By Glenn Christensen
NCUA approved 14 mergers in February 2017, a decrease from the 21 one month prior. The number of mergers were down and the combined assets of merged credit unions were down nearly $990 million compared to January of 2017.
For February, the total merged assets were markedly down to $144 million compared to $550 million for February of 2016. That’s a difference of $406 million. The mean and median assets of merged credit unions were $10.3 million and $6.5 million, respectively.
There were no acquisitions of credit unions with assets exceeding $100 million during February.
The largest merger involved Des Plaines, Ill.- based Encore Credit Union ($33 million) merging into Consumers Cooperative Credit Union ($1.1 billion), which is headquartered in Gurnee, Ill. Encore Credit Union was very well capitalized (17% Net Worth), had low delinquency (0%) and is profitable (.3% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $385 million. There were four credit union acquirers with assets exceeding $1 billion.
With $1.7 billion in assets, Educators Credit Union was the largest acquiring credit union in February.
Other credit union with assets exceeding $1 billion included:
- Capitol Credit Union, Green Bay, Wis. ($1.2B)
- Consumers Cooperative Credit Union, Gurnee, Ill. ($1.1B)
- Nuvision Credit Union, Huntington Beach, Calif. ($1.4B)
The acquired credit unions on average represented 2% of the assets of the acquiring credit unions.
The nearest merger of equals was Westfield, N.Y.-based Westfield Area Credit Union ($3.6 million) and North East Welch Credit Union ($14.2 million), which is headquartered in North East, Penn. There were two credit unions with less than $1 million in assets that were acquired. The smallest credit union was Hanna Employees Credit Union based in Pleasant Prairie, Wis., with $173,062 in assets. It has been merged into Educators Credit Union in Racine, Wis.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 14 mergers in February, the following reasons were given:
- Expanded services: 10
- Poor Financial Condition: 1
- Inability to Obtain Officials: 1
- Loss/Declining Field of Membership: 2
The median net worth ratio of the merging credit unions was 13.5%. Two credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio had a median of 0.6% and mean of 4.9%. The high mean is attributed to one credit union with a delinquency ratio nearing 50%.
Seven of the 14 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.19% and median -0.03% for February of 2017.
Below is a chart of the NCUA merger approvals for February 2017:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.