By Glenn Christensen
NCUA approved nine mergers in February 2018, a decrease from the 20 one month earlier. The number of mergers were down as were the combined assets of merged credit unions, $378 million, as compared to the prior month. For February, the total merged assets were down $120 million compared to 2017’s $144 million, a difference of $24 million.
The mean and median assets of merged credit unions are $13.3 million and $8.1 million respectively.
Large Credit Union Mergers
There was not an acquisition of a credit union with assets exceeding $100 million during February.
The largest merger was Albany, N.Y.- based Health Employees Credit Union ($33 million), which merged into State Employees Credit Union ($3.5 billion) in Albany, NY. Health Employees Credit Union was well capitalized (15.26% Net Worth) and had low delinquency (0.68%), but was barely making money (0.10% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $323 million. There were two credit union acquirers with assets exceeding $1 billion.
With $3.5 billion in assets, State Employees CU in New York was the largest acquiring credit union in February.
The other credit union with assets exceeding $1 billion was the $1.6-billion Nuvision CU in Huntington Beach, Calif.
The acquired credit unions on average represented 2% the of the assets of the acquiring credit unions.
The nearest merger of equals was Floodwood, Minn.-based Floodwood Area Credit Union at $19-million in assets and its merger partner, the $91-million Northwoods Credit Union in Cloquet, Minn.
There was one credit union with less than $1 million in assets that was acquired, the $817,526 Kit Tel Credit Union in Kittanning, Penn., which was acquired by the $15 million Armstrong County Federal Employee Credit Union, also in Kittanning, Penn.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 9 mergers in February, the following reasons were given:
- Expanded Services: 7
- Poor Financial Condition:1
- Lack of Growth: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 15.26%. There were two credit unions that had a net worth ratio below 7.0%, which is considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 1.53%
Five of the nine of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -0.24% and median 0.10% for February of 2018.
Below is a chart of the NCUA merger approvals for February 2018.
Glenn Christensen is CEO of CEO Advisory Group. He can be reached at Glennc@ceoadvisory.com.