Why credit union members should be cheering the strategic merger boom

The pace of consolidation in community banking has accelerated since 2020, as a confluence of factors continues to pressure small financial institutions. The recent period has brought (1) shifts in consumer preferences that demand maximum convenience and digital technology, (2) sophisticated fraud schemes and cybersecurity risks, and (3) increasing competition from nonbank financial institutions.

Meanwhile, the high cost of deposits and regulatory pressure on fee income puts additional strain on profitability.

Finally, the industry’s executive leadership is aging into retirement, forcing a difficult succession exercise in a tight labor market.

Naturally, these factors encourage consolidation, and the credit union industry is responding with dealmaking at a record pace. By the date of this article, the industry has announced 15 whole bank transactions in 2024, already surpassing the previous annual record of 14 such announcements (2022).

 

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