DUBLIN, Ohio – Does the merger of the North and South Dakota credit union leagues and the pending consolidation of the Washington CU League with the Credit Union Association of Oregon, spell the makings for a trend in regionalization among credit union leagues? League presidents Credit Union Times spoke with disagree whether these events suggest a move towards regionalization, but they concur on two things: first, that the numbers of credit unions across the country are continuing to drop; and second, that factor coupled with the growing complexity of the credit unions that continue to operate is driving leagues and credit unions to look for a solution that will allow them to provide additional services in an efficient and the most cost-effective manner. "I don't know if four leagues talking merger is the front end of a consolidation trend," says Paul Mercer, president/CEO, Ohio Credit Union League and chairman of the American Association of Credit Union Leagues (AACUL). "But certainly if you look long term, the consolidation of credit unions will probably mean more leagues will be forced to look at different forms of collaboration, and that could lead to a merger, co-management agreement or some sort of joint venture activity." Mercer pointed to the joint ventures the Ohio League has pursued with other leagues and national credit union organizations, and he stressed that, "So far it has nothing to do with a merger." For example, the Ohio League is working with four other leagues to build a league online compliant system called League Info Site. It also recently formed a joint venture owned by OCUL Services Corp. and seven other credit unions to provide business lending. It's also joined with 12 to 15 other leagues, as well as CUNA Mutual Group, to form HR Value Group, a national human resources executive consulting and search firm. "We recognize that the resources we have at the Ohio Credit Union System by themselves are not adequate to meet the needs of all the credit unions in Ohio. So by partnering and entering in to joint ventures with other leagues and with credit unions, we're able to add value and provide services to do good for Ohio credit unions," said Mercer. "At the end of the day it comes down to resources for credit unions and the value proposition," he added. "I think as the number of credit unions continues to shrink, we'll see all of the leagues working on whatever they and their credit union members consider to be the best manner of collaboration for them, be it mergers or new management contracts. More often leagues are choosing collaboration with other state leagues, credit unions, and national trade associations to strengthen the value proposition while keeping the structure of the league intact." For Dan Egan, president/CEO of the Massachusetts Credit Union League, that decision comes down to what the boards of the respective organizations determine are in their leagues' best interests. The Massachusetts League has managed the New Hampshire Credit Union League since 1985, and the Rhode Island League since 1992. Egan said MCUL has never had any discussions "or serious talks" with the Maine or Connecticut Leagues about a co-management arrangement with them. "Our co-management model with New Hampshire is very unique, it functions well for our needs. It's based on the theory that each state should control the issues within that state such as the dues structure, how credit unions are represented in their state's legislative process, and their unique operations such as ATMs," he explains. In the case of the Massachusetts, New Hampshire and Rhode Island Leagues, each league has its own board of directors that's elected by the respective League's membership at-large. Egan reports to each of the three League's boards. The three Leagues have combined subsidiary corporations – a service corporation and an insurance agency that are owned by all three Leagues. The co-management arrangement provides for all professional staff resources to be provided to all three Leagues, so one staff serves all three Leagues in the areas of legal, regulatory, compliance, public relations, marketing, education, and management. "It's my belief that for a co-management arrangement to operate effectively, you have to have a locally elected board to deal with each state's situation. So in our case, a merger of the three leagues isn't really a solution. In other states they may decide they don't need their own league anymore, but that's an individual state's decision," says Egan. He adds that, `The model we established with New Hampshire is the model used around the country by other Leagues that have co-management arrangements," referring to California/Nevada, Colorado/Wyoming, and Virginia/District of Columbia. That model, in fact, has worked so well for the California and Nevada leagues since they reached a co-management agreement in January 1996 that Matt Davidson, executive vice president/COO for the California League said the two leagues have never regretted their decision to go that route instead of merging. But he added that the "M" word did come up in some initial discussions the leagues had when they first put their heads together to come up with the best solution on ways the California Credit Union League staff could provide services to Nevada credit unions. "You have to remember that in the mid-1990s, the financial viability of the Nevada League wasn't that great. So we decided it was better for all the credit unions involved to leave the two separate boards intact," Davidson explained. In addition, he continued, "We decided leaving the two leagues as separate organizations was better for the political advocacy aspect. Nevada has its own state legislature and federal representatives in Congress, so it's better for Nevadans to be in the forefront of that instead of having someone from the California League come over." Even though the financial condition of the Nevada Credit Union League has improved and stabilized, Davidson said CCUL wouldn't entertain the possibility of the two leagues merging. "Leagues that do merge have their own set of circumstances. The co-management arrangement is working fine for us and for the Nevada League," he said. Deciding whether a merger or co-management arrangement would be better for the Washington Credit Union League and Credit Union Association of Oregon is the job facing the 10-member task force comprised of five representatives each from credit unions in both states as well as WCUL and CUAO. WCUL President/CEO John Annaloro said the task force members had met the week of March 7 to review input they received from credit unions in both states about "the concerns they want overcome, questions answered and opportunities that shouldn't be overlooked." The next step is for the task force to put together a hypothetical set of answers that address credit unions' questions and concerns around which the task force can do some organizational and financial modeling. "Credit unions' concerns and questions illustrate how much people care about their trade association and how important this process is to them," said Annaloro. Reiterating that a merger between the two organizations is not a done deal, he added that a co-management arrangement between the Washington League and CUAO has been part of the discussions and "is one of the possibilities we're looking at," said Annaloro. He explained that the final product "could be a complete consolidation or any one of a number of variations on the theme of sharing to avoid a duplication in resource expenditures. Avoiding cost duplication is a big part of this." In addition, the Washington League president emphasized that "all associations need increasing sophistication and experience in staffing because the demands of our growing industry are more complex. The caliber of league staff has to continually advance to keep up with the pace of credit union change." Annaloro agreed with the other league presidents on the uniqueness of the decision to each league on whether a merger, co-management arrangement or joint venture is in credit unions' best interest. "The politics of this are an issue that need to be addressed with the same care as financial and programmatic advantages. We've seen a number of credit union corporate mergers that were discussed but didn't happen because the concerns of members couldn't be adequately addressed. The members of leagues want to be assured the future will be as promising or more promising for them to be willing to shoulder the risk of change." -

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