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When Prospective Partners Come Knocking: Board and Management Responsibilities

For credit union boards and CEOs: how to prepare for a merger proposal and evaluate it on members’ interests, before one arrives.

Glenn Christensen · CEO Advisory Group · May 2019 · 37 pages

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Cover of When Prospective Partners Come Knocking: Board and Management Responsibilities
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Three findings

  1. Most credit union leaders would turn down a merger offer without weighing it.

    In a 2018 CEO Advisory Group survey of 93 credit union executives, directors and consultants, 72% said they were somewhat likely to very likely to dismiss a merger opportunity without due consideration. Only 24.2% said their board had a framework for considering merger proposals.

  2. The reasons leaders give are not the reasons members choose a credit union.

    Leaders most often cited “we are doing well now” (65.7%) and concern for executive roles and pay (67.6%) as reasons to set an offer aside. Meanwhile, branch convenience fell from the top reason to join a credit union for 73% of members in 2003 to 13% in 2018, while 48% now cite technology. Source: CEO Advisory Group survey; Burshek Research & Consulting.

  3. An offer only becomes real when it is in writing.

    Two CEOs discussing a merger over lunch is not an offer; a letter of intent is. Once one arrives, the CEO and chair have a duty to analyze it and bring it to the board, which need not accept it and may approach other partners. Source: interviews with financial institutions attorneys for the paper.

Every credit union board has a duty to weigh a merger proposal in members' interests, yet most have never agreed how they would. A 2018 survey of executives and directors suggests many would set an offer aside without a full review, and that the reasons they give are not the reasons members choose a credit union. This paper looks at why, and at what a prepared board does differently.

What does the full paper add?

  • The full survey results: how executives and directors say they would respond to an offer, and why.
  • What members now value most when they choose a credit union, from 15 years of member research.
  • How to build a framework for weighing offers before one arrives, and why it beats a rigid policy.
  • When an approach becomes a real offer, and who must act on it.
  • The questions a board should ask of any proposal, and the commitments that should not outweigh them.
  • How bank boards handle the same decision under their duties of loyalty and care.
  • A case study of two Wisconsin credit unions that got it right, and how the member vote went.

37 pages, with contributions from attorneys, consultants and the former CEO of the merging credit union. Published in 2019.
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