Increased regulatory burdens combined with demand for new mobile products are driving merger activity among credit unions. As several community credit unions race to find partners, Plymouth, Minnesota-based TruStone Financial is exercising patience, says CEO Tim Bosiacki.
Bosiacki says he is concentrating on TruStone’s needs, not what his competitors are doing. Credit unions, for the most part, provide the same services as traditional community banks. One of the major differences is that most credit unions are member-owned. Bosiacki, 56, has been in the financial services industry for more than 25 years. Before joining TruStone, he spent 19 years at TCF Bank in St. Cloud, Minnesota. TruStone usually stays close to home with its deals, as it did with Cudahy, Wisconsin-based Ladish Community Credit Union in 2013; Kenosha, Wisconsin-based A M Community Credit Union in 2012; and Ukrainian Credit Union of Minneapolis in 2011. TruStone has 11 branches across Minnesota and Wisconsin. Earlier in 2015, TruStone reached $1 billion in assets, which it attributed to an increase in lending.
What does TruStone look for in a merger partner?
We prefer a credit union with a proven track record that delivers value, services amenities and security to its members and employees. Most importantly, however, the member base of each merging credit union should benefit from that merger. We have an appropriate and controlled strategic growth plan that mergers and acquisitions are a part of, but not at the expense of our current membership employees or increased risk.
Do you expect consolidation among credit unions to continue?
Continued consolidation of credit unions is inevitable if the goal is to bring members better services, increased convenience and capabilities in more places. In addition to meeting these goals, the increasing compliance cost and regulatory burdens for smaller credit unions makes mergers a very real conversation that many credit unions are now having.
What trends are driving mergers in the sector?
Credit union mergers are driven by two factors: first, satisfying the needs of the members for new services or products as efficiently as possible; and second, the changing regulatory environment of the credit union industry. Financial institutions need to continue to provide servicing in branches while keeping pace with the increasing demands of electronic banking, and we need to do it in a regulatory environment which over the last seven years has placed an enormous strain on smaller institutions.
In the wake of the recession, widespread regulations of the financial services sector have spurred a range of acquisitions including SS&C Technologies Holdings Inc.'s (Nasdaq: SSNC) deal for Primatics Financial, and Vista Equity Partners' planned purchase of Solera Holdings Inc.