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Should We Acquire a Bank?

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By Jessica Whitmore

1 minute

Consider your credit union’s own health first.

Many credit unions are watching what happens with the National Credit Union Administration’s pending rule on credit union acquisitions of banks.

“The proposed rule is not perfect but good at codifying what we have been doing for the past 10 years,” explains Michael M. Bell, Esq., an attorney and counselor with Howard & Howard Attorneys PLLC in Michigan. “The rule is fair. It does not hinder or help. It is neutral.” 

Bell represented $2.2 billion Elevations Credit Union, Boulder, Colorado, during a recent case in which the CU was blocked from acquiring a bank. According to Bell, Colorado’s decision to block the acquisition was based on the state’s ruling that state-chartered banks are not able to give their charter to credit unions. 

“It is not about a credit union’s ability to buy, but that the bank couldn’t sell,” explains Bell. “We did our due diligence and (had) our understanding of the law. This was a political decision by the state of Colorado.”

Bell says approximately 14 states have given the green light for credit unions to acquire banks. So far, only one state, Colorado, has said no. At the federal level, credit unions can acquire banks. 

Bell notes that while the details of a bank acquisition are different from a credit union combination, operationally banks and credit unions are very much the same. A credit union needs to consider its own health whether considering any merger or acquisition.

“If you are looking to be acquired, and you are relatively healthy, as a seller you have more leverage than the buyer,” reminds Bell. “Be proactive, as you have all the leverage in the world when you are stable and healthy to pick the best partner for your members.”

Jessica Whitmore writes about financial and business topics, as well as human interest stories, from the Philadelphia area.

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