By Glenn Christensen
NCUA approved eight mergers in December 2017, a decrease from the 25 in the prior month.
The number of mergers was down, as was the combined assets of merged credit unions by nearly $466 million when compared to December of 2016. For December, the total merged assets were $156 million, compared to $1.646 billion one year earlier, a difference of $1.490 billion.
The large difference is primarily attributed to the NCUA’s approval in December of 2016 of the merger of the $1.3 billion North Island Financial CU merger into the $1.6 billion California CU.
The mean and median assets of merged credit unions during December 2017 were $19.5 million and $7.8, million respectively.
There was one acquisition of a credit union with assets exceeding $100 million in the last month of 2017.
The largest merger was Dearborn, Mich. Memberfocus Community Credit Union, with $104 million in assets, merging into the $244-million Our Credit Union in Royal Oak, Mich. Memberfocus Credit Union was well capitalized (10.37% Net Worth) and had low delinquency 0.87%), but it was also losing money (-0.20% ROA).
“Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $264 million. There were two credit union acquirers with assets exceeding $1 billion, including the $6.8-billion Mountain America Credit Union in Salt Lake City and the $2-billion Numerica Credit Union in Spokane, Wash.
The acquired credit unions on average represent 2% the of the assets of the acquiring credit unions.
The nearest merger of equals were the $2-million Mico Employees CU in North Mankato, Minn. merging into the $4-million Northern Energy CU, also in Mankato, as well as the aforementioned Memberfocus Community and Our CU.
There were not any credit unions with less than $1 million in assets acquired. The smallest credit union involved in a merger in December was RTA Hayden Credit Union in East Cleveland, Ohio, with $1,806,408 in assets, which was acquired by the $384 million Century Credit Union in Cleveland.
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 December, the following reasons were given:
- Expanded Services: 6
- Inability to Obtain Officials:2
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 12.99%. There were not any credit unions that have a net worth ratio below 7.0%, which is considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 1.20%
Three of the eight merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.02% and median -0.19% for December of 2017.
Below is a chart of the NCUA merger approvals for December 2017.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.