By Glenn Christensen
NCUA approved 19 mergers in September 2016, which is the same number as during August. The difference is that there is one credit union, Northwood, that merged 4 tiny credit unions this month.
While the number of mergers is the same, the combined assets of merged credit unions are up nearly $47 million compared to the prior month. For September, the total merged assets were markedly down to $281 million, compared to August’s $399 million. That’s a difference of $118 million. The mean and median assets of merged credit unions were also down, $14.8 million and $4.3 million, respectively.
There was one acquisition of a credit union with assets exceeding $100 million this month.
The largest merger was Glendale, Calif. based Fiscal Credit Union ($142 million) merging into Unify Financial Credit Union ($2 billion) in Torrance, Calif. Fiscal Credit Union was adequately capitalized (8% Net Worth), had low delinquency (0.17%) and was marginally profitable (0.03% ROA). “Expanded Services” was given as the reason for the merger.
The median size of acquiring credit unions was $42 million. There were four credit union acquirers with assets exceeding $1 billion.
With $2.2 billion in assets, Unify Financial Credit Union was the largest acquiring credit union in September.
Other credit unions with assets exceeding $1 billion that were involved in mergers included:
- Fox Communities Credit Union, Appleton, Wis. ($1.2 billion).
- Fort Washington Credit Union, Fort Washington, Penn. ($1.8 billion).
- Orange County's Credit Union, Santa Ana, C alif. ($1.4 billion).
The acquired credit unions on average represented 3% the of the assets of the acquiring credit unions.
The nearest merger of equals was Fairfield, Conn.-based Cornerstone Credit Union ($32 million) and Wallingford, Conn.-based Wallingford Municipal Credit Union($17 million).
There were four credit unions with less than $1 million in assets that were acquired, the smallest of which was Wesley Ame Zion Credit Union Philadelphia, PA with just$86,960 in assets. It was acquired by the $12-million Northwood Credit Union headquartered in Philadelphia.
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 19 mergers in September, the following reasons were given:
- Expanded services: 15
- Poor financial condition: 1
- Inability to Obtain Officials: 1
- Loss/Declining Field of Membership: 2
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions is 11.9%. Two credit unions have a net worth ratio below 7.0% and are considered under-capitalized.
The median delinquent loans-to-total loans ratio is 0.65%.
Seven of the 19 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -0.08% and median -0.36% year to date.
Below is a chart of the NCUA merger approvals for September 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.