By Glenn Christensen
NCUA approved 34 mergers in the second quarter of 2020, an increase from the 32 in the prior quarter. The combined assets of merged credit unions was $404 million, which compares to $1.6 billion in the prior quarter and $1.3 billion in the same quarter one year earlier.
The mean and median assets of merged credit unions were $11.9 million and $4.7 million, respectively.
There were no acquisitions of credit unions with assets exceeding $100 million during Q2. The largest CU absorved in a merger was Ball State CU n Muncie, Ind., which is being merged into the $573-million Financial Center First Credit Union in Indianapolis/ Ball State had $90 million in assets, 6.3% net worth ratio, a 1.6% delinquent loan ratio, and -0.6% ROA.
CU Merger Stats
The median size of acquiring credit unions was $209 million. There were six credit union acquirers with assets exceeding $1 billion.
With $3.2 billion in assets, Navy Army Community was the largest acquiring credit union in Q1.
The other continuing credit unions with assets exceeding $1 billion were:
- Trumark Financial CU ($2.4B)
- South Carolina CU ($1.8B)
- Sound CU ($1.8B)
- Fox Communities CU ($1.8B)
- Educators CU ($2.2B)
The acquired credit unions on average represented 2% the of the assets of the acquiring credit unions. The nearest merger of equals was St. Columbkille FCU ($21. million merging into the smaller All Saints CU ($20.4 million), a 105% acquiree/acquirer ratio
There were six credit unions with less than $1 million in assets acquired. The smallest credit union merger was Bethany Baptist Christian FCU based in Chester, Penn. with $43,000 in assets.
Reasons for CU Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 32 mergers in Q2, the following reasons were given:
- Expanded services:27
- Poor financial condition: 5
- Corporate restructuring: 1
- Inability to obtain officials: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 14.35%. There were six credit unions that had net worth ratios below 7.0%, which was considered undercapitalized.
The delinquent loans-to-total loans ratio averaged 8.54%. Eighteen of the 34 merging credit unions reported negative earnings year to date. The mean return-on-assets (ROA) was -1.43% and median -0.30% for Q1 of 2020.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.