Credit unions and CUSOs are using their investing powers to be more innovative and entrepreneurial when it comes to technology and new products and services. Many are exploring co-investing with individuals and business founders who are looking for additional capital from credit unions. While these partnerships between credit union investors and individuals generate fresh new ideas, they sometimes face friction as the two cultures collide.

I had the opportunity to speak on this issue with Kirk Drake, CEO of Ongoing Operations and Brian Lauer, Partner at Messick, Lauer & Smith in the panel “Entrepreneurs as Co-Owners of CUSOs – Managing Different Business Styles and Expectationsat the 2017 NACUSO Network Conference in Orlando, Florida.

In a packed breakout session we discussed how credit unions and CUSOs should persuade individuals to work for their organization and how to build a bridge between two different perspectives. One of the most important things credit unions and CUSOs must do is recognize the asymmetry between a highly-regulated credit union environment and a swift, entrepreneurial culture. Recognizing these differences is the first step to understanding how to incentivize entrepreneurs not just from a financial standpoint, but from an emotional and strategic position so that you can grow your organization as a team.

Last week Capstone Managing Director John Dearing had the opportunity to attend the 2016 NACUSO Annual Conference on April 4-7, 2016.

Over 400 people attended the Las Vegas event, exchanging ideas and listening to industry experts. Conference topics included investment services, insurance services, innovation and operations, technology, member business lending, mortgage services, and business development.

Erik Wahl, an internationally recognized speed artist, author and entrepreneur, delivered the opening keynote. Wahl’s message “UNTHINK” inspired CUSO leaders to expand creatively beyond traditional thought patterns and unlock new ideas.

John Dearing attended the Conference because of Capstone’s many years of experience in helping CUSO clients grow through M&A.  “It’s an exciting time to be in the CUSO space,” John reported. “Leaders are thinking of new ways to grow and we’re finding increased interest in pursuing strategic M&A as an avenue for growth.”

Below are some snapshots from the trip:

Keynote speaker Erik Wahl presents at the 2016 NACUSO Annual Conference.

Keynote speaker Erik Wahl presents at the 2016 NACUSO Annual Conference.

Erik Wahl's artwork.

Erik Wahl’s artwork.

CUSO leaders listen to industry experts at the 2016 NACUSO Annual Conference.

CUSO leaders listen to industry experts at the 2016 NACUSO Annual Conference.

All photos taken by John Dearing, Managing Director, Capstone.

Strategic mergers and acquisitions can be a powerful tool for growing your CUSO, but much of your success depends on finding the right partner. How can you identify the right partner for growth?

The best way to begin your search is to identify the ideal markets in which to grow your organization. Once you have researched and selected the top markets for growth, you can begin searching for potential partners in that market that will help your CUSO grow!

Capstone is excited to be partnering with the National Association of Credit Union Service Organizations (NACUSO) for an exciting webinar. NACUSO helps credit unions explore the use of CUSOs and the delivery of non-traditional products and services.

In this webinar, led by John Dearing, Managing Director of Capstone, you will learn how to use a demand-driven approach to search for the right partner systematically and efficiently. John has led a successful acquisition program for nearly twenty years, including over ten years of helping CUSOs grow through external growth and M&A.

Date: February 16, 2016

Time: 12:30 – 1:30 PM ET

Credit unions’ traditional use of consolidation as one way to grow is a trend likely to rise over the next five years, according to industry experts. While the percentage of these deals climbs, there actually are fewer mergers because there are fewer credit unions. There were 4% fewer credit unions in September 2015 than one year earlier, according to CU Data.

Credit Union mergers and consolidation.

Credit union consolidation continues.

Given their decreasing numbers, credit unions pursuing growth will need to consider alternatives ways to grow such as strategic mergers and acquisitions, a common strategy used in the for-profit world. Strategic M&A for credit unions may be motivated by distribution — offering existing products and services to new markets, members or geographies —or breadth — adding new products or services for their existing members. This important tool can generate noninterest income and allow credit unions to create unique value for their members.

At the CUES Directors Conference, Capstone CEO David Braun presented a workshop on Strategic Mergers & Acquisitions for Credit Unions, where he challenged credit union leaders to think creatively to generate new ideas for growth. At this standing-room only session, credit union leaders discussed the increasing importance of strategic mergers and acquisitions for their organizations and for the credit union industry as a whole.

