition, several of Core One's board members are older and are getting ready to step down. More importantly, says Guy, "we're just a good fit together, we're like a hand in glove. We're both very member focused and are very purpose driven. For example, compared to other credit unions in Ohio, we're both in the top 5% among credit unions in Ohio in cost of funds. We also both have some of the highest return-to-depositor numbers of credit unions in the state." Kemba Financial's net income in 2005 was $2.7 million and its capital ratio was 12%. Core One's net income was $5,000 and its capital ratio 18%. Swartz said although Core One's numbers were "a little lower than we expected, the credit union deliberately budgeted it that way by keeping its loan rates down and savings rates high." He added, "Kemba brings strong earnings and we bring a strong capital ratio. That's one of the reasons we complement each other so well." Both credit unions also fit well together geographically. Kemba Financial's branches are primarily on the north and east sides of Columbus, while Core One's office is on the west side of the city. Both credit unions also run branches outside Central Ohio. One significant difference between the two credit unions is the demographics of their respective memberships. The average age of Kemba Financial's members is 33, and Guy said they're a younger, faster growing group with a strong emphasis on lending. The CU's loan portfolio is $212 million, and the CU offers a variety of loan products such as consumer, mortgage, auto loans and credit cards. In comparison, Core One's members are an average age of 53 and have a strong savings base. Both credit unions are clients of Aimbridge Indirect Lending (AIL)-Ohio. Although the merger talks between Kemba Financial and Core one have been going on for the past 10 months, Guy says the deal still has a way to go. Because of the size of the credit unions, they need to receive approval from the Federal Trade Commission for anti-trust issues, and the merger still needs to be approved by the state regulator and the NCUA. Meanwhile, the credit unions have been ironing out some of the details of the merger. Guy says the two boards have negotiated solutions to most of the common obstacles they faced such as the size of the board (it will include seven members of Kemba Financial's board and four of Core One's); retention of staff (all employees will remain); and the name of the new credit unions. Guy says the credit unions are working with a marketing firm to come up with the new name, "but it could remain Kemba Financial or Core One, or be totally different." He added, "One thing we have agreed on is the new name will not be a combination of the two names of the credit unions." Guy is not expecting any noise from Ohio bankers if the merger is approved. "Even after the merger, our assets won't be larger than even some of their branches, and our combined field-of-membership will be less than half of one percent of the market share." -

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