The number of Credit Unions across this country continue in decline. Once peaked at 23,866 in 1969. Over the past 5 years we’ve lost over 1,000 Credit Unions.
Will our Credit Union Survive? If so, what is our strategic plan to grow or merge?
Asking questions can help clarify your goals, both in general terms and when you begin to examine potential partners. CUNA has provided a guide through these questions to help in the process.
- Number of members:What is your current membership potential? What is your membership target? Ideally, how many members should a merger partner bring to the table?
- Assets: What is your current asset potential? What is your asset target?
- Size of merger partners: Will you accept partners of any size, or do you want to target credit unions within a particular size range, based on membership or assets?
- Market penetration: What are your goals for market penetration, which may be based on criteria such as SEG or community penetration, or products per household? How will a specific merger partner enhance or detract from your ability to meet these goals? An example might be adding a branch in a neighborhood that contains some existing members but has a low penetration or a low level of products per household.
- Average age of members: What is the average age of your members? Are you actively seeking to lower it? How will a specific merger partner enhance or detract from your ability to meet these goals?
- Other demographic factors: What demographic factors distinguish your membership base? How would you like to influence these demographics to strengthen your credit union? Again, how will a merger partner impact these demographics?
- Charter or SEG limitations: How is your ability to grow limited by your charter and your current SEGs? How could a merger change the boundaries of your charter or field of membership?
- Deposit composition: What deposit products are drawing members? Do you see a need to expand your deposit line-up? Do you offer deposit products that would appeal to members of the merging credit union?
- Loan composition/loan-to-share ratio: Where are your lending strengths? Where is your portfolio lacking? How does the loan portfolio of the merger partner mesh with your strengths and needs? Is there potential to increase loans offered to members of the potential partner, based on loan-to-share ratio and other factors?
- Products and services: Is your current lineup of products and services sufficient to meet member needs? How does it compare to the products and services offered by the potential merger partner?
- Geographic coverage: Does your strategy call for remaining within a specific geographic or municipal area, such as the City of Utopia? Must merger partners serve a territory that is contiguous to your existing area, for example, or are you interested in partners who are based in another neighborhood, another region or even another state as a way to diversify your membership to reduce the impact of economic shifts? Should proposed merger partners already have a branch in place that would “anchor” your expansion to a new geographic territory?
- Branch footprint: Is a lack of branches hampering your ability to grow in specific neighborhoods with high potential for growth? Does the merging credit union offer a branch footprint that will help you reach appealing areas?
- Leadership talent: Does your succession plan reveal the need to fill executive positions in the near future, starting with the CEO? Does the potential merger partner possess talented leaders who can help the credit union continue to thrive in the future? In a tight labor market or at a credit union focused on cross-sales, this issue might extend beyond the executive branch to other areas of the credit union as well.
- Financials: What is your level of financial strength? Do you have plenty of capital? How does this impact your ability to select merger partners? Can you afford to work with a credit union with potential loan losses, for example, as long as they meet other goals?
- Operations: How do you approach operations issues such as staffing levels, using electronic tools at the front line, and cross-selling products? How will you introduce these concepts to your merger partners as you welcome their members and incorporate their branches into your operations?
Will the smaller credit union survive? Your thoughts?