By Glenn Christensen
NCUA approved 16 mergers in June 2016, an increase over the 10 mergers that had been reported in the prior month.
Not only were the number of mergers up, but the combined assets of merged credit unions were also up nearly $10 million compared to the prior month. For June, the total merged assets were down significantly to $225 million compared to last year’s $535 million. That’s a difference of $310 million. The mean and median assets of merged credit unions were down to $14.1 million and $8.4 million, respectively.
There were no acquisitions of credit unions with assets exceeding $100 million this month.
The largest merger was Kansas City, Mo.-based St. Luke’s Credit Union ($24 million) merging into Community America Credit Union ($2 billion) headquartered in Lenexa, Kan. St. Luke’s is well capitalized (11% Net Worth), has moderate delinquency (2.18%) and was profitable (0.38% ROA). “Expanded Services” was given as the reason for the merger.
The Statistics
The median size of acquiring credit unions was $205 million. There were two credit union acquirers with assets exceeding $1 billion.
With $2.3 billion in assets, CommunityAmerica Credit Union was the largest acquiring credit union in June. The $1-billion Credit Union of Southern California, Whittier, Calif., also acquired another CU via merger.
The acquired credit unions on average represent 4% of the assets of the acquiring credit unions.
The nearest merger of equals was Centralia, Ill.-based Kaskaskia Valley Credit Union ($12 million) and Mount Vernon, Ill-based Jeff-Co Schools ($9 million)
There was one credit union with less than $1 million in assets that was acquired: Jefferson County Public Employees Credit Union based in Menan, Idaho with $259,000 in assets, which was acquired by $146-million Connections Credit Union headquartered in Pocatello, Idaho.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to site the reason for the merger. Of the 16 mergers in June, the following reasons were given:
- Expanded services: 12
- Poor financial condition: 3
- Inability to Obtain Officials: 1
The median net worth ratio of the merging credit unions was 7.0%. Eight credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averages 3.9%.
Eight of the 16 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -0.15% and median -0.08% for June of 2016.
Below is a chart of the NCUA merger approvals for June 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.