Credit Union Merger Team

As an Acquiring Credit Union Who Should Be On Your Merger Team?

The process of merging credit unions must be carefully managed to ensure the combined credit union is financially stronger and that it benefits all members. It’s essential the credit unions are a good fit, that there is agreement of their valuation, acceptable assessment of risks, and that the proposed merger conforms to National Credit Union Administration (NCUA) regulations.

The accountability for this rests on the shoulders of the merger team, which should include the CEO, senior executives, professional advisors and experienced facilitators.

The Merger Team

The merger team should be as small as possible, but large enough to ensure that all aspects of the proposed merger are adequately handled. Although a merger steering committee is usually appointed, it is essential to have executive representation on the team. Additionally, the team should incorporate professional experts from the fields of accounting, law and valuation who have experience in credit union mergers.


During early stages of negotiation and until a deal is signed, confidentiality is crucial. Leaks could disrupt or impede the merger and members may obtain factually incorrect information that may adversely influence their ultimate vote. Information about a proposed merger should only be made public once an agreement in principle to merge has been concluded.

Key Merger Team Members

An effective merger team should incorporate key decision makers along with a team of professionals who are familiar with NCUA merger requirements and are experts in structuring credit union mergers:

  • CEO: As the ultimate decision maker, it is imperative the CEO is a member and that he or she fully participates in the team’s work. Although this may have a significant impact on the CEO’s time, this person’s contribution is invaluable in terms of setting direction and ownership. The CEO is regarded as being responsible for the merger team’s recommendations.
  • Board Chair:  The Board Chair will represent the acquiring credit union early in the discussions with the acquiree.  They will provide support to the CEO early in the discussions.  They will represent the board perspective and articulate the governance model and culture of the board to the Chair of the acquiree.  In partnership with the CEO they present recommendations to the board of directors.
  • Selected Executive Vice Presidents (EVP): In addition to the CEO, key EVPs should participate to ensure that due consideration is given to how the merged credit union would function and what organizational changes may be needed.
  • Board Members: The board provides direction on strategy, including the priority that should be given to mergers in the credit union’s overall strategic plan.  They set policy for mergers, which may include parameters for deal points.  Directors approve letters of intent, due diligence findings, supplemental merger agreements, and NCUA/DFI merger agreement.
  • Managers: As the merger progresses into the due diligence and integration phases, managers play a vital role ensuring that all the detail tasks are completed.
  • Merger Advisor: Credit union mergers are complex, and the unforeseen risks can easily derail the process. Experienced credit union merger advisors can play a significant role in guiding the process. They also bring expert knowledge to the merger process and are well placed to facilitate discussions between affected parties. Additionally, they are able to manage the merger process from the identification of potential partners through to preliminary agreement and finalization of the deal.
  • Attorney: Credit union mergers must conform to NCUA regulations, and a specialist attorney should always be on the team to ensure compliance and to file appropriate documentation with the NCUA. The attorney records agreements and prepares the legal documentation to finalize the merger.
  • CPA: The financial rules covering mergers require that the so-called purchase method of accounting is applied. The CPA’s role is to ensure compliance with these rules and also to review and verify financial results. Many credit unions choose to outside the preliminary due diligence to an accounting firm.  This provides a higher level of confidentiality in the early phases of a merger that has not been announced to the staff of the acquiree.
  • Valuation Consultant: While the CPA ensures compliance with financial accounting rules, the valuation consultant assists by establishing a fair value of the acquired credit union including assets and liabilities.

According to the NCUA, over two hundred credit union mergers take place annually. Because a predominant reason for mergers is the weak financial position of acquired credit unions, the merger team must carefully manage the process to ensure the merger is mutually beneficial.

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