7 Secrets For Merger Success | Credit Unions

These best practices will ensure your next merger won’t be your last.
By Aaron Pugh 

With six mergers completed since 2009 and three more on the immediate horizon, Credit Union of Southern California ($781.8M, Whittier, CA) — commonly referred to as CU SoCal — attributes just over half of its branch footprint and about 70% of growth achieved in the past five years to merger activity.

On the opposite side of the country, The Summit Federal Credit Union ($723.7M, Rochester, NY) averaged close to one merger a year between 2003 and 2011, increasing its assets by more than $445 million and adding 12 branches in three regional markets beyond its original Rochester and Seneca Falls footprint.

Despite the prevalence of this activity, neither of these institutions has ever actively sought out any merger partner. Instead, they’ve been responding to increased demand from small-to-mid-sized credit unions for cooperative alliances, both for survival and for the enhanced economies of scale a bigger sandbox can provide.

There’s no doubt that mergers can boost key metrics in a short amount of time, but according to these two cooperatives, those who pursue such opportunities out of a one-sided growth agenda usually falter as a result.

“We weigh every merger request we receive according to a number of factors, but it all boils down to two key questions: Does the merger ensure the financial safety and soundness of our credit union, and does it provide value to the members of both organizations?” says CU SoCal CEO Dave Gunderson.

“We’re not in business to put other credit unions out of business,” says Michael Vadala, CEO of The Summit. “But the industry is changing and in those cases where a merger is the right answer, you need to know how to do it and do it well.”

Below, both credit unions share seven key ways to stand out as an attractive merger partner and ensure those alliances don’t just benefit one party but rather strengthen the entire cooperative system.

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