By Glenn Christensen
NCUA approved 35 mergers in Q2 of 2022, a decrease from the 41 in the prior quarter.
The combined assets of the merged credit unions was $641 million, which compares to $5.5 billion in the prior quarter and $845 million in Q2 2021.
The mean and median assets of merged credit unions were $18.3 million and $8.9 million, respectively.
To view the largest mergers nationally, by region, or state since 2000 can be found here.
There was one acquisition of a credit unions with assets exceeding $100 million this quarter. The largest acquisitions was Financial One CU, located in Columbia Height, Minn., which is being merged into Magnifi Financial CU ($1.7 billion) in Melrose, Minn. Financial One has $202 million in assets, 9.1% net worth ratio, 0.22% delinquent loan ratio, and 1.8% ROA LTM.
CU Merger Stats
The median size of acquiring credit unions was $255 million. There were five credit union acquirers with assets exceeding $1 billion and eight credit union acquirers with assets below $100 million.
With $35.4 billion in assets, Pentagon FCU was the largest acquiring credit union in Q2. The other continuing credit unions with assets exceeding $1 billion included Philadelphia FCU ($1.7 billion), Magnifi ($1.7 billion), First Florida ($1.3 billion), and Credit Union 1 ($1.2 billion).
The acquired credit unions on average represent 1.3% the of the assets of the acquiring credit unions.
The nearest merger of equals was Corry Area Schools CU ($7 million) merging into Tri State Rail CU ($16 million), a 45% acquiree/acquirer ratio.
There was one credit unions with less than $1 million in assets that was acquired. The smallest credit union merger was Security Plus CU based in Russellville, Ky. with $720,000 in assets.
Reasons for CU Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 33 mergers in Q2, the following reasons were given:
NCUA approved 35 mergers in Q2 of 2022 which increased from 41 last quarter The median net worth ratio of the merging credit unions was 10.8%. There were five credit unions that have net worth ratios below 7.0%, which is considered undercapitalized.
The delinquent loans-to-total loans ratio averages 1.7%. Twenty-two of the 35 merging credit unions reported negative earnings last 12 months. The mean return-on-assets (ROA) was -0.77% and median 0.34% the last 12 months.
Below is a chart of the NCUA merger approvals for Q1 2022:
Credit Union Acquisitions of Banks
Bank consolidation was at approximately the same pace as credit union mergers. There was a total of 36 bank acquisitions announced in the second quarter of 2022. Four of the bank acquisitions were by credit unions. Of these, only one CU announced the deal’s terms. In May 2022, DFCU Financial Credit Union announced the acquisition of the $689-million First Citrus Bancorp. The transaction was reported with a price/tangible book of 210% and price/earnings multiple of 15.3, according to S&P Global Market Intelligence.
Below is also a deal summary of the credit union acquisitions of banks and summary of all bank transactions.
To view the largest mergers nationally, by region, or state since 2000 can be found here.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.