Feb. 14, 2017


  • Chip, I couldn't agree with you more. I've always said that "the only reasons credit unions actually merge are a) death/retirement of the CEO or b) regulatory force due to true financial duress. In the first instance (death/retirement of the CEO), the Boards are often just plain tired and are looking to hand off the responsibility of the organization. CEO recruitment is the most important job of the BOD and I believe it appears a daunting task for many. It is also a sign that CEOs aren't successfully preparing their direct reports to take on the challenge. The second instance (financial duress), I have always found interesting, because it typically results in exactly the opposite of what your initial commentary focuses on. In these instances, the surviving credit union's Members typically sacrifice (unknowingly) their accumulated wealth in order to merge with the weaker institution. Regulators don't offer a bargain price for the rescue either. Much like you noted, CEOs often times are willing to make these deals in order to 'grow' their business/Assets which, in the end, results in higher compensation, status, etc. I've been a firm believer that most credit unions have a sustainable future. It is simply a matter of finding the right Executives/Boards to run them. There will always be small businesses and large businesses in every industry. IF a credit union's Members are being served well, then size shouldn't really matter. Safety, soundness, and sustainability are the minimum requirements. True, 'scale', 'efficiencies', 'critical mass' are all important but, over the years it's become harder to distinguish whether these benefits even materialize as a result of the mergers. The beauty of the credit union industry is that our focus should be different. There are no external parties to cater to, just the Members.
    Moritz Wohanka
  • Having been on the regulatory side of the business for 27 years before retiring, we did not experience any mergers of this type while I was with the agency. However, in the ensuing years I have observed some of these nationally, but not many in my state. Mergers for distressed credit unions make sense, but just for the sake of being bigger is more a function of CEO ego! Credit unions between $50MM and $250MM seem to be the most vulnerable to these types of takeovers, and enticements to staff and boards only hasten then to decide to merge.
    Pappy Rat
  • I cannot thank you enough for writing this article. I have watched several credit union mergers in the Pacific NW (where I was CU born and raised) that were totally unnecessary. Viable charters, financially sound and community focused. One, many years ago, involved a husband and wife as merging CEOs. I do believe the "Everybody's doing it" is giving management and boards permission to check it out. But at the end of the day this money that is changing hands is our MEMBER'S money. When I hear the merging stats I never hear (until now) that this is a bad thing for everyone. For trade associations, partners, employees, members. I'm fortunate at this stage in my career to be working with NACUSO. I truly believe that the CUSO structure is one of the most powerful collaborative tools we have to help each other survive and to stave off the merger mania.
    Denise Wymore
  • Interesting take on voluntary mergers that, although a bit cynical makes a few good points: 1) Bigger is not always better, Credit Union leaders need to find ways to remain relevant to their membership regardless of their size or find leadership who can do so and 2) With today's field of membership options there is often a way for anyone to join the membership of a proposed merger partner without actually "merging" the credit unions. These are good reasons for smaller credit union's to think twice before completing a proposed merger. Notwithstanding the benefits of remaining independent, many voluntary mergers end up positive for the membership; and we have noted a intentional lack of self-inurement in the cases we have been involved with.
    Roger A. Jones, CPA
  • This article would be quite true if Credit Union Boards took their jobs seriously and stopped trying to run their CU like they did 25 years ago! Unfortunately this is not happening and many Credit Union Boards are eroding their capital ratios down while making risky loans and investments to try and make a bottom line. If your Cu is not growing... you're dying!
    Ben There