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The CU2.0 Podcast
This podcast explores contemporary, critical thinking and issues impacting the nation's credit unions. What do they need to be doing to not just survive but prosper?
The CU2.0 Podcast
CU 2.0 Podcast Episode 277 Michael Bell on Credit Union - Bank Mergers
This year there will be over 100 credit union mergers with other credit unions.
But there also will be mergers of credit unions with community banks and now is the time to start learning about what’s involved and what the payoffs are.
One big reason: probably half of the nation’s community banks are available to buy.
Another reason: for many reasons, many credit unions are hanging back, reluctant to take this plunge.
Part of the reason for hesitation is simple lack of information and on the show today is Michael Bell, Co-Chair of the Financial Institutions Practice Group at the law firm Honigman, the man who did the first credit union - bank merger in 2011 and who estimates that he has been involved in probably 90% of all credit union - bank mergers.
Bell knows what works, he knows why many of these deals never reach the finish line, and he also knows the payoffs for the institutions that in fact do close a deal.
The important fact about credit union - bank mergers: ultimately they are about money. That’s not so for many credit union - credit union mergers.
More credit unions with an eye on staying competitive will be eyeing doing deals with banks, predicts Bell.
This is a provocative show.
Listen up.
For more info on mergers, listen to our trio of podcasts with Peter Duffy - #274, a quick news flash in 2022, and episode 119.
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Welcome to the CU2.0 podcast.
SPEAKER_01:Hi, and welcome to the CU2.0 podcast with big new ideas about credit unions and conversations about innovative technology with credit union and fintech leaders. This podcast is brought to you by Quillo, the real-time loan syndication network for credit unions, and by your host, Longtime credit union and financial technology journalist, Robert McGarvey. And now, the CU2.0 podcast with Robert McGarvey.
SPEAKER_00:This year, there will be over 100 credit union mergers with other credit unions. Over 100. The number keeps growing year on year. But there also will be mergers of credit unions with community banks. Now is the time to start learning about what's involved and what the payoffs are. in these bank credit union deals. One big reason, probably half of the nation's community banks are available to buy. Might not have a for sale sign on the front door, but they're willing to sell. You just gotta ask them nice. Another reason, many credit unions are hanging back, reluctant to take this plunge. Why? Well, part of the reason for hesitation is simple lack of information. And on the show today is Michael Bell, co-chair of the Financial Institutions Practice Group at the law firm Honigman. He's the man who did the first credit union bank merger in 2011, and he estimates he has been involved in probably 90% of all credit union bank mergers since then. Bell knows what works. He knows why many of these deals never reach the finish line. He also knows the payoffs for the institutions that, in fact, do close a deal. The important fact about credit union bank mergers, ultimately, they are about money. That's not so for many credit union credit union mergers. You know that. Bank credit union mergers are all about the measurements. More credit unions with an eye on staying competitive will be eyeing doing deals with banks, predicts Bell. This is a provocative show. There's a lot to think about here. Listen up. You're kind of the go-to guy about credit union bank mergers.
SPEAKER_02:Yeah, that's right. You know, I did it about 10 years ago and the first one and it's become my life. That's for sure.
SPEAKER_00:Take us back. What was that first one?
SPEAKER_02:The very first one was United Federal Credit Union in Southwest Michigan. That's where they're based. And their purchase of Griffith Savings Bank, which was in Northwest Indiana. I think we closed that in 2010. Started it in 2009, but closed in 2010. And then it's, you know, the rest is history after that.
SPEAKER_00:And what kind of assets were involved there, the institution size?
SPEAKER_02:Yeah, that's interesting. So at the time, right at the time, United was, oh, about maybe 1.6 billion, 1.5.
SPEAKER_00:That was big for that time. Today, that sounds small, but that was big.
SPEAKER_02:And the bank itself was, I think about, it was a one branch, I think about 80 million in assets bank, 80 to 90 million in assets. Yeah.
UNKNOWN:Yeah.
SPEAKER_00:And what did the credit union want with that bank?
