MADISON, Wis. — Sixty percent of credit unions have indicated in a new study that they expect to be in merger talks over the next two years.
The study, released by the Credit Union Executives Society and Boston-based Aite Group, projects that most of the merger activity will be among credit unions smaller than $250 million in assets. It should be noted that the study probed only for expectation of being in discussion of a merger, and does not indicate such mergers will occur.
Kevin Davies, VP of research for CUES, told Credit Union Journal the open discussion of merger possibilities is a development worth watching. "What we are seeing more and more is credit unions coming around to the fact they should consider merging and should incorporate such talks into their plans," he said. "The consolidation keeps going and there will be a lot of credit unions that will have trouble managing in this environment without economies of scale. The increased regulatory requirements also play into that, I'm sure."
Survey participants were CUES members, 73% of which were credit unions with $249 million or less in assets. The trade group said the report gauges the effects of the current economic situation on credit unions and their members.
Findings Will Drive 2010 Programming
CUES said it will use the report's findings to assist with event programming in 2010, and Davies acknowledged a follow-up study is necessary to discover the reasons why CUs are looking for mergers. "Anecdotally, the environment is conducive to partnering with other credit unions," he assessed. "Driving growth is much faster through a merger than growing organically. Credit unions are looking at partnerships more openly now. Merger or acquisition used to be a sensitive topic and was thought of in a negative manner, but now people look at it as a positive possibility."
The study, titled "Credit Unions: Gearing-up for Success," also examines charter conversions, member growth, technology, leveraging new opportunities, outsourcing and more, and offers recommendations for modernizing business models and opportunities for credit union growth.
Among the other findings: 70% of survey respondents reported they have attracted new members away from large banks as a result of the current economic climate.
