MADISON, Wis.–The 14 credit unions that have acquired 16 banks since 2012 all had higher capital ratios, greater returns on both assets and equity and lower loan net charge-off ratios than peer group credit unions by the end of 2017, according to an analysis released by the Filene Research Institute.
The report, “Credit Unions’ Acquisitions of Banks and Thrifts,” was authored by David A. Walker, a business professor at Georgetown University.
As CUToday.info has reported extensively, consultants and attorneys working with CUs on bank acquisitions have indicated more deals are coming, and Walker found similar sentiment in his interviews with CEOs at the 14 credit unions that have bought or merged in a bank to date. Walker used the ratios factored into NCUA’s CAMEL ratings to determine the financial performance of the credit unions studied.
One factor that likely contributes to the better performance post-acquisition is that the acquiring CUs had to also be better performers prior to the acquisition in order to make the purchase.
Those CEOs who were interviewed for the Filene report include Avadian CU in Alabama, Achieva CU in Florida, Advia CU in Michigan, Royal CU in Wisconsin, Five Star CU in Alabama and GFA FCU in Massachusetts. Readers can get more information on any of those CUs by searching the credit unions’ names at CUToday.info.
“Credit union executives are likely to continue acquisitions so long as U.S. unemployment remains low and inflation is moderate,” the report states.
The full report can be found here.