SPEAKER_02:Yeah, so it was the strategy that remains today, you know, in part. I think that, you know, there's maybe 10 or 20 different reasons why credit unions are doing this, but there's really four main reasons. One of them is geographic, right? It's a geographic business that we're in in this industry. So they definitely had an interest in expanding and growing their presence in Northwest Indiana geographically. for some diversity. And I think that largely drove the transaction. And then just scale, you know, gaining some scale, gaining some size is important for institutions today and was 10 years ago.
SPEAKER_00:Now, if my math is right, there's going to be, oh, 10 to 20 times more credit union, credit union mergers this year than credit union bank mergers. Am I right?
SPEAKER_02:Yeah, so I think there's two ways to look at it, right? If you look at the number, you are correct. But interestingly enough, if you look at the assets involved, it's the opposite. So, you know, I don't have the exact numbers, but I'll tell you like in the third quarter, you know, with bank, CU acquisitions of banks involved about 1.5 billion in total assets, right? And then you look at the credit union to credit union mergers and, you know, even though there's more of those, the total assets involved are far smaller. So one's a volume business, one's a size and scale business.
SPEAKER_00:You're certainly right, at least to some extent, where a lot of the credit union mergers are what I call mercy marriages at the request of the regulator. And usually it's a tiny credit union being absorbed by one that's bigger and has the health to absorb the tiny credit union. Yeah. Now, is it harder for a credit union to merge or acquire a bank than it is for two credit unions to combine?
SPEAKER_02:It's a good question. So I would say no, but I would say the transactions are different, right? So a credit union to credit union transaction involves a mix of business and emotional issues, and that's not used in a negative sense. It just involves different issues when you combine two cooperatives. Where in a credit union bank acquisition, it's really a business transaction, period. So if you look over the last 13 years at all the transactions we've done, as an example, just to highlight it, Robert, there have been zero board seats asked for or given. Right? And it's different in credit union to credit union combinations. That's not true. Those are issues that you wrestle with.
SPEAKER_00:Oftentimes, when a merger falls apart at the end, it's because one of the boards said, to hell with this. I'm not going to give up my board seat.
SPEAKER_02:Yeah, and that is well-placed in credit union land, but that is a non-existent issue in these transactions. And I think it's important to note the differences. Regulatorily, legally... They both work in different ways, but I wouldn't consider one more difficult or more challenging than the other necessarily, but they're absolutely different types of transactions.
SPEAKER_00:So why aren't we seeing more bank credit transactions?
SPEAKER_02:Yeah, so I think, I'll be honest, I think at this point, it's not necessarily a lack of sellers. In today's marketplace, I think there are many, many, many banks available that are either for sale or would sell. I think it's a shortage of buyers. And I'll tell you that part of that is inherent and there's nothing we can do about it, meaning this is probably only applicable for maybe two to 250 credit unions of the almost 5,000 that exist, just based on size and capital and things of that nature. But within that two to 250, some aren't interested in this strategy, which I respect. But I believe that we would have even more of these if there were more buyers to connect to these sellers in this market.
SPEAKER_00:I also know that we've seen some really pretty strategic pinpoint acquisitions. I remember talking with one credit union that had acquired a small bank because the small bank had an expertise in lending for private airplane purchases. That was it.
SPEAKER_02:Oh,
SPEAKER_00:that was your deal? I thought that was the coolest deal. That one made the most sense. And they were taking on the staff of the people who actually knew how to do the airplane deals. Yes.
SPEAKER_02:So just let me put the four things out there, right? That deal is a perfect example of one of what I would call the four main strategies for this, right? I mentioned one, geography. Two... This absolutely is about talent and capabilities, whether that's people or technology or a combo of both. These are 100% about that. The private aircraft lending is a perfect example of that. Three, it's also about assets or liabilities. You know, depending on where we are in the cycle, this could certainly be about liquidity and deposits or certainly could be about loans and loan diversification, which again speaks to the aircraft deal you mentioned. And then the fourth thing that I want to highlight to be clear, is that these transactions, regardless of what you buy and what you pay for it and its condition, are revenue positive from day one, just based on the science of accounting and inherent expense saves, a whole series of things. So credit unions can invest their members' money, can put it to work in many ways, including buying real estate and building a branch, right? That's a great strategy, but it's not revenue positive on day one. That's a long game. These are revenue positive on day one, period. Every time, always.
