The Board’s Role in Credit Union Mergers
Board members discharge a number of essential duties at credit unions. None more important than the role they take in the increasingly common credit union-to-credit union merger. Listen to this interview with Texas A&M Professor Will Brown the author of Filene Research Institute’s latest study on the topic:
Brown and his research team used a variety of survey, interview, and case study methodologies to gain new insights into the credit union merger decision. The following are some of their high-level findings:
Mergers seem to develop for one of two reasons:
- Concerns about the long- term viability of the merging credit union (i.e., shrinking or stagnant membership, weakening financial condition), or
- The imminent departure of a longtime CEO.
- Two-thirds of the mergers discussed in this study are not a part of the organization’s long- range plan or predetermined strategic objectives.
- Potential merger partners are most likely to be identified through existing professional networks.
- In about 25% of cases, the board is not highly influential in the decision to merge.
- Most boards rely heavily on the CEO to oversee and manage the merger process.
Major issues discussed and decided by the board include:
- Making sure the merger is in members’ best interests (e.g., services offered and financial viability),
- Ensuring the continued financial viability of the continuing credit union,
- Staffing issues such as continued employment for longtime employees, consistency of benefits, and retention of key personnel,
- Board governance issues (e.g., allocation of board seats in the surviving organization), and
- Infrastructure issues such as branch locations and IT systems.
Three categories of board involvement emerge:
- Proactive and very involved (about 25% of participants),
- Responsive and engaged (about 50% of participants), or
- Minimally engaged and possibly aloof (20–25% of participants).
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