Credit unions eyeing branch prospects in Bank of America'smassive unloading of properties across the U.S. ought to be bothrealistic and wary of any quick fixes in hopes of landing specialdeals even though “there could be prime locations at discountedbook value,” New York investment banker Peter Duffy warnedMonday.

Given economic conditions, the opportunities will likely be inreal estate – branch brick and mortar – rather than acquisition ofaccount relationships, said Duffy, managing director of SandlerO'Neill.

The fact is, said Duffy, CUs are at a definite disadvantage ascompared to community banks making potential bids on what he called“dislocations.”

“Whether a whole franchise merger or branch sales, like that ofBank of America, healthy community banks have access to secondarycapital and have seen their base range for insurance lowered,” saidDuffy.

But CUs do not have that access “and are unsure of the totalcost of assessments over the next 10 years,” said Duffy.

“Most credit union managers tell me they are hesitant to beginspending more on marketing, branching or merger discussions intoday's environment,” said Duffy, considering the unknowns ofcapital requirements, the NCUA assessments “and no access tosecondary capital.”

Nonetheless, “these kinds of dislocations as in the Bankof America branch sale do present opportunities for healthyinstitutions to find available facilities at price levelssignificantly below what they were” a year or two ago, said Duffy.The Sandler O'Neill executive suggested CU managers consider makingbranch acquisition “in the context of their overall strategicplan.”

“A discount to book value” may make a deal look attractive on avaluation basis, he said, but CUs need to consider the impactof both new member acquisition and current member convenience.

Buying a group of branches because of a favorable price“may really not fit into your geography or those markets where youreally want to be,” Duffy advised.

He said it is still too early to know when and where BofA willstart the sale process as the San Francisco andCharlotte-N.C.-based bank determines whichbranches should remain based on various factorssuch as customer convenience.

One CU with recent experience in buying bank branches is the$1.2 billion Royal CU of Eau Claire, Wis., which 15 months agopurchased 11 central Wisconsin facilities including loans of anailing Madison savings bank.

An executive there suggested CUs contact leading accountingfirms, investment bankers and top attorneys in prospective BofAareas before proceeding too far with negotiations.

“You really should contact those CPA firms to find out whatreally is available, and you do have to be cautious about pickingareas where you really want to grow,” advised James Watts, RCUchief investment officer and a former Chicago banker.