Apr 16 '19

Do Credit Union Mergers Create Member Value?

One major question lingers: do mergers create value for members?

Holly Fearing

(00:11): Hello everyone and welcome to the Filene Fill-In, I'm Holly Fearing with Filene. The Filene Fill-In is the podcast where we fill you in on what's been going on here at Filene's home base and out and about in the financial services world. Mergers, they have dramatically restructured the credit union system over the last five decades and credit union leaders have accepted this as a reality of the current financial services landscape, but that does not mean leaders should approach a merger without caution and due diligence. Many leaders are rightly concerned about how a merger would affect their operations, their employees, and especially their members. Many seek evidence of the benefits and downsides as the system consolidates into fewer larger credit unions, a question lingers, do mergers create value for members? Fortunately, to help guide us through the complexities of that seemingly simple question, today I'm joined by Filene's chief research and development officer George Hofheimer and Dr. William E. Jackson, author of Filene's report Do Credit Union Mergers Create Value for Credit Union Members? An Analysis and Review of the Empirical Evidence. Dr. Jackson holds the appointments of professor of finance, professor of management and the Smith Foundation Endowed Chair of Business Integrity in the Culverhouse College of Business at the University of Alabama. Before joining the faculty at the University of Alabama, Dr. Jackson was a financial economist and associate policy advisor in the research department at the Federal Reserve Bank of Atlanta. We hope you are enjoying hearing directly from our research authors so they can explain the essential findings from their point of view. We are adding a series of mini episodes around these bigger report deep dives, where we bring in an academic or known expert to explore topics and issues important to credit union leaders. These won't always be tied to a Filene report, but will allow us to be even more timely with our topics here.

(02:04):If you want the next level experience connecting with our research, I recommend attending one of our research events this year. Each is hosted by our academic fellows from renowned universities across the country. Our next event is called the Future of Trust: How Technology Will Make it or Break it for Your Credit Union on May 29th and 30th in Seattle. This event will give your credit union an edge when you learn strategies for using data to grow member trust, not lose it. Be sure your marketing, technology, and operations leaders are there. You can also catch us in Boston on August 13th and 14th and Austin on September 26th and 27th. And of course you'll want to join us at this year's big.bright.minds in Durham on November 19th and 20th. And now for an analysis on the impact of mergers on credit union members. Thank you Will for joining us today. Will is the author of Filene's latest report, Do Credit Union Mergers Create Value for Credit Union Members? So, Will, let's get straight to it and tell us if it's true. Do mergers create value for credit union members and what led you to research to seek out this answer?

Dr. William E. Jackson

(03:16): Well, the answer to the first question is yes, definitely credit union mergers do create value for credit union members, at least on average, but the value that's created is not necessarily evenly split between the members of the acquiring or continuing credit union and the members of the target or the acquired credit union. And I think that's a really interesting question to kind of investigate and that was part of rationale for taking a look at this. This particular study that kind of see not only how the mergers work in terms of creating value, but in terms of how is that value distributed. Now, for me, this is kind of a question that goes back to my roots as an economist who has for quite a long time studied financial markets and financial institutions. I've always had sort of been interested in mergers and acquisitions. Part of that is because I believe, and I think a lot of scholars believe this too, that you see mergers and acquisitions.

(04:20): You know, they really tell you a lot about what's going on in that industry or in that market. So M&A's are probably one of the most revealing transactions about the underlying economics or market or industry that you can have. So it's kind of an important story about that industry or that market, and not only about current, but it's also an interesting story about the history of that particular industry. And perhaps even more importantly, it gives you some really useful information about the likely future of that industry. Now, as far as credit unions, I've been studying credit unions for quite a while, along with commercial banks and other financial institutions too. But I think credit unions are extremely important to our overall financial system and that's one of the reasons I'm really interested in and studying how they merge and how that changes the system.

