• Why Aren't You Buying a Bank?
  • August 6, 2014 | Authors: Michael M. Bell; Steven M. Van Beek
  • Law Firm: Howard Howard Attorneys PLLC - Royal Oak Office
  • These transactions have happened! Both Federal and State Chartered CU's have purchased banks. All types of banks have been purchased including: mutual banks, publicly-traded banks; healthy banks; banks with financial challenges; banks with TARP money; and many others. So far, transactions have occurred in three NCUA Regions. Transactions have been approved by the NCUA, OCC, FDIC, Federal Reserve and various state regulators. These transactions continue to be viewed favorably by the regulators and the regulators are getting more efficient and comfortable in their reviews.

    What is So Great About Buying a Bank?

    With a properly structured and priced transaction, you will purchase an existing operation that will contribute to the bottom line, throwing off positive cash flow from day one. De novo branches certainly have their place in the market, but buying a bank allows you to establish a de novo branch full of loans and shares from day one. Our clients have used these transactions to expand their geographic footprint with great success. In addition, these transactions offer an opportunity to gain talent. We have found that these transactions typically lead to an increase in expertise in many areas, but most often in the member business lending area (i.e. originations, underwriting, and management). 

    Why the Urgency?

    Circumstances change. At this very moment, the circumstances inside and outside of our industry have aligned to make these transactions ideal. It will not stay this way forever; in fact, it will certainly change in the near term. Now is the time to add this component to your growth strategy. By adding banks to your target list, your credit union can automatically double its growth opportunities. 

    So Now What?

    Go on the offensive! It's that simple. We have found great success in a proactive approach. We are currently working with CU's nationwide that have decided to go on offense. The most recent transaction - a Florida credit union buying a National bank - was just announced. Being proactive is not rocket science, but a rather simple process involving some old-fashioned tools: target lists and a telephone.