WARREN, Mich. — The Michigan trend toward credit union mergers picked up steam last week with an announcement by two Detroit area credit unions, Research Federal Credit Union and Community Choice, of plans to combine effective in 2007 forming a $425 million credit union.

“Yes, consolidation has been a trend in this state which has a large number of credit unions, but remember mergers are happening among banks too,” said Scott Williams, vice president of strategic marketing for Livonia-based Community Choice with $191 million in assets and three branches. Under a letter of intent, the surviving institution will carry the Community Choice name with Catherine Roberts, president of Research FCU, becoming CEO of the merged CU. Research FCU, chartered in 1936 to serve General Motors employees of its Research Laboratories, has assets of $238 million, serving 24,000 members also with three branches with a fourth planned next year. Robert Bava, president/CEO of Community Choice and who will retain the president’s title, said the merger would produce economies of scale “and is unusual since it brings together two very healthy credit unions with net worth just under 10% but comes at a time the Michigan economy is in a downturn.”

The proposed Research/Community merger follows on the heels of two other large CU combinations since July including formation of the state’s eighth largest located in the western part of the state combining $480 million First Resource Credit Union of St. Joseph with the $215 million United Federal Credit Union of Buchanan.

In addition, two Flint area CUs revealed plans in July to merge with Michigan Federal Federal Credit Union of Flint creating a $160 million CU.

Regarding Research/Community, the two CUs, located 15 miles apart, said they began negotiations last February and found much in common including shared and successful CUSOs developed over the years in such areas as mortgage lending and data processing.

In a formal statement, Roberts, the CEO said the two CUs share a “common vision” noting in a touch of irony that “at a time when Michigan’s economy is slow and many businesses have been forced to downsize, we’re planning to double our size, double our branches, and expand our ATM network.”

Expanding on that theme, Jessica S. Richardson, vice president of marketing at Research, said it is significant that the two “organizations with similar cultures” can still grow through the larger size amidst the dire economic conditions in metropolitan Detroit. “We feel the sting of the economic downturn in unemployment and all you have to do is look at the housing market with five or six for sale signs on every block plus many foreclosures,” said Richardson.

Richardson said the two CUs “are grateful” they have been financially healthy “despite the angst of growth that all credit unions feel.” Sounding a similar note, Robert Bava, the designated president, said both CUs have high capital ratios “with 96-97 satisfaction ratios” and see the merger as a way to introduce an improved product line and greater technology more inexpensively.

Discussions toward a merger began in February, but the two CUs “had already been working very close together since we are on the same boards of our CUSOs,” said Bava

A letter of intent was signed by directors of both CUs Aug. 9 with formal application filed this month with NCUA. Under the deal, Research FCU would be giving up its federal charter under the merged state CU.

The combined CU would have six branches with two more planned in 2007, plus, 1,800 ATMs.

Commenting on Michigan mergers, Williams of Community Choice noted there are more than 390 CUs in the state, ranking it one of the highest in what he called “sheer tonnage” so given the conditions in Michigan it was natural that more CUs in the state would be merging.

But in the case of the Research/Community merger, “We are looking to lower costs and lower fees,” he said.

Community Choice was chartered in 1935 and has more than 35,000 members in Wayne County. It formerly was Livonia Municipal Employees Credit Union merging in 1999 with Redford Community holding on to the community charter.