Credit unions plan to merge. Source: Shutterstock.

While no one knows what the full impact of the current COVID-19 crisis will be, 40.8 million jobless claims as of May 28, 2020 will most likely have an effect on credit unions and community banks in the near and longer term. With economic uncertainty continuing, community financial institutions of all sizes may begin proactively seeking new opportunities to join forces and serve a bigger base through consolidation in the months and years ahead.

Credit union mergers are often unique. Although one of the credit unions in a merger will be absorbed (terminating their charter), there is typically no exchange of consideration (e.g. cash purchase price) for the merger. This can be a huge positive; however, the challenges of credit union mergers can often be more emotional than other types of acquisitions. For example, common statements at the onset of exploring mergers include: “We must be the surviving entity,” “We must have a majority of board members” and “Our name has enormous brand value.”

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