By Glenn Christensen
NCUA approved 11 mergers in July 2016, which reflects a decrease from the 16 mergers approved one month earlier.
The number of mergers were down and the combined assets of merged credit unions were also down nearly $77 million compared to the prior month. During July, the total merged were $148 million compared to July 2016’s $514 million. That’s a difference of $366 million. The mean and median assets of merged credit unions are down to $13.5 million and $3.2 million respectively.
There were no acquisitions of credit unions with assets exceeding $100 million this month.
The largest merger was between Poughkeepsie, N.Y.-based Central Hudson Employees Credit Union ($47 million) and Mid-Hudson Valley Credit Union ($900 million), headquartered in Kingston, N.Y. United Financial was well capitalized (15% Net Worth), had low delinquency (0.08%), but was losing money (-2.24% ROA). “Expanded Services” was given as the reason for the merger.
The median size of acquiring credit unions was $385 million, and there were two credit union acquirers with assets exceeding $1 billion.
With $1.1 billion in assets Greylock Credit Union was the largest acquiring credit union in July. Another billion-dollar-plus CU involved in a merger was Credit Union of Southern California in Whittier, Calif.
The acquired credit unions on average represented 3% of the assets of the acquiring credit unions.
The nearest merger of equals was Lewiston, Idaho- based Lewis Clark Credit Union ($57 million) and Lewiston, Idaho-based Clearwater Credit Union ($23 million). Clearwater represents 40% of Lewis Clark’s assets.
There was one credit union with less than $1 million in assets acquired. The smallest credit union wasis Bailey, INC. Employees Credit Union in West Valley City, Utah with $791,000 in assets, which was being acquired by $63-million Hercules Credit Union h in Salt Lake City.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 11 mergers in July, the following reasons were given:
- Expanded services: 9
- Poor financial condition: 1
- Conversion to or Merger with NFICU: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 10.3%. Two credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 0.6%.
Three of the 11 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.80% and median -0.24% for July of 2016.
Below is a chart of the NCUA merger approvals for July 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.