• Credit unions do not automatically acquire and retain all the bank ’ s accounts and customer . Credit unions must address with the NCUA why the customers fit within the current field of membership .
Navigating the financial , legal and regulatory aspects of purchasing a bank can be a complicated process . Receiving assistance from a qualified advisor , like those at Doeren Mayhew , will help simplify the acquisition process and provide expertise for a successful and smooth transaction .
Leveraging Subordinated Debt
To partake in strategic opportunities including bank acquisitions , many credit unions are turning to subordinated debt to boost their growth efforts . Unlike the regulatory accounting for a credit union to credit union merger , capital in a bank acquisition does not carry over to the acquiring credit union . To prevent capital dilution , credit unions should consider raising subordinated debt to fund a bank acquisition . Doeren Mayhew ’ s advisors suggest applying for subordinated debt at the start of a bank acquisition strategic initiative . Once approved by the NCUA ( and state regulator , if state-chartered ), the window to raise capital is two years and can be raised simultaneously to fund a bank acquisition .
When to Seek Assistance
Is your credit union exploring the idea of acquiring a bank ? While it may prove valuable in the long run , navigating the road to a successful transaction can be very complex . Whether your credit union is exploring a strategic opportunity , or ready to start the education process , it ’ s important to work alongside advisors you can trust to provide guidance for a smooth ride to the finish line .
Serving the industry for over 45 years , Doeren Mayhew ’ s Financial Institutions Group has experience with completing more than 100 credit union strategic transactions . Contact us today to learn more about our credit union merger advisory services . ■
Nearly $ 600 million has been raised since the start of 2021 for total outstanding of nearly $ 1,150 million — a record for subordinated debt levels . This year , the industry anticipates further increases following recent rule changes set by the NCUA that increases the number of credit unions that can gain access to secondary capital . Complex credit unions , defined as those with more than $ 500 million in total assets , and new credit unions , those in operation for less than 10 years and have total assets of not more than $ 10 million , can now access subordinated debt .
Issue 2 | 2022 VIEWpoint 17