From the Twin Cities to St. Louis, the pace of credit union merger deals in the Midwest was steady this month.

Reflecting recent U.S. trends, the smaller CUs appeared most vulnerable, with some troubled institutions succumbing to consolidation with healthier partners.

A case in point was quickened regulatory action in Minnesota to spur the state's second largest credit union, the $1.3 billion Affinity Plus FCU of St. Paul, to merge ailing the $37 million Como Northland Community CU, also of St. Paul.

Triggered by large Como Northland loan losses on a soured Northern Minnesota resort deal and mortgage defaults, that deal is expected to be completed by yearend. Affinity Plus will take over Como Northland's lone branch and 8,000 members. Como Northland lost $1.2 million last year, recording 4.5% net worth. The credit union had approached Affinity Plus earlier this summer about a merger after NCUA encouragement.

Like other Midwest CEOs, Kyle Markland, president/CEO of Affinity Plus, said the plight of many small CUs in the Midwest and elsewhere can be traced back to the poor economy, continued slow loan growth, aging boards and NCUA assessments.

The earnings pressure continues to remain strong and I think the current climate begs for capital reform,” Markland said. Otherwise, “we will see many more mergers of all size credit unions.”

Meanwhile, CU merger proposals in both Illinois and Missouri continued to make news.

After five months of discussion, the $260 million Argonne Credit Union of Romeoville, Ill., said it expected to complete a merger of the nearby $70 million Prairie Trail CU of Joliet on Sept 1.

Both CUs are healthy with capital ratios at 9%. Prairie Trail said the merger would make economies of scale possible.

The combined CU will have branches in Romeoville, Joliet, Plainfield, Lockport, Frankfort and Woodridge as well as in Joliet Central and Joliet West high schools. The CU also retains limited-access branches for employees of Argonne National Laboratory and Fermilab.

The combined CU will serve more than 25,000 members, making it one of the largest in the state, according to a statement.

As part of the transaction, Prairie Trail's NCUA insurance is being converted to a private carrier, American Share Insurance of Dublin, Ohio. Brian Cedergren remains president/CEO of Argonne while Matt Thraen, Prairie Trail CEO, will become president of the Joliet Division.

In Missouri, the $180 million Gateway Metro Federal Credit Union of St. Louis said it has completed a merger of the ailing $400,000 Holy Infant CU, also of St. Louis, with more possible mergers of small CUs on the drawing boards. The merger marks the fourth parish CU takeover for Gateway Metro. The credit union's strategy, explained President/CEO David Barton, is to reach the youth market through student-assisted branches in parochial schools.

Gateway sponsors such branches at three Catholic elementary schools and opened another branch at Trinity Catholic High School in St. Louis last spring.

“We are negotiating now with a couple more which have approached us,” Barton said.

In addition to reaching students, the branches are helpful to the CU in reaching the parents who bring their kids into the school.

Barton said the concept has worked well considering the credit unions' aging membership. The age of the average Missourian, 37, is much lower than the age of the average Missourian CU member, 47-48. Gateway Metro's goal is to drop its average member age to 43, Barton said.

Across the U.S. border, the $1 billion DUCA Financial Services Credit Union of Toronto announced Ontario's first CU merger in years. DUCA said it has begun discussions to acquire the $160 million Virtual One Credit Union of Mississauga with an effective completion date of Jan. 1, 2011.

Virtual One will add five branches in southern Ontario and 8,700 members to DUCA's 12 branches and 35,000 members.

“This is a great fit, both geographically and culturally as the two credit unions seek to enhance value for their respective members through additional service locations” said David Bird, CEO of Virtual One. “The merged entity will be well capitalized and will be able to take advantage of economies of scale as it reaches out to extend its value proposition into new communities.”

Jack Vanderkooy, president/CEO of DUCA, said merger conditions for small CUs in Canada remain parallel to the U.S. since in both countries unions are triggered by advances in technology and the changing nature of boards.

But the Canadian economy has been healthier and has not been beset by large loan losses, he said. And the result is “fewer forced mergers” compared to the U.S, he concluded.

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