SPEAKER_00:Does a credit union need a lot of cash, a lot of capital to acquire a bank? I think you can do a credit union deal with spare change in your pocket often because not much money is changing hands.
SPEAKER_02:Yeah, you're right. Yeah, you're right. So in these transactions, absolutely, we're using retained earnings or capital or Could also use secondary capital or sub-debt, right? Call it what you will. But yes, we are paying with cash and we are trading our green liquid cash for two things. One, for their assets, for sure. We're going to get assets back, whether it's real estate, loans, you name it. But then assuming there's a premium involved, the rest of our spend turns into an intangible asset that we all call goodwill. But you are correct. We're using cash. Without question, we're using capital in these.
SPEAKER_00:And that brings you back to where you began, where you talked about a couple hundred credit unions having the wherewithal to even consider doing this.
SPEAKER_02:That's correct. Yeah, you need capital. You need a way for this to be safe and sound, and that requires capital. That requires a credit union that is earning money, that has a good ROA every year, that has management that's capable. You know, there's a series of factors that are required to make sure these can work and that they're safe and sound. And that's what the regulator obviously babysits and makes sure is the case.
SPEAKER_00:Now, my sense, and I think you agree with this, is that roughly half of the community banks that are out there are potentially for sale if you just ask politely and arrive with money in your pocket.
SPEAKER_02:Yeah, so I make a bad joke as an example that, you know, Illinois has more community banks, I believe, than any state in America. And that every community bank in Illinois is either for sale or would sell, right? So partially tongue in cheek, partially facetious. But based on what you just said, Robert, I agree. I would tell you, I think over half of the community banks in America today, a billion in size or less, are 100% for sale or would sell. I agree.
SPEAKER_00:Well, I think they see themselves on the wrong side of the scale equation where the money center banks, the chases just get bigger and bigger and bigger. So every transaction costs them less and less money. And I'm sitting here and I'm doing 10 chases, doing 100,000 on that day. I can't compete, man. I'm just priced out of the market.
SPEAKER_02:I agree. I think there's the scale issue and then layer into that, right? Layer into that issue. succession planning, right, whether for your board or for your management. Layer into that our current, you know, the current margin pressure with, you know, higher deposit rates and your existing loan portfolio. There is a lot of challenges that are nobody's fault, but they're factual that really pressure these small community banks without question.
SPEAKER_00:Now, how often do you get involved in an acquisition, discussion, a merger, discussion, bank, credit union, and the deal never is consummated. I know in credit union land, I can't get it. People won't give me an exact number, but it's significant.
SPEAKER_02:Yeah, it's significant here too. Last year, I think there were four different legislatures I testified in front of because various banker lobbies have come out and said, hey, these should be prevented. This is unfair.
SPEAKER_00:But it's the bankers who are... What I don't get about that. I'm not an expert on bank lobbying. It's the bankers who want to sell it. They want to cash out. They want to put money in their pocket.
SPEAKER_02:Right. And they argue we have this unfair advantage. And I explain, look... There's no such thing as a hostile takeover here. There's no such thing such that if I look just personally, all I have is my own information because these things are confidential. You know, you don't get all the statistics. I'll tell you, Robert, I think we're actually successful 10% of the time, right? Nine out of 10 times, we're going to lose the contest. We're going to decide not to do the deal. I mean, you name it. So I would think for every 10 of these we try, one of them is successful. Just from my own personal experience. Now, look, I can point you to a transaction where it was the first try of credit you ever made and we were successful. That happens. I can also point you to a client of mine that I've had for six or seven years and we've yet to do a deal and we've looked at 50. So it runs the gamut. But I anecdotally, incidentally, personal to me think it's about 1 in 10 success rate.
