By Glenn Christensen
Mergers approvals were down slightly in April, with NCUA approving 20 mergers in April 2016, down from 23 in the prior month.
With the lower number of mergers the combined assets of merged credit unions was also down nearly $25 million compared to March of 2016. For April the total merged assets were significantly down to $345 million, compared to April 2015’s $1.5 billion. That’s a difference of more than $1.1 billion. The mean and median assets of merged credit unions was $17.3 million and $5.1 million, respectively. In contrast, in March the mean assets were $16.1 million.
There were no acquisitions of credit unions with assets exceeding $100 million during April. The largest merger was Central Falls, R.I.-based Dexter Credit Union ($96 million) merging into Smithfield, R.I.-based Navigant CU ($1.6 billion). Dexter CU was very poorly capitalized (5.2% net worth), had moderate delinquency (.93%) and was losing money (-4.10% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $ 240 million. There were seven credit union acquirers with assets exceeding $1 billion. With $2.8 billion in assets, Service Credit Union was the largest acquiring credit union in April.
Other credit unions with assets exceeding $1 billion included:
- Navigant CU, Smithfield, R.I. ($1.6 billion)
- Trumark Financial CU, Fort Washington, Penn ($1.7 billion)
- Robins Financial CU, Warner Robins, Ga. ($2.1 billion)
- CommunityAmerica CU, Lenexa, Kan. ($2.3 billion)
- Unify Financial CU, Torrance, Calif. ($2.2 billion)
- Financial Partners, Downey, Calif. ($1.1 billion)
The acquired credit unions on average represent 2% of the assets of the acquiring credit unions.
The nearest merger of equals is tied between two separate mergers:
- Rochester, N.Y.- based Wit Credit Union ($13 million) and Rochester, N.Y.-based Irondequoit Credit Union ($5 million)
- Warrenville, Ill.-based Northstar Credit Union ($111 million) and Plainfield, Ill.- based Oak Trust Credit Union ($46 million).
There were three credit unions with less than $1 million in assets being acquired. The smallest credit union was KCUMB Credit Union based in Kansas City, Mo. with $449,000 in assets, which is being acquired by $3-billion in assets CommunityAmerica Credit Union headquartered in Lenexa, Kan.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to site the reason for the merger. Of the 20 mergers in April, the following reasons were given:
- Expanded services: 17
- Inability to obtain officials: 1
- Lack of growth: 2
The median net worth ratio of the merging credit unions was 10.5%. Five credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averages 0.7%.
Seven of the 20 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.9% and median -0.5% for April of 2016.
Below is a chart of the NCUA merger approvals for April 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.