New York Leads Pack in Small Credit Union Mergers
If you’re a small dog and you want to play with the big dogs, you may need to find a larger buddy.
That appears to be the case in New York where the state led the nation during the first half of the year in the number of credit union mergers, posting 12 of the 132 on record, according to the latest NCUA’s Insurance Report of Activity.
A second factor that Levine predicts will speed up the merger pace is competitive salaries. The second factor behind New York’s merging trend is security for the member. A smaller credit union may not have the capital to invest to ensure a very secure technology platform for the well-being of members and their families, he said.
“It’s a global issue, not limited to just major metropolitan areas,” Levine noted. “It doesn’t stop at any state or national boundary. The CIO or CTO has to be a strategic hire.”
Jeff Paille, a partner in the Rochester, N.Y.-based accounting firm The Bonadio Group’s Financial Institutions Team, said factors leading to mergers in other states may not have been that important in New York. Credit unions in other areas experienced stress from the slumping housing market, but that was a minor issue in New York. Another thing he’s noticed is that as technology advances and regulation increases, it’s a challenge for small credit unions.
“Part of what we’re seeing now, though, is smaller credit unions struggling with two things,” Paille said. “One is succession planning, as senior management reaches retirement. The small credit unions, say under $30 million, are finding it very difficult to draw in younger, talented people. They’re looking to a larger credit union that has the resources that can attract younger talent.”