Iowa’s credit unions and their members can expect to benefit from a new financial partnership announced earlier this month by Iowa Corporate Central Credit Union, say officials.

Iowa Corporate, which as a wholesale provider of liquidity services such as draft settlements and investment products serves as a “credit union for credit unions,” announced on June an alliance with Mid-States Corporate Federal Credit Union, a $5.6 billion institution and the nation’s third-largest corporate credit union.

The move combines the strengths of the two organizations, yet allows both to continue to operate separately to serve their existing members, said Tom Kuehl, president and CEO of Iowa Corporate, which is based in West Des Moines.

“Rather than merge, we said, ‘Why not try to take the best of both worlds?’” Kuehl said. “Over the years, we’ve held focus groups with our members, and our strongest suit is our service relationships with our members. So we said, ‘Can we outsource the highest-volume activities out?’”

Under the new structure, Warrenville, Ill.-based Mid-States, which serves 1,100 member credit unions in 21 states, will provide its institutional loan, investment, balance sheet and brokerage services to Iowa credit unions through Iowa Corporate’s staff. The organizations will continue to operate with their separate identities, office locations, staffs, boards and management.

Currently, 29 corporate credit unions serve credit unions throughout the country, and consolidation in that industry is expected to continue as regulatory and market demands on them increase. The alliance between Mid-States and Iowa Corporate may serve as a model approach that provides an option short of merging, Kuehl said.

Iowa Corporate provides its services to 161 of the state’s 165 credit unions through The Members Group, a transaction services subsidiary it co-owns with the Iowa Credit Union League. Iowa Corporate’s owner-member credit unions are represented through a nine-member board. Kuehl said he anticipates each existing member will opt in to the new partnership by the end of the year.

Credit unions are continually seeking ways to cut their costs and pass the savings along to their members, said Roger Reiser, president and CEO of Johnston-based Community Choice Credit Union, which serves about 25,000 members in a 20-county area.

“This is a good partnership,” he said. “It gives us an opportunity to get into better rates through a larger corporate for investments, borrowings and funding. If we can save and make more money, it comes back to our members.”