There have been plenty of legal bumps along the way before the $240 million American 1 FCU can complete the mergers of two struggling Detroit- area counterparts, the Jackson, Mich., CU said Friday.

As part of the deal, American 1 is switching to a state charter to accommodate field-of-membership hurdles in connection with next month's takeover of the $10.9 million Michigan Services CU of Southfield, the credit union announced Thursday. 

Earlier in the week American 1 formally effected a merger of the ailing $55 million Premier Financial CU of Detroit.

In a statement issued by David Puckett, American 1 president/CEO, the central Michigan CU said the NCUA last May had turned down its application to merge Michigan Services apparently based on FOM rules governing community-chartered CUs consolidating with occupational CUs “except in an emergency situation.” 

Despite its 2010 losses, Michigan Services CU was not considered an “emergency” case, said American 1.

“Because both credit unions still felt that this would be a good partnership for their membership, the American 1 board of directors researched” the merger issue and decided on converting to a state charter,  American 1 said in the statement.

But eight years ago when Michigan codified its CU law, the American 1 board decided that “the  state of Michigan provides a friendly business environment for credit unions” allowing American 1 more opportunities for partnerships with healthy credit unions in the future. In the state of Michigan, approximately 2/3 of credit unions are state chartered.”

American 1 with 11 branches is now “excited to be growing into new communities throughout Michigan” and would explore other merger opportunities with other like-minded CUs in the state, the credit union's Friday statement said.