By Glenn Christensen
NCUA approved 20 mergers during January 2018, which was an increase from the eight in December of 2017. The combined assets of merged credit unions were up nearly $342 million compared to the prior month.
However, for January, the total merged assets were down, $498 million compared to January 2017’s $1.134 billion, a difference of $636 million. The mean and median assets of merged credit unions were $24.9 million and $13.3 million, respectively.
Large Credit Union Mergers
There was one acquisition of a credit union with assets exceeding $100 million this month.
The largest merger was Tempe, Ariz.-based Altier Credit Union ($193 million), which merged into America First Credit Union ($9.2 billion) headquartered in Riverdale, Utah. Altier Credit Union was significantly undercapitalized (2.47% Net Worth), had high delinquency 2.71%) and had profitability issues (-4.71% ROA). “Poor Financial Condition” was given as the reason for the merger.
The median size of acquiring credit unions was $232 million. There were two credit union acquirers with assets exceeding $1 billion.
With $9.2 billion in assets, America First Credit Union was the largest acquiring credit union in January. The other credit union with assets exceeding $1 billion included Operating Engineers Local Union #3 Credit Union, Livermore, Calif. at $1.1-billion in assets.
The acquired credit unions on average represented 3% the of the assets of the acquiring credit unions.
The nearest merger of equals was Winslow, Maine-based Taconnet Employees Credit Union at $63 million merging into New Dimensions Credit Union, which had $93 million and is headquartered in Waterville, Maine.
There was one credit union with less than $1 million in assets acquired: Beaver County Times Credit Union, based Beaver, Penn. with $287,443 in assets. It was acquired by the $225 million West-Aircomm Credit Union in Beaver, Penn.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 20 mergers in January, the following reasons were given:
- Expanded Services: 17
- Poor Financial Condition:3
The median net worth ratio of the merging credit unions was 9.59%. There were five credit unions that had a net worth ratio below 7.0%, which is considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 2.81%
Nine of the 20 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.68% and median -0.19% for January of 2018.
Below is a chart of the NCUA merger approvals for January 2018.
Glenn Christensen is CEO of CEO Advisory Group.