By Glenn Christensen
NCUA approved 17 mergers in May 2017, an increase from the 11 approved in the prior month. The number of mergers was up and the combined assets of merged credit unions was also up nearly $ 468 million over April. For May, the total merged assets were $765 million, compared to $216 million in May of 2016. . That’s a difference of $549 million. The mean and median assets of merged credit unions were $45 million and $23.6 million, respectively.
There were two acquisitions of credit unions with assets exceeding $100 million this month. The largest merger was Santa Rosa, Calif.-based Community First Credit Union ($212 million) merging into Mendo Lake Credit Union ($241 million), headquartered in Ukiah, Calif.. Community First Credit Union was well capitalized (9.03% Net Worth), had low delinquency (0.47%) and was profitable (0.44% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions wass $233 million. There was one credit union acquirer with assets exceeding $1 billion, the $6.9 billion Barksdale Credit Union.
The acquired credit unions on average represented 16% the of the assets of the acquiring credit unions.
The nearest merger of equals the aforementioned combination of Community First Credit Union and Mendo Lake Credit Union.
There were credit unions with less than $1 million in assets acquired. The smallest credit union was Public Service Sewaren Credit Union based in Sewaren, N.J., with $181,689 in assets, which is being acquired by $35.8-million Public Service Credit Union headquartered in Middlesex, N.J.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 17 mergers in May, the following reasons were given:
* Expanded services: 15
* Poor Financial Condition: 1
* Inability to Obtain Officials: 1
The median net worth ratio of the merging credit unions was 9.2%. Two credit unions had a net worth ratio below 7.0% and were considered under-capitalized. The delinquent loans-to-total loans ratio averaged 2%.
Seven of the 17 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -1.70% and median -0.08% for May of 2017.
Below is a chart of the NCUA merger approvals for May 2017.
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.