By Glenn Christensen
NCUA approved 21 mergers in June 2017, which was an increase over the 17 approved in the previous month. Yet while the number of mergers was up, the combined assets of merged credit unions were down nearly $287 million compared to May.
For June, however, the total merged assets were up to $478 million, compared with $225 million in merged assets in June of 2016. That’s a difference of $253 million. The mean and median assets of merged credit unions were $22.8 million and $14.9 million, respectively.
There was one acquisition of a credit union with assets exceeding $100 million during June.
The largest merger was Cincinnati-based Cinco Family Financial Center Credit Union ($113 million) merging into Superior Credit Union ($663 million) headquartered in Lima, Ohio. Cinco Credit Union was well-capitalized (7.74% net worth), had low delinquency (0.11%) and was profitable (0.22% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $309 million. There were three credit union acquirers with assets exceeding $1 billion:
- The $2.7-billion Affinity FCU, Basking Ridge, N.J., acquired the $94-million NEA FCU
- The $1.9-billion American Heritage CU in Philadelphia acquired the $77,000 SM Credit Union.
- The $1.2-billion Financial Partners CU in Downey, Calif. acquired the $15-million Star Harbor CU.
The acquired credit unions on average represented 4% the of the assets of the acquiring credit unions.
The nearest merger of equals was Conshohocken, Penn.-based Media Members Credit Union ($43 million) and U of P Credit Union ($25 million), headquartered in Phila, Penn.
There were two credit unions with less than $1 million in assets acquired. The smallest credit union is SM Credit Union based in Philadelphia with $77,000 in assets, which merged into the $1.9 billion American Heritage Credit Union in Philadelphia.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 21 mergers in June, the following reasons were given:
- Expanded services: 18
- Poor Financial Condition: 1
- Poor Management: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 8.3%. Six credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 7.1%
Seven of the 21 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.77% and median -0.46% for June of 2017.
Below is a chart of the NCUA merger approvals for June 2017:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.