(05:19): I think it's very important to sort of understanding the future of credit unions. Of course, I was also drawn to this research by sort of the excellent previous research that's been done by a couple of Filene scholars, Dr. Luis Dopico and Dr. James Wilcox. And they did some really interesting work. Their comprehensive study of the credit unions mergers and acquisitions from the mid-1980s, about 1984 to 2009. And they provided really strong evidence that credit unions, mergers and acquisitions provide value for credit union members, for the credit union system and I thought that was really interesting. I was thinking about, well, what about more recent data? And what's happened after the great recession. And that was such a major turning point in our economic history. So what has happened here is basically just kind of building on their studies and addressing the same type of questions about whether credit union mergers create value for credit union members, but looking at it in a more recent time period from 2010 to 2017, and also they add a little value to the study, but maybe we should think a little bit about the distributional impacts too.

(06:44): So knowing that most credit union mergers involve a small credit union and a larger credit union, I felt that, well, maybe we want to take a look at what happens when small credit unions merged with other small credit unions and when small credit unions merged with medium-sized credit unions and all versus when small credit unions merged with large credit unions. So three different categories, and just a question, do we get a really different outcome across those three categories? And the answer is on average, yes, it's very different. And then we see that some members of small credit unions on terms of financial benefits, there are much different when a small credit union mergers with a large credit union, as opposed to when a small credit union simply mergers with another small credit union.

Holly Fearing

(07:43): It sounds like a lot of different factors are involved. Different variable.

Dr. William E. Jackson

(07:49): That's correct. That's a huge number of variables and that's part of the problem dealing with a topic like mergers and acquisitions, because it's such an important topic. There are lots of studies that have looked at elements of it, and it becomes like, try to figure out the elephant. If you're a blind person, you can touch pieces of it. But what does the big picture look like? And for this, I was trying to develop the whole picture, but just to give a little bit in terms of the idea that there are distributions, different outcomes for different groups, and hopefully provide some information that'd be useful for small credit union trying to decide or think about mergers. And also some information that allows you to think about regulatory environment, what large credit unions should be doing, responsibility of the system in lots of different issues.

Holly Fearing

(08:42): So, George, I wanted to ask you next about Filene's interest in this research. Why is this something that we're looking into and how does this research fit into the other reports that we have in the center for performance and operational excellence?

George Hofheimer

(08:59): Yeah, thanks Holly, and you know, the short answer is any opportunity to work with Will Jackson, we jump at, and we knew that he was working on research related to this, and we have a long history of working with Will, as it relates to all manner of research in credit unions, including pricing and looking at issues related to the product portfolios of credit unions and now mergers as well. And the reason that we were so interested in this topic besides just working with professor Jackson, is if you look at all of the trends that are going on in the industry, there's very few that you can predict will continue a pace at the current or faster rate. And you can say with a relatively high level of confidence that mergers are going to continue, it is just a nature of the industry that credit unions find themselves. In a heavily regulated environment where scale is rewarded and it's becoming more and more difficult for many institutions to continue to meet the needs of the changing needs of consumers and the technology changes in society. So when we look at all of those factors and we say, okay, what is going to have an impact on the operations and the performance excellence of a credit union? Mergers is always top on the list. And as Will has said, we've studied this topic before, but we felt it was time for another examination of it, just with facts and figures after some of the big shocks that happened after the financial crisis.

Holly Fearing

(10:22): From a high level, executive summary level, how do you envision a credit union leader putting this report into use?

George Hofheimer

(10:29): Well, I hope they do one of two things. You know, number one, I think mergers are always on the front burner for many credit unions, whether they have a proactive plan or a reactive plan. So, you know what I would hope that people would read through this report or listen to this podcast and determine is to have a more proactive approach to mergers and that proactive approach could be, hey, you know what, we've read the literature. This is our business model and we've decided mergers are not part of our growth strategy or survival strategy, or it could be the opposite or something in between. So that's the first thing is to have a proactive, emergent strategy. And then I think secondly is to really dig into the history and examine the analysis that professor Jackson has done on the merger situation within credit unions over a very, very long timeframe, and to be able to digest what those benefits and costs are in the merger equation and place those variables within the context of what's going on at their credit union. So hopefully, you know, there's the strategy side, and then there's the more tactical side of things.

Holly Fearing

(11:36): And we're going to get into some of the main points of the research from Will in just a moment, but I'm always curious to know, from both of you, what are the unexpected or surprising elements that you discovered in the course of doing this research or in other words, is there anything that, you know, you felt was maybe reaffirmed or, you know, either way it either reaffirmed what you believed or it surprised you in the course of doing this research.

