By Glenn Christensen
NCUA approved 18 mergers during September 2017, which is a decrease from the 21 of the prior month. Just as the number of mergers were down, the combined assets of the merged credit unions also declined nearly $177 million when compared with August.
For September, the total merged assets were up to $392 million as compared to the $281 million in September of 2016. That’s a difference of $111 million. The mean and median assets of merged credit unions were $21.8 million and $4.4 million, respectively.
There were two acquisitions of credit unions with assets exceeding $100 million during the month. The largest merger was Janesville, Wis.-based Parker Community Credit Union ($124 million), which merged into Educators Credit Union ($1.8 billion) headquartered in Racine, Wis. Parker Community Credit Union is adequately capitalized (7.97% Net Worth), had relatively low delinquency 0.95%) and was marginally profitable (0.19% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $433 million. There were six credit union acquirers with assets exceeding $1 billion.
With $2.9 billion in assets, Idaho Central Credit Union was the largest acquiring credit union in September. Other credit union with assets exceeding $1 billion included:
- Community First Credit Union, Appleton, Wis. ($2.7 billion)
- Financial Partners Credit Union, Downey, Calif. ($1.2 billion)
- Utilities Employees Credit Union, Reading, Penn. ($1.2 billion)
- Educators Credit Union, Racine, Wis. ($1.8 billion)
- Summit Credit Union, Madison, Wis. ($2.8 billion)
The acquired credit unions on average represent 3% the of the assets of the acquiring credit unions.
The nearest merger of equals was
Bangor, Maine- based Eastern Main Medical Center Credit Union ($52 million) merging into Fort Kent, Maine-based Acadia Credit Union ($158 million).
There were two credit unions with less than $1 million in assets that were acquired. The smallest credit union was Transfiguration Manhattan Zion Credit Union in New York City, with just $63,878 in assets, which was being acquired by $73 million New York Times Employees Credit Union.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 18 mergers in September, the following reasons were given:
- Expanded Services: 17
- Lack of Growth: 1
The median net worth ratio of the merging credit unions is 12.08%. Three credit unions have a net worth ratio below 7.0% and are considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 3.11%
Ten of the 18 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.80% and median 0.05% for September of 2017.
For more information, on merger-related questions and issues, go here or here.
Below is a chart of the NCUA merger approvals for September 2017:
Glenn Christensen is CEO of CEO Advisory Group.