BOSTON-Credit unions exploring the possibility of acquiring a bank are being offered some advice by Sterne, Agee & Leech, which conducted the valuation on Monadnock Community Bank prior to its acquisition by GFA CU."
If you are looking at a bank, particularly if there is a stock component to it, you are best served to hire a financial advisor," said Bob Hutchinson, head of depository institutions investment banking for Sterne Agee. "But more important, the nature of the valuation should be in the context of not only what is the bank intrinsically worth, but how does the acquisition fit in with and enhance your current strategic plan. The credit union should not look at a valuation in isolation. Look at how an acquisition of a bank can expedite, enhance, or further your plan. Look at the deal in the context of what kind of value you create for the credit union as much as you look at the kind of value that bank has achieved on its own."
Hutchinson sees a blurring of lines between depository institution partnerships, noting that it may be more cost effective at times for banks and credit unions to look across charters for expansion opportunities instead of spending money on de novo branching."
We may be witnessing the beginning of a world in which mergers between different financial institution charters become more common," said Hutchinson. "Because if the arrangement enhances a strategic plan, that is meaningful. And with cost structures increasing for both credit unions and banks, I think looking at mergers and acquisitions across charters can be intelligent decisions."