Dr. William E. Jackson

(12:11): So we've basically reaffirm some of the excellent research that's been done at Filene before about mergers. The comprehensive studies that were done by Dr. Dopico and Dr. Wilcox basically laid it out as some of the best research on credit union mergers that's ever been done. And basically they found, again, the trend of mergers, actually creating value on average and reducing costs and flowing directly into theoretical models that you would have for mergers and also into sort of the models of rationales given by credit union managers, for why credit unions merged. One about basically providing a wider variety of high quality services and products for their members. So the evidence was very supportive of previous studies. Now, the thing that I found a little amazing was just how different the results were for small credit unions merging with small credit unions versus merging, with large or medium sized credit unions and even more so for the difference between small credit unions merging with a medium sized credit union and a small credit union merging with a large credit union. The difference there was larger than I expected, in terms of the benefits for loans and the benefits that you would receive from the deposit side for the members of that small credit union. So there's still some interesting areas to try to dis-aggregate and try to do a little more nuance research on I think, because that was a little larger than I expected.

Holly Fearing

(13:50): What about you, George?

George Hofheimer

(13:51): Yeah, I would absolutely concur, you know, the order of magnitude of benefits that accrue to the members of the smaller typically, credit unions that merge in with the typically larger credit unions is pretty compelling and especially interesting as you know, this is something that we studied way back in 1999, and we found the same results. Although not at the order of magnitude that we find in this study with up-to-date data. And, you know, I think that that has some serious practical implications, for credit unions, you know, especially if a smaller institution is really struggling to meet those needs that we described earlier of technological chains, increasing consumer demands, competition, regulatory, and compliance questions, you know, the purpose of why a credit union exists is to serve the members owners, that made the institution. And there's a fairly compelling case in some cases for a merger to sincerely benefit the members of a merged institution. Now, you know, psychologically and historically, that's a really difficult decision for management and board to make amongst a smaller institution that's finding it hard to operate in today's environment, but what we hope that the research does is that it sheds light on all of these issues and topics and gives comfort to institutions that have to make those difficult decisions going forward. Because at the end of the day, it's all about the member owner and the evidence is pretty clear that the benefits do accrue to member owners quite readily.

Holly Fearing

(15:24): So Will, can you walk us through some of those main points that we touched on earlier of the research, specifically talking about the impact that mergers have already had on this industry and why mergers are even occurring? What types of credit unions benefit more or less? I know you covered that a little bit, but any other points on that, and then talk about the impact for those members in general, for both large and small credit unions.

Dr. William E. Jackson

(15:51): Okay, before I do that though, let me simply comment on the excellent answer that George just gave, if you're listening to this and you can rewind it, you should make sure you listen to that answer again cause that was a very excellent answer. But in terms of looking at this kind of in a general sense, the ideas or reasons for mergers and impact of mergers and so forth, most economists think about the reasons for mergers is this notion of a market for corporate control of assets. That is that the market itself pushes us to reallocate assets to firms that can use them most efficiently. So here we think about mergers as a way to become more efficient and efficiency can be strictly economic, or it can be a little more social in terms of whatever the objective might happen to be for the credit union.

(16:46): But typically when we think about efficiency, we're thinking about things like a economies of scale and economies of scope and to some extent, the economies that go along with efficient management operations. So economies of scale are pretty straightforward. You grow because at a larger size you're able to produce units at a lower cost per unit, common to the scope you grow because you're producing a variety of products and services, but all of those, require a certain type of supervisory overview input and so forth. And you can spread that across more high quality products. If you have a variety of products, so have more products and then the X efficiency or efficiency management, this is just kind of a step up from that. Thinking back within the system, there are some managers that are just very good at what they do, and you would like to have more resources, more credit union assets under the management of these really, really good managers. But there's also the other issues in terms of maybe, you know, the credit union because they are credit unions because there is a social issues, a social objective going on to the cooperative objectives, maybe there's some folks out there and credit unions that aren't being served as well and, you know, a large credit union wants to merge with a smaller credit union to provide that smaller credit union access to these really high quality products. And that might even be part of sort of serving underserved markets and so forth. So that could go into sort of the issues that go along with why credit unions might merge. I think when we think about the impact of mergers so, you know, most of this discovered linearly in the Dopico and Wilcox studies, there has been a major change in the system, major change in the structure of the system, for example, over the last five decades or so mergers have reduced the number of credit unions from over 23,000, to less than 6,000, you know, reduction of over 75% of the number of credit unions, of course, the amount of assets and the system reallocated, because the mergers has only been about 10% over that period.

