Credit Union Mergers: Maximizing Benefits & Best Practices

You have a lot to celebrate when you’ve created a credit union that is successful enough to be sought after by larger financial institutions. All of your hard work and due diligence can pay great dividends in the face of a merger, but it is up to you as a leader of your organization to ensure that your employees, members, and the community at large receive maximum benefits. With proper research, everyone involved can have a positive experience as a result of your observance of credit union merger best practices.

The National Credit Union Administration, or NCUA, recently released an informative video entitled Credit Union Mergers: Maximizing the Benefits and Best Practices. In this instructional piece, the organization aims to define best practices and key factors that credit union decision makers should consider when the possibility of a merger is on the horizon.

Understanding the Benefits

With almost 68% of merger agreements reportedly including negotiated items, it is imperative that you seek experienced acquiree representation. It is important to bear in mind that the strength of the negotiation process is largely dependent upon the health of the acquiree’s financial health. The stronger the acquiree, the more capable this organization is in terms of negotiating branch locations, retaining employees, and determining bonus dividends or interest rebates for members.

Understanding Best Practices

With proper advisory guidance, you can readily weather the muddy merger waters and find yourself safely and happily upon shore when the deal is done.

• • Find Compatible Merger Partners. Experienced advisory and integration specialists can help you determine if your suitor is a good match for you. After you have successfully built your credit union into an organization desired by others, it is important to consider all possible options.
    • Culture & Mission. You do not want to compromise your credit union’s mission, values and culture. As you are evaluating potential suitors, make sure the future of your existing organization will be well-facilitated through common bonds.
    • Products & Services. Ideally, economies of scale will allow the emerging credit union to deliver optimal technology and accessibility to your existing and future members. It is important to assess your suitors’ possibilities before you commit to a merger, as a decline in quality can negate the successes you have built for your organization.

Click Here to Download White Paper “How Mergers Help Small CUs”

• Know Where There’s Room To Negotiate. Before entering into a merger agreement, it’s important to understand where the success of your organization has created leverage for negotiations.

• Prior History. Educating yourself in terms of past merger history with any potential suitor can give you invaluable knowledge to facilitate your own credit union’s decisions.

• Networking & Negotiations. As a leader, it’s important to be well-connected with other industry professionals. Bear in mind, however, that a merger made out of convenience or friendship with neighboring credit union executives often results in agreements that aren’t optimal for all involved.

By employing the services of advisory professionals, your negotiations will remove emotion from the process and ensure that your deal delivers the best possible solutions for your members, employees, and the greater community.

• Financial Health. Being pursued for a merger is indicative of your organization’s strong financial health. Maximizing your monetary situation will allow you to offer more when negotiations commences.

If you found this CEO Advisory article interesting, we invite you to learn more about credit union mergers by visiting our CEO Advisory Group YouTube Channel.