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Assisted and Other Mergers with Mike Macchiarola of Olden Lane
Manage episode 446162351 series 3303439
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1. Mike Macchiarola from Olden Lane discusses NCUA-assisted credit union mergers and why we may see more of them in the near future.
2. Current industry challenges:
- 10% of credit unions are now CAMEL 3, 4 or 5
- ROA is at 69 basis points, lowest in a decade (excluding COVID dip)
- 764 credit unions have zero or negative ROA
- Rising cost of funds, asset quality concerns, fee compression
3. Importance of pursuing mergers while credit unions still have "self-determination" rather than waiting for NCUA to dictate terms.
4. Overview of the NCUA's Merger Partner Registry and how it's used when an assisted merger is needed.
5. Process for NCUA-assisted mergers:
- NCUA identifies potential acquirers from registry
- Interested credit unions sign NDA and receive bidder's package
- Acquirers evaluate opportunity under time pressure
- NCUA seeks lowest-cost alternative but considers multiple factors
6. Advice for credit unions considering assisted mergers:
- Hire experienced advisors to help navigate the process
- Be prepared to make decisions with imperfect information
- Understand NCUA's preference for full mergers over purchase & assumptions
7. Importance of maintaining strong capital position to be an attractive merger partner.
8. Discussion of how NCUA balances cost considerations with ensuring long-term stability when selecting merger partners.
Key Quote: "Don't get yourself to the place where the NCUA is dictating terms because your option set is closing. You owe it to your membership, your staff, your management team, your legacy of your institution, its brand and its community not to get there." - Mike Macchiarola
Call to Action: Credit unions considering mergers or concerned about their long-term viability should visit www.oldenlane.com to learn how Olden Lane can assist with strategic planning and merger navigation.
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