CUES David Braun Strategic Mergers and Acquisitions 2015

David Braun presented a workshop “Grow or Die: Strategic Mergers and Acquisitions for Credit Unions” at the CUES Directors Conference in Orlando Florida on December 8, 2015

Feature photo credit: via Flickr cc

Credit union consolidations are on the rise in 2015, continuing a trend from previous years. There were 14% fewer credit unions in March 2015 than there were in March 2010, according to data from As credit unions consolidate, the number of smaller credit unions is decreasing while the number of large credit unions between $100-$500 million and over $500 million in size is increasing.

Credit union consolidation continues. There were about 14% fewer credit unions in March 2015 than March 2010.

Credit union consolidation continues. There were about 14% fewer credit unions in March 2015 than March 2010.

With all the M&A activity, it’s no surprise M&A remains a key topic of interest for credit unions leaders. Earlier this week John Dearing, Managing Director, presented “Strategic Mergers & Acquisitions: Exploring External Growth” at the Credit Union Services and Products Conference hosted by CU Conferences in Nashville, Tennessee. About 70 executives and board members of credit unions participated in this interactive session.

John’s presentation not only covered current trends in credit union M&A, but also explored how credit unions can use strategic options in addition to consolidation when growing through M&A. These could include adding a new technology or expanding into a new market order to grow.

Below are some pictures from the conference.

John and Don Berra, hosts of CU Conferences.

John and Don Berra, hosts of CU Conferences.

John Dearing, Capstone Managing Director, presented "Strategic Mergers & Acquisitions: Exploring External Growth" at the Credit Union Services and Products Conference in Nashville.

John Dearing, Capstone Managing Director, presented “Strategic Mergers & Acquisitions: Exploring External Growth” at the Credit Union Services and Products Conference in Nashville.

Participants at the Credit Union Services and Products Conference hosted by CU Conferences in Nashville, Tennessee.

Participants at the Credit Union Services and Products Conference hosted by CU Conferences in Nashville, Tennessee.

Enjoying local music.

Enjoying local music.

Nashville at night: The Grand Ole Opry

Nashville at night: The Grand Ole Opry


John Dearing, Capstone Managing Director, was asked to write an op-ed for the Credit Union Times about the ways that credit unions can find additional sources of non-interest income. I’ve included part of John’s article below:

Every industry faces change and the credit union industry is no different. Market developments and new regulations are challenging credit unions to find new sources of non-interest income in order to grow.

While it can be difficult to thrive or even survive in an unstable environment, change also brings opportunity. One option for credit unions is using strategic mergers and acquisitions.

I invite you to continue reading the article the Credit Union Times’s focus report on non-interest income: Using Strategic Mergers and Acquisitions to Adapt.

Many credit union leaders are taking a closer look at strategic M&A as a way to accelerate company growth.

Capstone Managing Director John Dearing spoke to a packed room of credit union CEOs and board members at the “Reaching Your Members in the 21st Century” Conference hosted by CU Conferences in Las Vegas on November 11.

John talked about the strategic rationale for pursuing acquisitions and how they can be a powerful tool for growth. To be successful, credit unions must start with strategy and vision before jumping into deal execution. Throughout the M&A process, using tools for objective decision-making is also critical to moving forward in the right direction.

John drew on his experience of executing acquisitions and growth strategies with credit unions and CUSOs to provide useful suggestions for credit union leaders seeking acquisitions. Several conference attendees said the presentation provided extremely valuable information for credit unions that might be considering mergers and acquisitions.

“Reaching Members in the 21st Century” was hosted by CU Conferences, a leading conference provider for the credit union industry. About 70 conference attendees discussed the latest industry trends, from using technology, to adding value for members, to mergers and acquisitions.

If you a have questions about mergers and acquisitions for credit unions, contact Capstone today!

Read more about M&A for credit unions: 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


Non-interest income is a hot topic in the credit union industry. Check out Capstone’s infographic on non-interest income below. Click on the image for a closer look.

CU Trends Non-Interest Income


How can you generate more non-interest income?

Many credit unions and CUSOs are turning to external growth and mergers and acquisitions to generate more non-interest income. Find out if  external growth is right for your organization.

Capstone brings a unique perspective, having successful facilitated deals for CUSOs and for companies in other industries. To learn more about proactive, strategic growth options for credit unions and CUSOs, please contact Capstone.