Merger-Mania Shakes Out Michigan CUs

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DEARBORN, Mich. – In the latest of a frenzy of credit union consolidation in local markets, DFCU Financial, the state’s biggest credit union, announced plans this morning to acquire troubled MidWest Financial FCU, a one-time $200 million credit union with five branches in Ann Arbor and Ypsilanti.

The deal follows closely DFCU’s acquisition of troubled Capital Community FCU, a one-time $320 million based in Lansing, and comes as two large Florida credit unions, MidFlorida CU and Bay Gulf FCU, also announced plans to combine this morning.

The $2.7 billion DFCU is among the nation’s largest, well-capitalized credit unions that are being sought out by regulators to acquire troubled credit unions and Michigan is among the states, along with California, Nevada and Florida, where a flurry of dealmaking is occurring.

MidWest Financial reported losses of $1.1 million for 2008 and of $1.5 million for 2009, followed by a $19,243 loss for the first quarter of 2010. A decline in assets to $181 million at the end of the third quarter helped retain net worth at 7.7%.

The deal follows recent Michigan mergers of USA FCU and T&C CU to create Genisys CU; of Detroit Edison CU with Huron River Area CU, then with NuUnion CU to create Lake Trust CU; and of DFCU’s own acquisition of Capital Community FCU last year. Earlier this week Michigan regulators said they approved three more consolidations, including that of troubled Citizens CU into $1.7 billion Lake Michigan CU.

The state’s Office of Financial and Insurance Regulation also approved the mergers of: Michigan Teachers CU into Community Schools CU and Otsego Paperworkers CU into Berrien Teachers CU.

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