May 23, 2014

NCUA puts out CU merger guide

NCUA's merger guide is online.

May 27, 2014 – NCUA's Office of Small Credit Union Initiatives put out a guide for credit union mergers, citing lessons from a review of more than 430 mergers in an 18-month period.

"Truth in Mergers: A Guide for Merging Credit Unions" offers a framework for credit union leaders who are considering whether a merger is right for them.

"Every strategic plan should include contingencies, including when a merger is worth considering," said OSCUI Director William Myers. "The critical first step is recognizing the early signs that a credit union's long-term viability may be at risk. A credit union still in sound financial condition has more options when it comes to merger partners and is in a better position to negotiate a contract than a credit union in a deteriorated financial condition."

The guide includes a section on recent merger trends, and notes that between 2003 and 2012, there were 2,462 mergers, which contributed to a decline in credit union numbers from 9,369 to 6,812 – a 27 percent decrease. The report estimates a credit union merger occurred approximately every 1.5 days during that period.

"NAFCU welcomes this as a helpful resource for credit unions who are going through a merger, or considering going through a merger," said NAFCU Director of Regulatory Affairs Michael Coleman. "However, the trends noted in this report illustrate that credit union industry is consolidating. NAFCU will continue to urge NCUA, and other regulators to ease the regulatory burden on the industry so more credit unions can keep their doors open."

NAFCU Services offered a free webcast on making decisions about mergers and acquisitions in the fall 2013, hosted by NAFCU Services Preferred Partner HCSGroup, which is still available on the association's website.