By Glenn Christensen
Similar to the prior month, the NCUA approved 19 mergers in November 2015, which is down from the 22 mergers in October of last year.
The combined assets of merged credit unions was up nearly $50 million compared to last month. For the month of November the total merged assets was $347 million, compared to last year’s $435 million. The mean and median assets of merged credit unions were $18.3 million and $6.2 million, respectively. In contrast, in September 2015 the mean assets were $15.5 million.
There were no acquisitions of credit unions with assets exceeding $100 million during October.
The largest merger was Wilmington, DE based Chestnut Run Federal Credit Union ($69M) merging into Louviers FCU, also headquartered in Wilmington. Chestnut Run FCU was well capitalized (10.5%) and had low delinquency (0.1%). “Inability to obtain officials” was given as the reason for the merger.
The median size of acquiring credit unions was $211 million. There were three credit union acquirers with assets exceeding $1 billion.
With $31 billion in assets, State Employees CU in Raleigh, N.C. was the largest acquiring credit union in November, merging $15 million BCBSNC Credit Union.
Pentagon Federal Credit Union in Alexandria, Va., with $18 billion in assets, acquired Fort Gordon, Ga.-based Fort Gordon and Community Credit Union, which had just over $63 million in assets.
The acquired credit unions on average represented 1% of the assets of the acquiring credit unions.
The nearest merger of equals was among Johnstown, Penn.-based Healthcare First Credit Union ($59M) and Altoona, Penn.-based Altoona Regional Health System Credit Union ($29M).
There were three credit unions with less than $1 million in assets that were acquired. The smallest credit union was Alloy Scottdale Credit Union Scottdale, Penn. with $226,000 in assets. It was acquired by $216 million USX Credit Union in Cranberry Township, Penn.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to site the reason for the merger. Of the 19 mergers in November, the following reasons were given:
- Expanded services: 12
- Lack of sponsor support: 3
- Lack of growth: 1
- Poor financial condition: 1
- Inability to obtain officials: 1
- Loss/declining field of membership: 1
The median net worth ratio of the merging credit unions was 11.9%. Only two credit unions had a net worth ratio below 7.0% and are considered under-capitalized. The delinquent loans-to-total loans ratio averaged 1.6%.
Only seven of the 19 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.2% and median -0.1% through September of this year.
Below is a chart of the NCUA merger approvals for November 2015.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.