Jim Wilcox

Why do depository institutions fail? Do credit unions and banks fail at the same rate? What if there was a predictive tool to help prevent institutions from closing their doors?

Mortgages have become a significant part of credit unions’ lending portfolio. More mortgages are a net benefit to credit unions: They tend to raise ROA slightly and increase asset growth while also nudging up noninterest expense and earnings volatility.

Conventional wisdom about mergers is that they reduce operational costs. And why wouldn’t they? After all, they assume advances like reductions in staff, consolidation of systems and vendors, more talented overall leadership, streamlined product structures, improved supplier pricing, and so on. Bigger is better, or at least marginally less expensive, right? But the answer, at least for credit unions, is merely “sometimes.” 

Credit union mergers are unlikely to fade away in the foreseeable future. In fact, we can expect the pace and types of credit union consolidation to increase over the next several years.