(19:02): But that's major and as George mentioned, it's likely to continue. There are forces in place now that will continue to drive mergers, competitive nature of the markets, financial markets that change in major ways. So you're likely to see even more of this. And the purpose of this study was to look at sort of typical mergers and we think about the typical merger in the credit union system involves a larger credit union that's acquiring a smaller credit union. So this study focuses on that and looked at whether or not that led to increase in levels of efficiency. Typically it does because smaller credit union typically is not operating as efficiently as the larger credit unions that it's acquired by. And that typically leads to benefits for the smaller credit union. The benefits usually include lower rates on loans, higher rates on deposits, lower fees on services, and also a wider variety of products and services offered. And that's pretty much what we found in our study. So in this study, we look at sort of, unassisted mergers, you know, before the regulators got involved. Looked at about 1,840 unassisted mergers over the time period from 2010 to 2017. Now, one of the things interesting when we look at all these mergers, the first thing we recognized in our study of the 1,840 mergers that we've looked at, over 1,700 involved a small credit union merging with either another small credit union or a medium sized credit union, or large credit union. So most of the mergers involved a small credit union, as we could expect and looking at that, we kind of focus on a couple of things. We focused on, what was the impact of the small credit unions merging with other small credit unions? We had about 623, so roughly a third of the credit union mergers in our study were small credit unions merging with other small credit unions.

(21:11): Now at about 870 of these mergers were small credit unions merging with medium sized credit unions. So a little more than a third there, of all the smaller credit unions that merged. And then about 260 or so of small credit unions are acquired by the large credit unions. We focus on the financial benefits derived from improvements in three metrics for the members of small credit unions after the merger. Three metrics was the loan benefits, the positive benefits, and also improvements in the non-interest expense, which has kind of a measure for operational efficiency, which allows for reductions in certain costs to provide certain types of services and so forth. Now our loan benefits, and this is one of the improvements of this study over the previous studies loan benefits here, we defined it differently. We define it in a market sense where our loan benefits are defined as the rates on a portfolio of credit union loans compared to a portfolio of commercial bank loans.

(22:23): So we're really looking at what economists would call the market impact of this merger on benefits by looking at how much true value is produced after the merger, in terms of how much these measures change. Basically the question is after the merger, the members of the small credit unions, do they actually pay less on their loans compared to what they would've paid if they'd gone to a bank, relative to what they paid before. So we're not only looking at the change in the loan rates, based on the merging with the larger credit union, we're indexing those changes to kind of a national market. So we really get a better indication of the value being produced by the merger, and we do the same thing with deposit rates. So if the loan rates go down, that's a good thing. That's a benefit. If your deposit rates go up, that's a good thing, and that's a benefit. If your non-interest expense ratio goes down, that's a good thing and that's a benefit. And we compare all those benefits and we come up with these rather remarkable differences in magnitude for the different categories. For example, loan benefits were seven times larger when a small credit union merged with a large credit union, as opposed to the small credit union merging with another small credit union, seven times larger, which is larger than we expected. The deposit benefits were five times larger, which is also [inaudiable] and reductions in non-interest expense, were three times larger, and that's huge. So depending on the merger partner, the results of the merger were incredible. Very, very good.

Holly Fearing

(24:13): Great. That's a very helpful analysis and I think there's some major details there for our credit union listeners. George, what would you add to that?

George Hofheimer

(24:22): You know, that was a very complete answer and I think it documents what the potential benefits are. The only proviso that I would add and I'm sure Will can talk to this from a statistical perspective is that, you know, this is aggregate data. And when we're talking about research like this, it's useful to gain an understanding of what this topic means on quote unquote average, and for credit unions to also realize that their individual situations may be a little bit different. So, you know, when we're talking about the pricing benefits accruing, you know, seven times for a merged institution, prior to being merged, and then after being merged, these are average numbers. So you may actually experience higher than that, and you may actually experience lower than that. So we don't want to lead people to conclude that these are hard and fast numbers. These are average numbers and, you know, when you're looking at it from a statistical perspective, you can see the orders of magnitude are pretty compelling. So you can probably read into it, the fact that, hey, if you're a smaller institution that's being merged into a larger institution, and you're worried about the welfare and utility of your members, this data says on average, it's going to be quite beneficial. So, you know, in addition to all of the stuff that Will just shared, that would be the only other thing that I would add as well.

