By Glenn Christensen
NCUA approved 11 mergers in October 2016, a decrease from the 19 approved one month earlier.
In addition to the number of mergers declining, the combined assets of the merged credit unions was also down nearly $196 million compared to September. Moreover, for October, the total merged assets were markedly decreased at $85 million, compared to last year’s $295 million. The mean and median assets of merged credit unions was down to $7.7 million and $7.0 million, respectively.
There were no acquisitions of credit unions with assets exceeding $100 million during October.
The largest merger was Golden, Colo.-based Jeffco Credit Union ($21 million) merging into Aurora, Colo.-based Space Age Credit Union ($112 million). Jeffco Credit Union is well capitalized (14% net worth), has low delinquency (0.00%) and healthy earningss (0.69% ROA). “Expanded Services” was given as the reason for the merger.
Other Credit Union Merger Stats
The median size of acquiring credit unions was $112 million. There were two credit union acquirers with assets exceeding $1 billion.
With $6.5 billion in assets, VyStar Credit Union in Jacksonville, Fla. was the largest acquiring credit union in October.
Other credit union with assets exceeding $1 billion included Educational Employees Credit Union, Fresno, Calif. ($2.7B)
The acquired credit unions on average represent 1% of the assets of the acquiring credit unions.
The nearest merger of equals was Kansas City, Mo.-based KC Area Credit Union ($5 million) and Kansas City, Kan.- based Area Credit Union ($7 million).
There were three credit unions with less than $1 million in assets that were acquired. The smallest credit union was Christopher Credit Union based in Chesaning, Mich. with $277,583 in assets, which was acquired by $12 million United Financial Credit Union in Saginaw, Mich.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 11 mergers in October, the following reasons were given:
- Expanded services: 9
- Poor financial condition: 2
The median net worth ratio of the merging credit unions was 11.10%. One credit union had a net worth ratio below 7.0% and is considered under-capitalized.
The delinquent loans-to-total loans ratio averages 4.29%
Only three of the 11 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.11% and median -0.23% for October of 2016.
Below is a chart of the NCUA merger approvals for October 2016.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.