SIOUX FALLS, S.C. - The long-planned combination of the North and South Dakota Leagues moved a step closer this month with the formation of a new entity, a North Dakota corporation called Mid-America CU League and Affiliates, to begin formal operation next January. At the same time, a newly formed 10-member board, joining the two state Leagues in Mid-America, was pressing ahead with a regional search for a new president/CEO to run the trade group with selection completed possibly as early as next July. "Remember this is a consolidation and not a merger," stressed Floyd Rummel III, chairman of the South Dakota League, which is slated to close its headquarters here by year-end and move its service center and other operations to Bismarck, N.D. "I think the real estate listings for sale of the Sioux Falls building were to go out this week," he said. The juncture of the two Dakota Leagues pursued for "economies of scale" in an environment of difficult conditions for the very smallest CUs in the U.S., is being watched closely by CUNA and state league boards as a possible harbinger of things to come for Leagues with declining numbers of affliliated credit unions. Rummel maintained the combination of the two Leagues with 112 CU members is a "pioneering" step in state League organization across the country and runs counter to the trend elsewhere of one League managing another as in Colorado/Wyoming, California/Nevada, Virginia/District of Columbia and Massachusetts/Rhode Island/New Hampshire. "We think regionalization could be the wave of the future which is why we chose the Mid-America name since we have a vehicle available to invite other states to join," said Rummel, who will become a director of Mid-America and also is president of Dakota Territory Federal CU of Deadwood. Rummel said no other Midwest or High Plains state League has expressed interest so far in joining, but that could occur later on as the merger trend among small CUs continues and industry conditions change. For now, however, the two League boards and staffs in Bismarck and Sioux Falls are concentrating on how best to handle the complicated task of consolidating financial, operational and legislative elements of two separate businesses. That means relocating the 20-member staff between Bismarck and Sioux Falls and closing down the service center corporation here serving South Dakota CUs. The entire process is expected to take all year though it could be speeded up if a new CEO is hired soon or if a buyer is found quickly for the South Dakota headquarters building occupied by the League since 1978, officials said. Under the transition, a new "regional" service center subsidiary serving CUs in both states will be operated under Mid-America in a Bismarck office. A search committee for a new CEO was formally launched at a joint meeting of the two boards Jan. 7 and one leading candidate is Kermit Larson, the president/CEO of the North Dakota League, who has held that job since November 2002. Donald P. Couch, 64, the veteran president of the South Dakota League and who has been a key figure in helping engineer the creation of Mid-America, is slated to retire in July 2005 after decades of service to the organization but he has agreed to stay on as a consultant if a new CEO is picked early, said Rummel. Regarding the consolidation of the two leagues, of particular concern to South Dakota CU executives, said Rummel, is the possible loss of a strong legislative presence in that state. However, the two existing lobbyists for the League will be retained and may maintain small-scale Mid-America offices in both Sioux Falls and in the Rapid City area to cover western South Dakota, officials said. In deciding on Bismarck as the Mid-America headquarters, League officials said they considered prime lobbying needs pointing out that the CU structure in the two states is different with South Dakota retaining only federal CUs while North Dakota has both federal and state-chartered CUs. In sticking to a bi-state framework for now, Rummel said the League boards felt the Mid-America structure allows Dakota CUs "just like our own members do, to have pride in ourselves in that we maintain ownership" in something as important as a trade group. "You know we see large takeovers everywhere and so we hate to see one League control 10 states," declared Rummel noting the Mid-America framework can still strengthen "hometown ownership." He said not all of the state management pacts have worked equally well noting he has talked to some CU executives who are sorry they are managed by a neighbor state. He declined to name them. Meanwhile, as for the CUNA leadership, it views the Mid-America formation as charting new ground in League management but is "troubling," declared Donald L. Larsen, president/CEO, Community CU, Tacoma, Wash. and CUNA's Secretary. Larsen said CU Association of the West, started several years ago and covering California, Oregon, Idaho and Washington, is similar to Mid-America though CUAW keeps its focus on education, reducing conference duplication and expense among Leagues in those states in such areas as compliance, accounting, training and management. Larsen said while there are great benefits "and great opportunities" in economizing as demonstrated by CUAW, "we just hope" this phenomenon of smaller CUs is somehow slowed. "The net result is a weakening of the food chain," declared Larsen explaining that CU political clout in a combined North and South Dakota League is diminished "since we have fewer members and fewer volunteers." "Every time we lose a credit union we lose volunteers who can spread our message," said Larsen maintaining this is an issue that is continually under study by the CUNA leadership, himself included. "This is all very troubling and I hope it can be worked out," he concluded. Rummel said the South Dakota League has picked five members for the Mid-America Board, and the North Dakota League is slated to pick its five at a special meeting in early February. In addition to Rummel, the four others representing the South Dakota League include: Roger Heacock, president, Black Hills FCU, Rapid City; Roger Peters, president, Service First FCU, Sioux Falls; Mechelle Nordberg, president, East River FCU, Madison, and Jerry Peterson, a director of Consumer FCU of Burke, who also is the county auditor in that community. North Dakota League President Larson said whoever takes command will have to make "very difficult decisions." For one thing, he said, "it is tough to deliver services from one location over such a wide geographic area," but the challenge remains an exciting one, said Larson, a former CU manager in Moorehead, Minn. -

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