Holly Fearing

(25:38): Great, so this is kind of the research that's been done so far is looking at what has been done and what is currently happening in this landscape, but let's look to the future now. If we could pretend that we were able to see into the future, what do you think you would see in credit union merger activity in five, 10 or 20 years out?

George Hofheimer

(26:01): I'll try and take that and say, I have no idea. You know, now we do have a dataset that does look at merger trends over the years. So if we didn't want to be bold, we could just say, hey, you know what? It's going to follow the same trend lines as before, just in terms of activity. Now, we all know that there can be wildcard events that either increase or decrease the level of mergers. But I think the safe bet is to assume over the 5, 10, 20 year period, that we're probably going to continue a pace with merger activity. Now, some of the things that could change that from the wildcard perspective are significant technological changes, significant regulatory shifts that either make it easier or harder for credit unions to operate. Consumer demand for specific products and services and maybe there's high barriers to entry are low barriers to entry, which would have an impact on that. So I'm channeling my inner economist here, Will, and just saying it depends, I don't know if you have anything to add to that.

Dr. William E. Jackson

(27:01): I think that's a very reasonable approach to take and very reasonable way to look at this. Of course, that doesn't surprise me and George brings so much wisdom to this overall conversation and research on credit unions in general. And he'd been doing it for more years than, I won't count, because that means he's almost middle-aged and that means I've gotten old. Essentially when we think about what the future of mergers for credit unions, we can be sort of very practical in a sense of thinking about, well, if we know the trends, typically how small credit unions merge in with larger credit unions, we can look at what's the supply side, how many small credit unions are left. So basically right now, most credit unions in the U.S, they still would be in the small category about maybe 75%, but there's still a huge supply of small credit unions. That'll be less than 6,000 credit unions in the country, about 4,000, are what we call it small, less than a hundred million in assets. So there seems to still be a good number of small credit unions. I'm not implying that all small credit unions will merge. I don't think that's going to happen, but there seems to be a good supply out there and as George was mentioning, the industry is going to change, and we can think about it in terms of history and that would suggest that there will continue to be mergers, but we also think about the wildcard, so to speak, and the changes out there, like with the FinTech industry, regulations, all that could get a core that activates something, and you can see the pace of mergers increase substantially. I don't see it declining very much, but something could happen to make an increase in a major way.

Holly Fearing

(28:46): And Will, do you think that for any of these strategic opportunities or threats or challenges, are any of these unique to credit unions over other types of financial institutions?

Dr. William E. Jackson

(28:58): In some ways they are because of the cooperative nature of credit unions and the seriousness in which they focus on the system and maintaining the system and being very prudent about managing risks, not only at an individual credit union, but also across the entire system. So to the extent that the credit unions are taking about a view, they're not focused on profit as much, or they tend not to want to see the system need to be bailed out by the federal government or something. Well, in those lines, it's a little bit different. There's some things that they have to consider. Also, they're kind of focused on being involved in their communities and helping their members over the longterm, as opposed to just thinking about members as being customers. The example during the great recession of credit unions, stepping in and trying to help individuals, who've lost jobs, worked through maintaining their homes during the recession as an example of how that's a little different for credit unions. And, that might lead to, again, more emphasis on mergers to have the financial strength, to be able to get members during a longer period of time and so forth.

Holly Fearing

(30:15): So George given all that great information that we'll just shared, can you boil it down for our credit union listeners around the most pressing implications of this information and what kinds of things for both large and small credit unions that they should be thinking about acting on or thinking about whether or not a merger is on their horizon?

