By Glenn Christensen
NCUA approved 18 mergers during November 2016, compared to the 11 approved in October.
During November, the total merged assets were up 500% to $426 million when compared to November 2015’s $85 million. That’s an increase of $342 million. The mean and median assets of merged credit unions were $23.7 million and $9.6 million, respectively.
There was one acquisition of a credit union with assets exceeding $100 million during the month.
The largest merger was Carson, Calif.-based Harbor Credit Union ($118M), which merged into the Las Alamitos, Calif.-based Southland Credit Union ($600 million). Harbor Credit Union was well capitalized (14.5% net worth), had relatively high delinquency (3.5%) and healthy earnings (0.82% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $297 million. There were three credit union acquirers with assets exceeding $1 billion.
With $2.3 billion in assets Unify Financial Credit Union, was the largest acquiring credit union in November.
Other credit union with assets exceeding $1 billion that were involved in mergers included:
- Local Government Credit Union, Raleigh, N.C. ($1.7 billion)
- Goldenwest Credit Union, Ogden, Utah ($1.2billion)
The acquired credit unions on average represented 5% the of the assets of the acquiring credit unions.
The nearest merger of equals was Perry Point, Md.-based Perry Point Credit Union ($20 million) and Baltimore, Md.-based Central Credit Union of Maryland ($21 million.)
There were two credit unions with less than $1 million in assets that were acquired, the smallest of which was West Holmes School Employees Credit Union in Millersburg, Ohio with just $321,272 in assets. It merged into the $668 million Directions Credit Union in Toledo, Ohio.
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 11 mergers in October, the following reasons were given:
- Expanded Services: 12
- Poor Financial Condition: 3
- Loss/Declining Field of Membership: 2
- Lack of Sponsor Support: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 11.6%. Two credit unions had net worth ratios below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio among the merged CUs was 1.6%
Only four of the 18 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.33% and median -0.18% for November of 2016.
Below is a chart of the NCUA merger approvals for November 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.