SPEAKER_00:Well, you've had successes in this business. So your track record has to be looked upon as a good indicator of a high-performing result. And you make an excellent point. These are not hostile takeovers. The great gecko is not there plotting how to lower the stock price to get it for pennies. It doesn't work that way here.
SPEAKER_02:Yeah, that's right. I mean, this is a voluntary action by the selling bank, deciding to sell and having a shareholder vote, like legitimately. You know, we can't force anything. We could send out all the LOIs we want and say we're going to pay them billions and billions of dollars. Doesn't matter. There's nothing we can do. They have to voluntarily elect to sell, period.
SPEAKER_00:In your experience, how often does the acquiring credit union keep most or all of the branches open and how much staff reduction is there on the bank side after these deals?
SPEAKER_02:Yeah, so look, first and foremost, these transactions are about the money, right? Let's be clear. But second, we, the credit unions, tell our story because it's important. And our story does involve keeping most, if not all, the branches open because we want the network and hiring most, if not all, the people in every transaction because that's what happens. So in general, we hire more people than a different type of buyer without question. We keep more branches or all branches open versus other types of buyer without question. And then finally, you know, the community piece, because it's important to community banks, kudos to them. We continue and slash, you know, amp up community support because that's in our bones, right? That's in our DNA. So in the end, it's a pretty good story to tell for the community banker to his employees, his community. as well as to his shareholders. Or I should say his or her. But to the shareholders, the community, and the people, it's kind of a win-win-win. And it sounds like I'm a salesman. I'm not selling this. It's factual.
SPEAKER_00:I believe you, actually, because oftentimes when two banks merge, there is huge staff reduction on the side of the bank that's being acquired. It's always a merger of equals, but there's no such thing in my experience. There's always one institution that's driving the bus. their staff will be retained and the other staff will be let go. Not on the branch level. Branch people tend to survive. We're talking about executives.
SPEAKER_02:Yeah. And again, it depends. I'll tell you there's really two scenarios that I see. Many of the sellers are coming to the table because management is aging out or wants to retire. So there's a natural, hey, we're on the way out. We need to sell the bank. We don't have a replacement. That occurs often.
SPEAKER_00:Yeah, oftentimes the bank was founded by the current president's father or grandfather. Now, the current president is like me, an aging baby bloomer. But the current president doesn't have a child who's capable or wants to take on the job, and no one else seems to be available. So let's cash out, get a few bucks. This is worth some serious change. Let's collect it. Perfectly rational thinking.
SPEAKER_02:Yeah, it's 100% correct. And then the other scenario, which is usually a win, There happens to be young management or younger management that has a long runway to retirement that is eager to join a bigger institution and have some more firepower to do what they do for their customers. So one or two scenarios get presented to us. And there are many stories I can point to of the bank management joining the credit union after closing and being able to do more. for their customers, now members, and being very pleased about that, right? They have a bigger balance sheet to lever, to provide products. So one of two things will occur there.
SPEAKER_00:Is there any difference between a state chartered credit union doing one of these deals and a federally chartered credit union doing one of these deals?
SPEAKER_02:In essence, no, right? The question where that may come up is simply based on field of membership, because that applies here. These are not exempt from FOM. So depending upon the state charter, you know, we have to look closely as to their FOM rules and certain states are better than other states, right, when it comes to FOM. So there are states that are probably more restrictive that make these a little trickier, but there's wonderful state charters out there, Michigan, Wisconsin, Washington State, Florida, Georgia, Alabama, just to name a few. that we're doing these all the time with those state chartered institutions. And then I do want to mention, you know, the federal multiple common bond charter, in my opinion, is the best charter in existence, the most malleable, the most flexible, the most dynamic. And many of the purchasers I work with are federal multiple common bond credit unions.
SPEAKER_00:Now, what's the attitude of the federal regulator towards these deals?
SPEAKER_02:Yeah, so look...
SPEAKER_00:I know they're pretty... pretty happy about credit union mergers. And in fact, they initiate some of them, although I think they'll probably deny that.