George Hofheimer

(30:37): So I think I'll go back to what I said at the beginning is just being more proactive around the merger discussion and the merger issue within credit unions. And regardless of whether you're small, medium, tiny, extra large credit union, just having a philosophy on how your credit union approaches the merger topic, are you pro-merger, are you con-merger? What would change your opinion either way? What would be some of the contributing factors that would cause your credit union to engage in a merger, both as an acquire or an a target situation? So, you know, I really kind of channeling the famous scientist Louis Pasteur, he's got a famous quote, he says, chance favors the prepared mind and for credit unions, to be able to be prepared for a situation where you can say with a relatively high level of confidence that you're going to be faced with this, sometime in the future, either as a credit union that's going to decide to acquire or already have acquired in many cases, or you're going to be a target. And, you know, rather than waiting for it to happen to you, to have those proactive discussions amongst management team and your board, and then between your board and your management team, so that you have a better understanding of what is the right decision for the membership who credit unions ultimately are around for. So, you know, it may sound trite, but just having that proactive, you know, in some cases, a very formalized strategy, about how we're going to approach the merger topic, but at the very least having an honest discussion at the board and management level about what mergers mean for your institution.

Holly Fearing

(32:11): And throughout this research, when we're talking about the small, medium and large credit unions, we've kind of broken it down to credit unions, less than 100 million in assets for the small then credit unions in the asset range of 100 million to 1 billion for the medium and then for credit unions that are larger than 1 billion we were referring to as large. Will or George, do you have any other specifics around those categories and the impact of mergers on their members?

George Hofheimer

(32:41): So I'll start and then I'll let Will add. You know, for the less than a hundred million, the evidence is pretty clear that that is the source of largely the target credit unions. So probably paying a little bit more attention to what that means from a target perspective. You know, for the credit unions in the a hundred to a billion category, it's a little bit of a mixed bag. You know, they probably straddle both sides of that equation. What we're starting to see in credit unions of that quote unquote midsize category is that, you know, I wouldn't say an overwhelming number, but there are some really interesting examples of credit unions being very proactive about mergers of equals type of strategy. So thinking about, you know, how to buck the trend of how a typical credit union merger occurs and just looking around it, perhaps people that are geographically close to you have similar strategies, maybe have the same technology platform and to think proactively around what a merger of equals may look like. So you start to think about, hey, maybe a $700 million institution and a $500 million institution can combine to be at $1.2 billion institution and the benefits, according to this research on average would likely accrue to the member of both of those merged institutions. So being proactive around that, and then obviously for the billion dollar plus, those are typically the acquiring types of institutions and I guess the advice would be focusing on and understand that the benefits may not accrue right away if you're acquiring a smaller institution and just being realistic about the quote unquote synergies that may occur with the merger of even a hundred million dollar institution may not accrue right away for the members of the existing institution. So those are the few things that I would say from the different asset size categories. I don't know if Will, if you have anything to add to that.

Dr. William E. Jackson

(34:26): I think you've covered it really very nicely. The only thing I would add in terms of this particular research is the idea that the larger credit unions, the acquiring credit unions over a billion dollars in terms of impact on them, I think this study suggest that there is signs that even they were starting to have a positive impact. So what you're saying makes a tremendous amount of sense, and it's something that I would encourage all the listeners to pay close attention to, and then perhaps use the statistics in this study to kind of help support some of those ideas.

Holly Fearing

(34:59): And George, do you see anything on the regulatory landscape that you think could affect the merger activities?

George Hofheimer

(35:09): That's a loaded question, Holly. I don't know if I want to go on record to answering that, but you know, I think generally speaking, I'm a little bit of a political junkie, so I like to kind of see what's going on on the national political front and that obviously has an impact on what happens on the regulatory side of things and I think it would be an understatement to say in the current environment with the Democrats running the house and the Republicans running the Senate and occupying the White House right now with a divided government, there's probably not much that's going to happen. And I know that this recording will be going out after the CUNA's GAC event, and there'll be a lot more details and discussions around that, but I think it would probably be a sane bet to assume that the regulatory environment may not shift that much from a public policy perspective. You know, that being said, there are opportunities for administrative rules to change without change in legislation. We're already starting to see that in little ways with like the CFPB has kind of pulled back from their discussions about a tighter regulatory framework for small dollar payday loans, so we may see that. So if I were to kind of index it of zero is, you know, completely free regulatory environment and a hundred is a locked down regulatory environment, I'm going to hedge my bets and say 50/50, right. That doesn't make great podcast material, but that's where I've landed.

