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Mid-Michigan Credit Unions Expanding Even Amid Wall Street Meltdown

Thursday September 25, 2008

Amid Wall Street's turmoil and the mortgage meltdown, there's a bright spot in mid-Michigan's financial industry.

Credit unions are seeing significant asset growth and are pursuing expansion plans by adding new branches as well.

"Credit unions are really doing very well in this tough economy," said Dave Adams, president and chief executive officer of the Michigan Credit Union League.

"During the first two quarters, their assets grew 7 percent on an annualized basis," Adams said.

Adams said he feels credit unions are perceived as safe havens during troubled economic times, and that's boosting deposits and membership.

"They're seen as a trusted not-for-profit provider in a firestorm of bad behavior on Wall Street," he said.

As nonprofits, credit unions benefit as tax-exempt organizations and that also helps their bottom lines.

Credit Union League figures show there are 31 credit unions in ?mid-Michigan, with about 374,000 members. Together, they have about $3 billion in deposits and $2.1 billion in outstanding loans, the league estimates.

The Midland-based Dow Chemical Employees' Credit Union is the largest of those institutions, with assets of more than $1 billion.

Adams said home mortgage foreclosures have hurt some credit unions, but he is not aware of any credit union in Michigan that is having lending problems that could force them to shut down.

"They are certainly seeing a spike in foreclosure activities, but they didn't get involved in the sub-prime market. They didn't try to swing for the fences," he said.

In fact, many credit unions have recently undertaken branch expansions or are in the process of expansion right now.

Saginaw-based Catholic Federal Credit Union, for example, broke ground this month on a new office in Essexville - it's third location in the Bay City area.

"It gives us great exposure and opportunity, and makes us more available to our customers," said Bridget Looby, vice president of business development for Catholic Federal.

Looby said Catholic Federal has 23,800 members.

United Bay Community Credit Union in Bay City, with 23,000 members, is constructing a new branch office in Pinconning. The 4,000-square-foot facility is expected to open in February 2009.

Gary Klein, United Bay's president and chief executive officer, said the expansion is designed to serve its northern membership and position the credit union for growth when the economy rebounds.

"Every new branch allows the credit union to increase its market share," Klein said.

"Hopefully, by the time we open this branch, we'll see the economy starting to turn around a little bit," he said.

Even with recent expansions, Adams said credit unions represent only about 2 percent of the 60 trillion dollar financial services industry. That could be changing.

"With the disgust right now on Wall Street, people are really starting to rediscover credit unions. We're adding customers at a rate of 100,000 a year in Michigan," he said.

by Eric English | The Saginaw News