Credit Unions

Mercer Capital is an employee-owned business valuation and financial advisory firm founded in 1982. We offer a broad range of valuation services and assist clients with transaction-related needs, including M&A advisory and representation, fairness opinions, and strategic alternatives assessments.

Mercer Capital is also one of the nation’s leading valuation firms serving financial institutions including banks, credit unions, and FinTech companies, and regularly assist these clients with significant corporate valuation requirements, transactional advisory services, and other strategic decisions.

In 2022, Mercer Capital was ranked in the Top 3 advisors for credit union/bank M&A deals since 2015 (per S&P Global Market Intelligence). Mercer Capital has experience providing valuations of financial institutions in a variety of niches of financial services and across the corporate lifecycle (from early stage to growth to more mature), including:

• Banks, Credit Unions, Thrifts

• CUSOs

• FinTech Companies (including niches such as payments, digital lender, SAAS, InsurTech)

• Insurance Agencies

• Trust Companies/Wealth Management Firms

• Specialty Lenders (including niches such as mortgage, equipment/auto finance, credit card)

We regularly work with credit unions in merger and acquisition advisory engagements and help CUs assess the value of a transaction and the potential impact of the transaction on the acquiring CU’s balance sheet and future performance and capital/net worth ratios. We assist credit unions in evaluating the attractiveness of acquisition candidates (whole banks, branches, or CU merger partners), determining a valuation range for the target institution, financial modeling of the transaction and key deal metrics, and estimating fair value marks for financial assets (loans, core deposit intangibles) and liabilities (CD portfolio) acquired for financial statement reporting purposes.

Services provided to CU acquirers prior to closing include:

• Efficiently and effectively analyze the target bank or CU and determine a reasonable valuation range for the target bank or CU

• Assist the CU acquirer with performing financial due diligence of the Target and negotiating and analyzing the financial terms of the potential transaction

• Analyze the financial effects of the transaction on the buyer and their net worth/capital ratios

• Prepare an analysis of the pro forma impact of the potential transaction on the acquirer’s net worth and capital ratios at closing and earnings, capital ratios, and net worth over a multi-year forecast period

• Analyze and test sensitivity of key deal metrics on a potential transaction to evaluate different terms and ensure that the consideration paid in a transaction meets the financial criteria of the acquiring CU

• Prepare reports related to the valuation and analytical services performed and present our assessment of the valuation range and strengths/weaknesses of the potential transaction to the CU’s board and/or management team

At closing Mercer Capital has experience providing independent valuation opinions to CU acquirers on the fair value of certain financial assets, intangibles, and/or liabilities acquired in business combinations for purchase price allocations and financial statement reporting purposes. These services include preparing valuations of acquired loans, core deposit intangibles, other intangible assets acquired, and/or CD portfolios as of the transaction closing date to assist acquirers with the fair value marks for financial reporting purposes.

For credit union mergers, we can also provide the CU acquirer with a valuation of the fair value of the equity acquired. For the acquired loan portfolio valuation, the analysis considers: the loan portfolio characteristics (such as loan balances, weighted average coupons, variable and/or fixed rate structure, future repricing data for variable/adjustable loans, and weighted average maturities); prepayment rates; likelihood of default and severity of loss upon default, and discount rates.

For the acquired core deposit (customer relationship) intangible, the analysis considers: the nature of the customer relationships and their retention characteristics; the economic benefits derived from the acquired customer relationships; and a discount rate to derive the present value of the cash flows over the estimated life of the deposit base.

Our advantages include the following:

• We regularly handle similar engagements and have relevant experience working with CUs.

• Mercer Capital has both deep CU industry expertise and is a recognized thought leader in the valuation profession

• We have vast experience working with CUs on mergers and acquisitions, including working on over 15 CU transactions since 2015 and assisting CUs with the acquisitions of community banks, bank branches, insurance companies/agencies, RIA/wealth management firms and mergers with other CUs. In 2022, Mercer Capital was ranked in the Top 5 advisors to CU/bank M&A deals since 2015 by S&P Global.

• We have an experienced staff with leaders on CU engagements typically having over 20 years of valuation and Financial Institution industry and valuation experience

• We have a large amount of project experience and can provide valuation and financial modeling/analysis on a transaction needed at all points along the transaction timeline (from pre-LOI to deeper due diligence once an LOI is in place, to transaction announcement/approval to closing.

• Mercer Capital follows professional appraisal standards of valuation preparation and documentation.