NCUA Rules - Economy to Unleash a Flood of Credit Union Mergers

Proposed NCUA FOM rules and economic conditions will accelerate the flood of credit union mergers. Therefore, consideration should be given to merging with a mutual bank or even a stock bank as a way of remaining relevant and to transfer value to members, before this decision escapes your control.

 
 

Proposed NCUA FOM rules and economic conditions will accelerate the flood of credit union mergers. Therefore, consideration should be given to merging with a mutual bank or even a stock bank as a way of remaining relevant and to transfer value to members, before this decision escapes your control.

The elimination of overlap protection and NCUA’s recent sweeping territorial and associational expansion proposal and current practice fuels the rapid shift of member accounts from the smaller credit union to the larger. In addition, the 2002 plunge in investment yields and the small CU’s inability to offer competitive loan products leads to falling earnings and, ultimately, regulatory scrutiny. Statistics show large credit unions growing at a much faster rate than the smaller. About 1,000 credit unions now control over 75% of deposits. In order to manage these realities, legislation is being sought to reverse merger restrictions among healthy federal credit unions and regulation is likely to drastically increase NCUA’s ability to eliminate small credit unions.

 

 

 

Feb. 10, 2003


Comments

 
 
 
  • Economies of scale can be achieved through credit union mergers. Well run credit union's are consistently competitive with commercial banks. A merger with a bank is like throwing the baby out with the bathwater. Sheldon Greene, Greene & Allison San Francisco
    Anonymous
     
     
     
  • Very Interesting, but I don't think this article should be coming from creditunions.com, whoever wrote this should be writing for a bank.com!
    Anonymous
     
     
     
  • Why is the assumption that large credit unions are gaining increased market share from smaller credit unions and not from poorly priced and poor service oriented banks??
    Anonymous
     
     
     
  • Why not look at merging with a credit union if one is available before looking at banks?
    Anonymous
     
     
     
  • I don't want to seem narrow minded but why is the author promoting merging into a bank, over and over again?
    Anonymous
     
     
     
  • Recommending we merge with a bank? Is hell freezing over?
    Anonymous
     
     
     
  • I know Alan and he is raising some very good points on what the NCUA is trying to do with smaller credit unions But merging with a bank is out of the questions-changing your charter to a mutual savings bank might be more appealing to some boards
    Anonymous