Published by CU Business

It’s no secret that merger and acquisition activity is poised to ramp up in the financial services industry as leaders seek ways to manage reduced earnings, offer more convenient service through enhanced digital and physical channels, diversify their geographic base, and improve technological infrastructure.

According to S&P Global, June 2021 saw the highest number of U.S. bank M&A deals since September 2019. Credit union merger activity hasn’t dwindled this year either with the NCUA approving 33 mergers in the first quarter of 2021, compared to 34 consolidations in the first quarter of 2020.

Increasingly, Board of Directors have a vital role to play in setting the strategy for their institutions and proactively planning for long-term, sustainable growth. This starts with evaluating the options available, including potential mergers & acquisitions.

Here are a few of the key questions that should be asked as part of the evaluation process at the governance and executive level. This thought process also happens to align with a board’s fiduciary duty to always act in their key stakeholders’ best interests.

Question #1 – Is this an opportunity that could increase value for my members/customers?

It’s important for any board member to understand how a merger opportunity could provide important benefits like greater convenience, more competitive pricing, and expanded products and services.

Would this collaboration provide:

  • increased access to advanced technological distribution channels in current and future expansion areas?
  • practical economies of scale allowing more competitive offerings and improved pricing opportunities?
  • an enhanced, more complete suite of products & services?
  • in-person service and superior digitalexperiences that are adaptable and scalable to improve and enhance service?

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