By Glenn Christensen
NCUA approved 18 mergers in December 2016, which was the same number it had approved in November. The difference is that there is one credit union, Indianhead, that merged in four tiny credit unions during December.
While the number of mergers was the same, the combined assets of the merged credit unions wasup nearly $ 1.2 billion when compared to November of 2016. In addition, for 2016, the total merged assets were markedly up to $1.6 billion compared to 2015’s $673 million. That’s an increase of $974 million. The mean and median assets of merged credit unions are $91.5 million and $3.6 million, respectively.
During December there were three acquisitions of credit unions with assets exceeding $100 million. The largest merger was San Diego-based North Island Financial Credit Union ($1.2 billion) merging into the Glendale, Calif.-based California Credit Union ($1.6 billion). North Island Financial Credit Union was well capitalized (11.3% Net Worth), had low delinquency (0.4%) and was profitable (0.8% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions during December was $98 million. There were four credit union acquirers with assets exceeding $1 billion.
With $20.7 billion in assets, Virginia-based Pentagon FCU was the largest acquiring credit union during December.
Other credit union with assets exceeding $1 billion that merged in other CUs included:
- Nutmeg State Financial Credit Union, Rocky Hill, CT ($3.4 billion)
- American Heritage Credit Union, Philadelphia, PA ($1.8 billion)
- California Credit Union, Glendale, CA ($1.6 billion)
The acquired credit unions on average represented 3% the of the assets of the acquiring credit unions.
The nearest merger of equals was the aforementioned North Island and California CU combination.
There were three credit unions with less than $1 million in assets acquired. The smallest credit union was Catholic Credit Union in Superior, Wis. with $ 833,647in assets, which was acquired by $46 million Indianhead Credit Union headquartered in Spooner, Wis.
Indianhead Credit Union was also approved for mergers with four credit unions, all based in Superior, Wis.:
- Douglas County CU ($3.6 million)
- Lake Superior Refinery CU ($1.3 million)
- Catholic CU ($0.8 million)
- Water-Light ($1.3 million)
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 18 mergers in December, the following reasons were given:
- Expanded services: 14
- Poor financial condition: 2
- Inability to Obtain Officials: 1
- Loss/Declining Field of Membership: 1
The median net worth ratio of the merging credit unions was 15.0%. Three credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 1.1%
Ten of the 18 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.3% and median was -0.01% for December of 2016.
Below is a chart of the NCUA merger approvals for December 2016:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.