Conditions and underlying trends varied widely last week for the mergers of two small credit unions in Illinois and Wyoming.
For one, the Illinois-based Credit Union 1 of Rantoul and one of the leaders among privately insured CUs in handling mergers, is ready to take over its third small, struggling CU in a year.
The $650 million Credit Union 1 is taking over the $14 million Elgin City Employees CU, which since June has been under a state cease and desist order following large recession-related loan losses.
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"We read the financial statements, saw what was happening, and we approached them about a merger and their board agreed," said Paul Simons, president/CEO of Credit Union 1, which in 2009 merged the failing $185 million Cumorah CU of Las Vegas. Since then, the downstate Illinois CU has merged two other small CUs, the $1.5 million ICG CU of Champaign and the $1.3 million IAM CU of Chicago.
And in Wyoming, the ailing $8 million Cody Schools FCU agreed to a merger with the $155 million Valley Federal Credit Union of Billings, Mont., which reached across the Wyoming border to expand, completing its first merger in that state.
C.H. Steele, president/CEO of Valley FCU, said his southern Montana CU has long coveted extending its field of membership to a market area encompassing both states and had months ago approached Cody management regarding consolidation.
The merger provides an entry for Valley to reach various government agency employees working in the Wyoming portion of Yellowstone National Park and in Park County.
Both Simons of Credit Union 1 and Steele of Valley FCU agreed that the problems of small credit unions trying to cope with myriad regulations, compliance and high tech innovations are spurring the merger pace.
"This is simply a tragedy what is happening to small credit unions when you know they represent the grassroots of our system," lamented Simons, whose CU as well as Elgin City are both insured by American Share Insurance.
Cody Schools, said Steele of Valley, "is a credit union that simply could not afford to continue operating with too many hands in their pockets."
Cody Schools lost $103,000 in 2009 and $57,000 through the first nine months of last year.
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