Credit Unions Buying Banks

CONSIDERATIONS

Transaction

Most always all cash

An asset purchase with acquiror assuming liabilities

Taxes

Credit Unions pay no corporate taxes

Deferred tax assets on balance sheets cannot be purchased

Cost Savings

Typically limited to redundancies at Corporate level

Positions often include HR, Accounting, Marketing, etc.

Capital

Credit Unions must currently maintain 7.00% Net Worth Ratio

Post transaction, regulators may require 8.00%  or more

Assets

Some Credit Unions have limitations on certain types of assets and loans

held in portfolios

Charter

A Federal Chartered CU is often easier to approve for bank acquisitions

State charters’ challenges relate to  "Field of Membership" issues

Regulatory

Often involves two or more regulators, dependent upon bank charter

Length of time to closing is typically extended

Business

Credit Unions typically want banks that are more retail in their business model

Credit Unions often have little talent with commercial expertise

Culture

Credit Unions focus primarily on number of members (customers)

In addition to growing the balance sheet