SPEAKER_02:They have to remain apolitical and they do, right? But I believe that these transactions are viewed in a positive light as long as the purchasing credit union is safe and sound and should be in this business, right? You know, we can't take a risky credit union and do a risky transaction. But with the right credit union buyer, I believe the regulators are very supportive. This is a very efficient way to get more new, different funds into the credit union system, right? There's a lot of wins here when you look under the covers if the buyer is the right kind of buyer.
SPEAKER_00:Do any of these deals go bad? Do any of them go sour? I'm not necessarily asking you to point to one of yours. Are you familiar with any that just have gone horribly bad?
SPEAKER_02:Yeah. So, I mean, look, I think there are some... horror stories for sure that i've been a part of right post-closing some things come up um that are problematic that does occur very rarely right a sharp minority of the cases because when you involve people sometimes people do things that are not honest so there's definitely some random or some rare occurrences but that happens anywhere and everywhere
SPEAKER_00:uh oh when i was a kid i worked for a very big fortune 25 company that went out and bought, it was an oil company, went out and bought a mineral company. And within two years, the mineral market had just gone to hell. This was a deal. This is a poster child for an awful deal. And I think they wound up closing that company within five or 10 years, just walking away from it. So these deals happen. And who knew that the mineral market was going to go that bad, but it did. So stuff happens.
SPEAKER_02:Right.
SPEAKER_00:So, yeah, I would assume some of these deals do go bad.
SPEAKER_02:Yeah, it's different. And I mean, the feelings, the things I see when something goes bad, right, are largely based on a seller that was not honest, right, or a seller that was not fully forthcoming, right? that painted a different picture than what was actually there. You know, and that, again, that occurs in every industry and every deal and every kind of transaction. By the way, that occurs in our day job, right? In credit union land. I mean, we have people that will come in and we will give them a loan and it turns out they were dishonest with us, right? So it's not like we're not in the risk business. We are 100% and sometimes things go bad. But again, that's the minority of times. That's our job is to keep it to the very random or few people exceptions.
SPEAKER_00:What's the fastest bank credit union deal that you've put together?
SPEAKER_02:You know, it's interesting. These have their lifeline or timeline. But, you know, if we look at all the ones done, I would say the quickest we have seen occur has taken about seven to eight months. I think that would be the fastest.
SPEAKER_00:That's That's faster than I would have guessed, actually. Credit unions as a whole, I'm sure you know this probably better than I do, move really slowly. And seven months in credit union land is like seven hours at chase. So seven months, I think that's a speed record in my mind. Wow.
SPEAKER_02:Yeah. And I mean, look, and that goes to show you, I mean, again, we're talking about the minority of credit unions, right? There are, in my mind, 100, 150 or so that are dynamic market leaders, sophisticated, move at the speed of banking, that are very impressive without question.
SPEAKER_00:Now, one thing I've noticed, not involving mergers and acquisitions, but involving hiring, is that in the last five years or so, credit unions have become open to hiring bankers. and to their institutions. You go back 10 or 15 years ago, bankers were the antichrist. And of course, we'd never invite them into our house. That attitude seems at least at the larger institutions to have gone away. There's a recognition that these bankers have skills that are really pretty useful. I
SPEAKER_02:agree completely. And I will tell you that I've noticed over the last 20, my career spans about 20 years at this point, which ages me a little. But I have noticed that paradigm shift where today, many of my clients, the C-suites are full of ex-bankers without question. And I'll tell you these transactions, I mentioned it earlier, are definitely driven by the ability to gain bank trained talent. That's real. It's material for an institution and kudos to the bank world, community bank land of the bank world, I believe they are superior when it comes to the banking schools and banking training. We could bring on people on the front of the house and the lending side and the back of the house and the underwriting side, you name it. And they're difference makers for the acquiring institution without question.
