FMS Forward Magazine – Mergers & Acquisitions Article
Wilary Winn was recently interviewed for an article published in the July/August 2018 issue of Forward, a publication of the Financial Managers Society.
The article, titled “Matchmaker, Matchmaker,” focuses on current merger and acquisition activity in the financial institution industry and highlights key elements that leaders should look for when seeking a target entity for a merger.
In the “Union of Unions” subsection highlighted on page 3 of the article, Wilary Winn experts give our take on the credit union merger market, including prevalent reasons why mergers occur and highlighting various challenges to consider pre-merger.
“Most credit union mergers have been smaller credit unions consolidating [and] one of the reasons is probably the same as what you’re seeing in the community bank sector – folks are having a hard time earning enough with the flattening of the yield curve and the compression of net interest margin,” Wilary Winn President Douglas Winn states in the article. “Sometimes credit unions look into mergers because of their membership profiles. For example, when you have credit unions that start as a particular employer segment and their members have grown are older and are not taking out loans. The credit union becomes investment-heavy. Conversely, you could have a credit union where the membership is young and does not have significant savings and they need loans. Certain M&A transactions are meant to balance out these types of things” (“Matchmaker, Matchmaker”).
Doug points out that credit unions also often choose to merge to acquire a different charter – federal or state. Doug explains in the article, “When you merge, you receive the rights to their charter and the right to serve their members and their segment. Therefore, some institutions will acquire a federal credit union so they can offer more services, or sometimes an institution will want to acquire a state charter so they can serve a larger geographic region” (“Matchmaker, Matchmaker”).
Wilary Winn notes that cultural fit is perhaps the most important factor to consider when looking for the right institution with which to merge. We also believe that it is important for each entity to have a voice post-merger, whether that entails board representation for the merging-in credit union in mergers that consist of institutions of equal size, or via an advisory committee for credit unions that are much smaller in size than the institution they are merging with. This consideration can help promote a smooth transition as the two organizations merge and face the marketplace as one institution.
To view the full “Matchmaker, Matchmaker” article and to read more of Wilary Winn’s insights on credit union mergers, please view the PDF
Are you currently considering a merger? Please visit our Mergers & Acquisitions page to learn more about our merger services, and contact us with any questions.