By Glenn Christensen
NCUA approved 46 mergers in Q2 of 2024, an increase from the 26 in the first quarter. The combined assets of merged credit unions totals $3.3 billion, which compares to $3.7 billion last quarter and $2.7 billion in Q2 2023.
The mean and median assets of merged credit unions are $72.8 million and $26.4 million, respectively.
There were five acquisitions of credit unions with assets exceeding $100 million during the second quarter. The largest acquisition involved Member One CU in Roanoke, Va., which is being merged into the $5.3-billion Virginia CU in Richmond, Va. Member One CU has $1.7 billion in assets, 9.0% net worth, a 0.5% delinquent loan ratio, and 0.6% ROAA LTM.
CU Merger Stats
The median size of acquiring credit unions is $520 million. There were 15 credit union acquirers with assets exceeding $1 billion and 12 credit union acquirers with assets below $100 million.
The acquired credit unions on average represent 5% of the assets of the acquiring credit unions.
There were two credit unions with less than $1 million in assets that were acquired. The smallest credit union merger involved Forrest County Teachers CU based in Hattiesburg, Miss., with $198,000 in assets.
Reasons for Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 46 mergers in Q2, the following reasons were given:
Financial Performance of Acquired CUs
The median net worth ratio of the merging credit unions was 10.6%. There were eight credit unions that had net worth ratios below 7.0%, which is considered undercapitalized.
The delinquent loans-to-total loans ratio averaged 1.4%. Nearly half (22) of the 46 merging credit unions reported negative earnings in the prior 12 months. The mean return-on-assets (ROA) was -0.29% and median 0.05% over the prior 12 months.
Below is a chart of the NCUA merger approvals for Q2 2024:
Credit Union Acquisitions of Banks
Bank consolidation was at a slightly slower pace than credit union mergers. There was a total of 32 bank acquisitions announced in the second quarter of 2024.
Five of the announced bank acquisitions were by credit unions. In total these banks had assets of $3.7 billion, which is 11% more than the combined CUs acquired in the second quarter.
Only one credit union announced the deal terms. In May 2024, Atlanta Postal CU announced the acquisition of Affinity Bank, with $870 million in assets. The transaction was reported with a price/tangible book of 159% and price/earnings multiple of 22.8, according to S&P Global Market Intelligence. Among all bank acquisitions reporting deal terms the price/tangible book was 118%.
Among all acquired banks the average ROAA was 0.82%, with only two reporting a negative ROAA the last 12 months before the announced M&A transaction.
Below is a deal summary of the credit union acquisitions of banks and summary of all bank transactions.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.