SPEAKER_00:That's fascinating. A long time ago, probably 20 years ago, I wrote an article about what was then a very high-flying company, Cisco Systems, a tech company that was doing a deal a month. And I asked the guy who was at Cisco, who was orchestrating these deals. And I said, you know, most of these companies you're acquiring are going to fail. The product's going to fail. And he said, hey, I know that, man. I'm acquiring talent. And if the product works, so be it. But before we do a deal, we have signed employment agreements with the people we've designated we need an agreement from before we sign the paper. And I said, oh, that was a whole different way of looking at this.
SPEAKER_02:Yeah, that's true. That's true because we can quantify the assets we get, right? The liabilities we assume. I mean, that's math. That's easy to do. We can look at return on assets when it comes to the math and the spend. But the one piece you can't necessarily put the math on in a tangible way are the people. And I'll tell you this, you know, I was just discussing this earlier this week. I was speaking in Texas to a room of CEOs and I said, look, one of two things are going to happen. The bank talent for the most part, will join us. We'll have some folks self-select and leave, right? It's not their culture. It's not for them, what have you. But the folks that stay are going to become some of our best employees. And I've seen it time and time again over the last 15 years. These people, remember, Robert, are leaving a smaller institution, joining a bigger one. So they're going to be provided with the same or better pay and benefits, better opportunities for advancement, you know, better opportunities for training and career, you name it. And they really become champions. They really become stellar employees. And we've got facts to prove that over these last years that shows that it's a real gain in talent. It's very powerful for a buyer.
SPEAKER_00:So I'm sure you've heard from credit unions. Yeah, but they won't fit in culturally. What do you say to that?
SPEAKER_02:Yeah, so I say what I said. Look, There may be a couple of folks at every deal that don't and they'll self-select and leave. Don't get me wrong.
SPEAKER_00:That happens with mergers of different kinds of companies. Two oil companies would merge and a bunch of the people at the acquired company would leave because they don't like the people at the other company. It's different cultures.
SPEAKER_02:Yeah, and here it's a minority. I always believe that it's just a minority of employees and most stay, embrace it and become real champions. They fit right into the culture and they find it to be very rewarding and very comfortable. Again, let's avoid a political argument because I'm not making one, but I'm saying to you, at least for the clients I work with, they're pretty darn good employers, to be honest, right? These are great places to work and people don't really know that. It's a secret, unfortunately. And once folks show up there and they're working there, they're like, wait a second, this is a great place to work. And it ends up being a great story.
SPEAKER_00:I just saw in Credit Union Times today, a large North Carolina credit unit, a very large one, is letting go of 30 people and a staff reduction. Now, I can't imagine a Chase sorrowfully announcing with great regret that they're having a 30-person staff reduction.$3,000, maybe? And that's part of that credit union culture is, oh, heavens, man, we feel so bad about this. And it's sincere. They actually do feel bad about it.
SPEAKER_02:Yeah, and look, it made the news because it's such a rare occurrence, Robert. I mean, just think that through. It's so rare, it made news. How interesting is that, right?
SPEAKER_00:It's a fairly sizable story. So how did you get into doing these deals? The first one that you did, I guess that was 12 years ago. That was a pretty revolutionary concept. I mean, that was violating all the principles of God and country in credit union
SPEAKER_02:land. Yeah, so luckily, and I'm sincere in this, luckily I was a lot younger and I was naive because I looked into it.
SPEAKER_00:No, I believe that.
SPEAKER_02:No, I'm serious. And
SPEAKER_00:nothing said you could do it. I believe you entirely. When you're young, you say, oh, that could be possible. Whereas all the old guys are sitting in the room going, oh God, the kid's dumb. He'll learn.
UNKNOWN:Yeah.
SPEAKER_02:Because nothing said you could do it, right? But also nothing said you couldn't. And I, being young and naive, was like, well, I think we can do it. The rest is history. I was young and naive. Thank God.
SPEAKER_00:This is your primary focus. Why did you stick with this primary focus?
