September 2019 | Report

The State of Credit Union M&A

Today’s credit unions face a shifting industry climate, with a demonstrable appetite for consolidation, tightening regulatory enforcement and digital transformation putting longstanding business models to the test

The State of Credit Union M&A

The consolidation of credit unions shows no sign of slowing. In 2018, the National Credit Union Association approved 187 mergers between credit unions and an additional nine mergers with banks. Our latest poll of 100 credit union M&A decision-makers demonstrates an unabated desire for M&A activity in the industry, coupled with a marked uptick in interest in merging with non-traditional partners. Among other things, we asked what’s driving their quest for M&A, how long they’ve been looking for a partner, and where potential roadblocks exist.

  • Most credit unions pursuing M&A don’t want to merge with other credit unions – a majority cited banks or fintech as their desired partner

  • About one-third have been looking for longer than a year, and are struggling with high deal prices and regulations

  • More credit unions want to buy than be bought, and their investments and drivers for M&A differ

For many credit unions, changing times signal the need to pursue other strategic growth areas — including new M&A partners.

In a recent poll, West Monroe asked 100 credit union leaders -- whose organizations are actively pursuing transactions -- about the current M&A landscape. Questions explored credit unions’ desired transaction partner, size, type and strategic goals, as well as current and potential roadblocks along the way.

While the poll results unearthed valuable insights on the top-of mind concerns for credit union professionals in their search for an M&A partner, these three takeaways are positioned to make the biggest potential impact in 2019 and beyond.

1.) Credit unions are not primarily looking for M&A transactions with other credit unions.

Credit unions are casting a wide net in their search for the right merger and acquisition partner — and surprisingly, many are looking far beyond other credit unions. Fewer than half (46%) of respondents to West Monroe’s poll are looking to merge with another credit union. Instead, they want to merge with banks (32%) and fintech organizations (22%). Their primary reasons for wanting bank/fintech mergers are twofold. The first is technology-based: Credit union leaders feel that a bank or fintech partnership will facilitate access to technology that wouldn’t be available otherwise. The second reason is growth: Leaders feel these mergers will, in the words of one respondent, “make our business more viable in the long run.”

Plus, there’s the relative convenience of integrating with a bank or fintech partner compared to merging with another credit union. In a transaction between two credit unions, both parties have a responsibility to both entities’ customers and board members; those concerns are abated in external transactions, clearing a more direct path forward.

This rang true in our findings: 43% of credit unions who had been seeking an M&A transaction with another credit union for more than 12 months cited member alignment as a reason for the prolonged time frame, compared with 25% of those looking for a bank partner. No credit unions seeking a fintech partner mentioned member alignment as a source of delay, though 88% pointed to regulations as an issue. 

2.) Credit unions are struggling to find the right partner — in particular due to regulations and high prices. 

More than one-third (34%) of credit union leaders reported their institution had been pursuing a merger partner for more than a year. Pricing and regulatory delays were most likely to be the source of their headaches; 59% of respondents cited these reasons.

Credit union leadership is rightly cautious about remaining in-line with regulations; 40% say they would want to assess a potential partner’s regulatory and compliance gaps before any merger.

Nearly two-thirds (62%) of those who have faced a merger delay of more than a year cited regulatory issues as the impetus.

Those seeking bank and fintech agreements are facing down an educational or buy-in requirement around topics like lending limits, products on offer and even regulators themselves. While regulations have loosened in recent years, these mergers still aren’t a simple shift for any credit union.

3.) Credit unions want to buy right now instead of being acquired, seeing opportunities for cost savings and an expanded reach.

Roughly two-thirds (64%) of respondents told West Monroe their credit union would prefer to purchase within the next two years rather than becoming acquired.

Among those looking to buy, the biggest reasons are cost savings (59%) and improving the member experience (56%).

However, there are several factors holding credit unions back from pursuing an acquisition within the next two years. First, 48% of intended buyers said they’re concerned about an uncertain economy — particularly given the looming signs of a potential recession. Second, 46% of intended buyers cited high deal prices as a deterrent.

The Takeaway

While there are now fewer than 6,000 credit unions in the United States, they represent include 117 million members — about one-third of the population. To move forward successfully and respond to disruptive change, these organizations should first focus on what their growth plan should look like — then consider strategic M&A activity to support this plan.


In July/August 2019, West Monroe surveyed 100 leaders in credit unions (manager level and above) that are pursuing M&A transactions. The survey was conducted online and respondents were required to be employed in a credit union and involved with M&A decisions and activity.

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