Credit Unions Growing Through Mergers – Why You Should Too!

Credit unions increasingly are using M&A as a growth strategy. According to NCUA data, 90% of mergers in recent years have been voluntary and have realized greater success than involuntary mergers.

“Properly planned and executed, mergers can continue the core mission of your credit union,” said Dominic Carullo, NCUA Economic Development Specialist on NCUA’s recent webinar, “Merger Best Practices for Credit Unions.”

We wholeheartedly agree with NCUA’s assertion that credit unions need to consider M&A as a growth strategy.  According to Economic Development Specialist Bob Jones, “A recent Filene Research study looked at member value post-merger and found that on average member value improved for credit union members, and it described these improvements as immediate, material and persistent.”

New positions often were created for partnering staff and officials during a merger, making the deal a collaboration and a “win-win.”

In working with credit unions and CUSOs for more than 10 years, we have found this to be true. In the credit union industry, as with any other business industry, carefully planned strategic acquisitions and partnerships can yield great success and exciting new opportunities.

If you’re still feeling skeptical about mergers, here is why you should consider them as a growth strategy.

Merger Benefits for Credit Union

  • Improved financial condition – Credit unions in a financial decline can gain stability through merging with a financially stronger credit union.
  • Expanded or improved services – Credit unions that have merged can leverage economies of scale to provide better and new services.
  • Expanded membership – By merging, credit unions expand combine their fields of membership. The newly merged credit union now reaches members it didn’t have previously.
  • Succession plan – Typically larger credit unions attract more talented staff, ensuring a succession plan.

Merger Benefits for Members

As credit unions reap the benefits of the merger, they are passed along to their members. Benefits include:

  • More or improved services
  • Lower cost of services
  • Better loan and dividend rates

Whether or not you are actively considering using M&A in the near future, it’s important to have an understanding of M&A. As more credit unions begin using proactive acquisitions which change the industry, equipping yourself with the right tools for growth, including M&A, can prepare you to execute your growth strategy at any time.

To view NCUA’s webinar “Merger Best Practices for Credit Unions,” visit their website http://www.ncua.gov/resources/oscui/pages/videos.aspx

 

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