As total merger activity slowed slightly in 2018, with 192 approved consolidations vs. 200 approved by the NCUA the previous year, there seems to be a transition happening within the industry. Larger credit unions with $1B or more in assets are less likely to be acquiring smaller institutions with $100 – $200M in assets, while similarly sized institutions are more likely to consider merging. Mergers of equals do not comprise the majority of transactions, but the expectation is that we’ll continue to see instances where total assets of the combined institution exceeds $1B.

        Why the change? Even for larger organizations, combining forces can create new economies of scale and allow for better – and more – member services. This is especially true when you have two similarly sized institutions operating within the same geographic area. Larger targets are also merging because there are less attractive, smaller institutions available. Many of the remaining, smaller institutions either don’t have a desire to merge or aren’t very attractive merger candidates.

        What should credit unions consider?

Culture & Leadership – Before considering a merger, it is important to ask whether the two credit unions have similar cultures? How will the two organizations – and their leadership – be integrated? For smaller institutions, an impending CEO retirement may be a key motivation to merge. Whereas, larger institutions with two CEOs need to discuss and decide their leadership strategy very early on to ensure a smooth transition.

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