Should your credit union acquire a bank? If you are looking for new ways to grow, acquiring a bank may be an option for your credit union.

Capstone is excited to host a webinar attorney Michael Bell, who pioneered this new approach and continues to help credit unions acquire banks. The webinar will cover the strategy and mechanics behind a credit union-bank merger as well as challenges and proactive growth opportunities for credit unions.

Seizing Your Opportunity for Growth: Exploring the  Credit Union–Bank Merger Trend with Expert Michael Bell

Date: March 9, 2017

Time: 1:00 PM / 12:00 PM EST

Michael Bell is an attorney at Howard & Howard and a leading advisor to credit unions and national financial institutions seeking non-organic growth, strategic advice. In 2011, Michael completed the first ever purchase of a bank by a credit union. Michael continues advising credit unions in this area and has completed every credit union purchase of a bank to date. He is a “go-to” legal advisor in this area.

Founded in 1995, Capstone is a leading advisory firm focused on helping companies grow through proactive, strategic growth programs and mergers and acquisitions. As the leaders in strategic mergers and acquisitions for CUSOs, we have helped numerous credit union and CUSO leaders develop, evaluate, and implement initiatives for growth. Learn more at www.CapstoneStrategic.com.

Photo Credit: Ted Eytan via Flickr cc

The credit union industry is evolving. While many credit unions are consolidating through credit union mergers, others are seizing creative opportunities such as adopting cloud technology to improve efficiencies, focusing on underserved markets, and using partnerships and strategic mergers and acquisitions to grow and bring value to members.

One interesting trend to note is credit unions acquiring banks. Since 2011, 11 transactions have been announced. Most recently Family Security Credit Union of Decatur, Alabama announced its plan to acquire Bank of Pine Hill of Pine Hill, Alabama. Earlier this year Royal Credit Union announced the acquisition of Capital Bank in St. Paul, Minnesota, and Advia Credit Union announced the acquisition of Mid America Bank in Parchment, Michigan.

Since 2011, 11 credit union - bank acquisitions have been announced.

Since 2011, 11 credit union – bank acquisitions have been announced.

Credit unions are taking action for a number of reasons including to increase their market footprint, scale with vendors and partners, grow non-interest income, and enhance technology. For many credit unions, strategic mergers and acquisitions can be a way to rapidly achieve growth.

Acquiring community banks is a new type of opportunity for credit unions that adds to their share and geographic reach. For the banks, credit unions are a trusted local partner that can continue to serve the financial needs of their customers. More credit union – bank transactions are expected to be announced before the end of 2016.

While acquiring a bank may or may not be the right strategy for your organization, being proactive and developing new strategies for growth is incredibly important in today’s environment. Credit unions are faced with new challenges every day from the rising cost of compliance to the increasing threat of hackers and cyber security issues to generating member-friendly non-interest income. It is abundantly clear that remaining stagnant and going about business as usual is no longer an option. Credit unions that address these challenges head-on and adapt new strategies will continue to grow and serve the needs of their current members and new members.

The future looks cloudy. IBM, Salesforce and SAP all announced big deals in cloud this week.

IBM announced it would buy Softlayer, a cloud computing company, in a deal estimated to be worth $2 billion. IBM plans to use Softlayer to bolster its cloud services in a growing market.

Salesforce announced it intends to buy ExactTarget, a mass-customization marketing company, for $2.5 billion. Salesforce is a cloud software company providing CRM management. This deal would build on Salesforce’s existing social marketing offerings.

SAP announced it would buy Swiss software developer Hybris for an estimated $1.5 billion, in a move to compete with Salesforce and Oracle.

The IBM, Salesforce and SAP purchases all indicate a trend towards the cloud. There is more and more of a push for new technologies and companies are paying a high price. Salesforce’s shares dipped with the announcement of the ExactTarget purchase, which may indicate a concern it is overpaying.

Traditional valuation is difficult in these cases; there is cloudiness to the crystal ball. What will future technology look like? Will cloud computing – specifically this acquisition – pay off? Which technologies will users adapt? As a buyer you need to balance a company’s current value with its anticipated future worth, which of course is an unknown. This gamble is the price of getting into the market.

Often companies feel competing in a new market space is a game of musical chairs. What do you do when the music stops and you’re left standing without a chair?

Stay Ahead of the Game

If you’re not IBM, Salesforce or SAP, I recommend you ask yourself two questions:

1. If cloud computing is what IBM, Salesforce, SAP and countless others are doing, what is being missed? What alternatives are out there for me that others have not noticed yet?

2. If I can’t get a foothold in cloud technology, what is my plan B? What is my strategy?

Leapfrog over what’s happening right now and think about what the next generation will look like. This type of strategic thinking is especially necessary for fast-paced technology companies. In today’s environment if you don’t move quickly you may not survive. You don’t need to copy your competition or buy a cloud computing division because big name corporations are doing it, but you do need to remain relevant. It’s an opportunity to think strategically, move quickly, and grow your company.