SPEAKER_02:Yeah, it found me. It found me. So right, I did that one. And then shortly thereafter, I believe it was MeQ of Baltimore found it or saw it and called me up and said, hey, there's this bank we know across town. They want to sell to us. Can you help us? And I did it. And then shortly after that, GFA Federal Credit Union of Massachusetts called and said, hey, we saw these two things. There's a little bank in New Hampshire that we want to buy. Can you do it? And I said, yes. Then I did the first 14 or 15 in a row right over a course of years, and it just became my life, like a slow trickle. Now, it's the vast majority of what I do. I had no visibility into that. I could not have predicted that.
SPEAKER_00:Now, if you look at the gross numbers of these deals, have you done... The majority of those deals, what percentage of the deals, the bank credit union deals?
SPEAKER_02:Yeah. So full disclosure, I can't give you exactly, right? Because it depends on what you count, how you count them. But I believe I've done 90% of them.
SPEAKER_00:That's my sense.
SPEAKER_02:Yeah. Yeah. Essentially, I've done the vast, vast, vast, vast majority of them. And that won't always be the case, right? So when I first did it, I was the only guy that did it. But my work product can be FOIAed. You know, what I figured out can be FOIA, and it was thousands of times. And now anybody can fill out a piece of paper and make it happen. But there's other things involved. You know, there's strategy. There's operational things. There's best practices. There's knowledge involved. This is not a commodity. Each deal is unique.
SPEAKER_00:But it's dealing with the personalities. Yeah. keeping all the personalities around the table, talking with each other, not cursing too much, not throwing anything.
SPEAKER_02:Yeah, that includes both the deal making and then that includes the regulatory piece as well, right? There's kind of these two big phases where you've got to manage the situation to one, get the deal to come together and two, get the deal approved. And there's different people involved in both of those. And that's, I think, where the value comes in. You're dead on. That's where... Someone like me can deliver value that is far beyond some form of a deal and checking boxes.
SPEAKER_00:Well, one thing you know probably better than anybody else in this sector, I don't see how anybody could be better, is how to deal with NCUA. Who do you make the first phone call to? What's the second step? That kind of stuff. It's what kind of papers do I need before I make this phone call?
SPEAKER_02:Yeah, there's a regulatory pathway, right? And it's an interesting dance because it involves essentially every regulator, right? FDIC and CUA, sometimes OCC, sometimes states. And there is a lot of strategy there. Again, I think someone with no knowledge of this could perhaps push one through, right? But I believe there's strategy there. that can quicken the pace, can assure approval, those kinds of things that's very important.
SPEAKER_00:Well, you probably want to time which agency you're going to. There's a sequence that you're going to go to. Yeah, there is. That's probably going to work better. And someone who has done this before wouldn't know that sequence probably.
SPEAKER_02:Yeah, there's a sequence and there's also a coordination amongst those agencies and they'll try to coordinate themselves. That's fine. But I think there's assistance to be had in helping them coordinate themselves. Right. Because, again, these agencies, they have a day job and it's not this. Anytime we submit a deal to them, it's in addition to what they're supposed to do every day. So it's taxing. And to the extent we have the knowledge to know those pathways and can help get everything organized, that saves months.
SPEAKER_00:Strangely, I think at least the NCUA would. Every time two credit unions merge, there's one less reason for NCUA to exist. A bank credit union merger doesn't have that impact on the math there.
SPEAKER_02:That's right. In fact, it's the opposite. We're bringing more assets into the credit
SPEAKER_00:union system, which
SPEAKER_02:I think is a net win, to be
SPEAKER_00:honest. I look at this very favorably. Before we go, think hard about how you can help support this podcast so we can do more interviews with more thoughtful leaders in the credit union world. What we're trying to figure out here in these podcasts is what's next for credit unions. What can they do to really, really, really make a difference in the financial scene? Can't all be mega banks, can it? It's my hope it won't all be medical banks. It'll always be a place for credit unions. That's what we're discussing here. So figure out how you can help. Get in touch with me. This is rjmcgarvey at gmail.com. Robert McGarvey again, and that's rjmcgarvey at gmail.com. Get in touch. We'll figure out a way that you can help. We need your support. We want your support. We thank you for your support. The CU2.0 Podcast.