The following is an article written by Rise Analytics' SR Strategic Consultant Lending, Chris Lindsay. It originally appeared on CUInsight.com.
Credit union mergers are becoming more and more frequent, with some reports showing an average of 150 mergers per year. If your credit union is considering a merger, either as the surviving institution or as the acquiree, it’s important to conduct a thorough loan analysis before, during, and after the acquisition to determine if this is the right step for your organization and to measure success.
Before—Is This the Right Move?
Mergers can be very beneficial for credit unions and their members. For the credit union being merged it can result in increased services for members and access to a larger institution. But if your institution is entering into a merger, it’s important to have a thorough understanding of the culture of the other credit union.
Conducting a loan portfolio analysis is a great place to start. For the surviving credit union, this can alert you to the types and amounts of loans your organization will be assuming, the risk associated with those loans as well as an overall snapshot of the average member’s circumstances. It can also alert you if the merging institution had more or less conservative lending practices than your own. Likewise, the credit union that’s being merged can learn about the surviving organization’s lending practices and have any necessary conversations about how those practices differ.
During—How Are Things Progressing?
Rome wasn’t built in a day and credit union mergers don’t happen overnight. Conducting ongoing analysis during the merger provides both credit unions with clear visibility into progress while also identifying opportunities to hit the ground running with new members as their data is brought over.
For example, If the surviving institution has a great refinance program that the merging institution didn’t, that may be an opportunity to engage with new members and provide immediate value to them.
Conducting an ongoing analysis will also enable your credit union to identify any potential challenges or obstacles. Are members suddenly closing accounts or refinancing their existing loans to new institutions? It’s best to identify these issues early, so your credit union can reach out and engage these new members and keep them with your combined organization.
After—How Do We Maintain Our Momentum?
Once the merger is officially complete, you don’t get to rest. Your members, both legacy and incoming, will expect your credit union to keep up the momentum and continue serving them with the loan products they need. A loan portfolio analysis will allow you to continue to monitor for opportunities, identify areas of concern or risk and adjust offerings based on evolving markets and member needs.
At Any Stage, Rise Analytics Can Help
Merging without deep loan-level insight can expose your credit union to avoidable risk. With Rise Analytics, you’ll make informed decisions backed by data so you can protect your members, satisfy regulators and unlock the full value of your combined portfolio. Whether you're the surviving institution or part of a collaborative merger, our analytics help you:
- Evaluate credit risk across both loan portfolios.
- Update credit scores, vehicle values and real estate values.
- Identify overlapping exposure or concentrations by loan type, geography or credit tier.
- Spot growth potential hidden in underperforming or underserved segments.
- Benchmark lending performance to industry and peer standards.
- Ensure fair lending compliance with consistent data across both institutions.
If your credit union is considering a merger, whether you’re the surviving institution or not, reach out to us for a deeper understanding of your loan portfolio and the loan portfolio of the other institution involved. We can help you both determine if this is the right move for you and your members and help ensure a smooth transition.