Holly Fearing

(36:35): Great. Will, do you agree?

Dr. William E. Jackson

(36:37): I totally agree, I think that's very astute. The only thing I would add would be to suggest to the listeners to think about regulation, to some extent as a market also, and to consider the fact that sometimes the regulations or even more regulations can be helpful. So the idea of just thinking very strategically about regulation itself and not immediately thinking that regulation would be something that's going to create a negative factor for their operations, and be very careful in their longterm strategizing and thinking about how regulations fit into their particular plans.

Holly Fearing

(37:19): George, your answer was equivalent to telling somebody that there's a 50% chance it's going to rain today, 50% chance it's not going to rain today, if they're looking for, you know, should I bring an umbrella and so very helpful.

George Hofheimer

(37:33): Sure, I can tell you there's a 0% chance of rain today in Madison, Wisconsin, because it's really cold.

Holly Fearing

(37:41): Okay, so what can credit unions do next with all of this great information that we've just provided? How can they learn more and stay connected to the research and other ideas like this presented in this report? So this is where George you plug things.

George Hofheimer

This is where I plug things?

Holly Fearing

Yeah.

George Hofheimer

So stuff that's coming up?

Holly Fearing

Yeah.

George Hofheimer

(38:06): I'll be in Vegas next week at Zinnis. No, you know, we have, as our listeners know, we do research, we do a lot of research, research is our middle name and you know, I think that there's a lot of really interesting stuff that's coming down the pike that would be of interest both to this topic and to others. You know, some of the things that I'm most excited about and where I would imagine that we would be talking a lot about mergers and the impact of mergers, we've got this upcoming really cool research event in Seattle, Washington around our Center for Emerging Technology. So even though the centers based in California, we're having the event in Seattle, if people can follow along with that. And the reason that we're having it up in Seattle is that there's a lot of talent up there, not surprisingly around the emerging tech area and we'll be having people from Vancity presenting, we'll have people from the Bill and Melinda Gates Foundation, we'll have some FinTech startups that are involved up there and then a host of academics from University of California-Irvine, Tulane, University of Virginia, and the University of Colorado talking about all of those issues. So that's one of the things I'm super excited about and hope people will engage with that, and the date for that is May 29th up in Seattle, Washington, so I think that that's a really cool, cool thing to be aware of. And then if you don't mind, maybe some research that I think is interesting and it's actually kind of linked to what we were talking about on the regulatory side of things and how was that linked with the political environment. We have this really, I think provocative research study coming up, it's called Who Do Credit Unions Belong to? The Promise and Peril of Being Undefined in a Time of Political and Social Polarization and it's written by a professor up here at the University of Wisconsin. So it takes that notion of, you know, we're living in interesting political times and social times and what does that mean for financial institutions? So, that's one I think people should, after they finish reading the mergers report, I think that that's one that people should really keep an eye out for.

Holly Fearing

(40:18): And Will, we will give you the last word. This is your research report. Did we do it justice? Or is there anything that we left out that you think our listeners need to know right now?

Dr. William E. Jackson

(40:30): Basically this has been a pleasure working with folks at Filene and I've always had a great deal of respect for the amazing talent that's there, and my only suggestion would be for the listeners to pay more attention to some of the new studies coming out at Filene and continue to follow you guys. I know I will and that's about it.

Holly Fearing

(40:54): Thank you for that endorsement. We certainly appreciate that and thank you for the time that you've taken out of your day today to walk us through this research. I know I've learned a ton and I hope that this has been helpful for our listeners as well. All right, that's it for the Fill-In folks. Thanks again for listening. This episode of the podcast is endorsed by our research team to give Filene members and listeners an opportunity to dive deeper into our latest report, exploring do credit union mergers, create value for credit union members? Thank you Will and George for sharing your insights with us. We hope to have you on again soon. If you liked this episode, please do rate us on Apple Podcasts so more people can find us and make sure you're subscribed to the Filene Fill-In podcast, so you can keep up with what's going on at Filene. You'll find us on Apple Podcast, Stitcher, SoundCloud, Google Play, or wherever you get your podcasts. If you want to get in touch about today's show, email me at [email protected], or find us on Twitter @Fileneresearch. Until next time. Thanks everyone.