By Glenn Christensen
NCUA approved 15 mergers in October 2017, a decrease from the 18 in September. Not surprisingly, the combined assets of merged credit unions were also down nearly $95 million compared to the prior month.
For October 2017, the total merged assets were up at $297 million compared to 2016’s $84 million, a difference of $213 million. The mean and median assets of merged credit unions were $19.8 million and $12.3 million, respectively.
There was one acquisition of a credit union with assets exceeding $100 million during October.
The largest merger involved Palatine, Ill.-based Meadows Credit Union ($124 million) merging into Consumers Cooperative Credit Union ($1.1 billion), headquartered in Gurnee, Ill. Meadows Community Credit Union was marginally capitalized (6.6% Net Worth), had low delinquency (0.54%) and slightly profitable(0.29% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $391 million. There were four credit union acquirers with assets exceeding $1 billion.
With $2.2 billion in assets, Chartway CU was the largest acquiring credit union in October.
Other credit unions involved in mergers with assets exceeding $1 billion included:
* Consumers Cooperative Credit Union, Gurnee, IL ($1.1 billion)
* Arrowhead Central Credit Union, San Bernardino, Calif. ($1.1 billion)
* Financial Partners Credit Union, Downey, Calif. ($1.2 billion)
The acquired credit unions on average represented 3% of the assets of the acquiring credit unions.
The nearest merger of equals was Fremont, MIch.-based Newaygo County Service Employees Credit Union ($25 million) merging into Rogue River Community Credit Union ($41 million), which is headquartered in Sparta, Mich.
There were not any credit unions with less than $1 million in assets acquired. The smallest credit union in a merger dureing October was Portsmouth VA City Employees Credit Union in Portsmouth, Va. with $ 1,734,334 in assets. It was acquired by Chartway Credit Union headquartered in Virginia Beach, Va.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 15 mergers in October, the following reasons were given:
- Expanded Services: 8
- Poor Financial Condition: 5
- Loss/Declining Field of Membership: 1
- Poor Management:1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 6.83%. Seven credit unions had a net worth ratio below 7.0% and were considered under-capitalized.
The delinquent loans-to-total loans ratio averages 3.11%
Four of the 15 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -2.30% and median -0.74% for October of 2017.
Below is a chart of the NCUA merger approvals for October 2017.
Glenn Christensen is CEO of CEO Advisory Group and can be reached at Glennc@ceoadvisory.com.