By Glenn Christensen
NCUA approved 34 mergers in Q3 of 2020, and increase over the 25 approved in the second quarter. The combined assets of merged credit unions was $1.5 billion, which compares to $777 million in Q2 and $1.3 billion in the same quarter of 2019.
The mean and median assets of the merged credit unions was $45.1 million and $9.8 million, respectively.
To view the largest mergers nationally by region or state since 2000, go to https://ceoadvisory.com/cu-acquirers-by-state/.
There were six acquisitions of credit unions with assets exceeding $100 million during Q3. The largest acquisitions included:
- Sperry Associates Federal Credit Union in Garden City Park, N.Y., which is being merged into Pentagon CU ($25 billion) in McLean, Va. Sperry’s has $273 million in assets, an 8.4% net worth ratio, a 1.28% delinquent loan ratio, and 0.33% ROA.
- Northstar Credit Union in Warrenville, Ill., which is being merged into Numark CU ($308 million) in Joliet, Ill. Northstar has $205 million in assets, an 11.2% net worth ratio, a 0.72% delinquent loan ratio, and 0.77% ROA.
Credit Union Merger Stats
The median size of acquiring credit unions was $286 million. There were six credit union acquirers with assets exceeding $1 billion. With $25 billion in assets, Pentagon FCU was the largest acquiring credit union in Q3.
The other continuing credit unions with assets exceeding $1 billion were:
- Chartway FCU ($2.2 billion)
- ORNL FCU ($2.4 billion)
- NuVision FCU ($2.6 billion)
- Rogue CU ($2.0 billion)
- Idaho Central ($6.0 billion)
The acquired credit unions on average represented 3.0% the of the assets of the acquiring credit unions. The nearest merger of equals was River Valley FCU ($129 million), which merged into Members Advantage Community CU ($143 million), a 90% acquiree/acquirer ratio
There were five credit unions with less than $1 million in assets that were acquired. The smallest credit union in a merger was Union Memorial FCU in Olivette, Mo. with $90,000 in assets.
Reasons For Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 34 mergers in Q3, the following reasons were given:
- Expanded services, 29
- Poor financial condition, 1
- Loss/declining FOM, 1
Financial Performance of Acquired CUs
The median net worth ratio of the merging credit unions was 9.05%. There were seven credit unions that have net worth ratios below 7.0%, which is considered undercapitalized.
The delinquent loans-to-total loans ratio averaged 3.73%. Eighteen of the 34 merging credit unions reported negative earnings year to date. The mean return-on-assets (ROA) was -0.93% and median 0.12% for Q3 of 2020.
Below is a chart of the NCUA merger approvals for Q3 2020.
Glenn Christensen is CEO of CEO Advisory. For info: www.ceoadvisory.com.