By Glenn Christensen
NCUA approved eight mergers in March 2017, which was a decrease from the 14 approved in February. While the number of mergers was down, however, the combined assets of the merged credit unions was up nearly $24 million compared to the prior month.
For March, the total merged assets at $168-million were markedly down with March 2016’s merged assets of $371 million. That’s a difference of $203 million. The mean and median assets of merged credit unions were $20.9 million and $8.8 million respectively.
There was one acquisition of a credit union with assets exceeding $100 million during March.
The Largest Merger
The largest merger was Green Bay, Wis.-based Harbor Credit Union ($110 million) merging into Fox Communities Credit Union ($1.3 bilion), which is headquartered in Appleton, Wis. Harbor Credit Union was well capitalized (9.57% Net Worth), had low delinquency (0.35%) and was moderately profitable (.32% ROA). “Expanded Services” was given as the reason for the merger.
The median size of acquiring credit unions was $381 million. There were three credit union acquirers with assets exceeding $1 billion.
With $1.8 billion in assets, American Heritage CU was the largest acquiring credit union in March.
Other credit union with assets exceeding $1 billion included the aforementioned Fox Communities CU, as well as the $1.1-billion Greylock Credit Union in Pittsfield, Mass.
The acquired credit unions on average represent 3% the of the assets of the acquiring credit unions.
The nearest merger of equals was between Nashville, Tenn.-based Employment Security Credit Union at $12.8 million and Tennessee Employees Credit Union at $15.7 million.
There were two credit unions with less than $1 million in assets that were acquired. The smallest credit union was First Baptist Church of Darby Credit Union, based in Pleasant Darby, Penn., with $71,943 in assets, which was being acquired by $1.8 billion American Heritage Credit Union in Philadelphia, Penn.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the eight mergers in March, the following reasons were given:
- Expanded services: 7
- Poor Financial Condition: 1
The median net worth ratio of the merging credit unions was 15.6%. One credit union had a net worth ratio below 7.0% and was considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 1.8%
Three of the eight merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -0.65% and median -0.28% for March of 2017.
Below is a chart of the NCUA merger approvals for March 2017.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.