By Glenn Christensen
NCUA approved 11 mergers in April 2017, which was an increase over the eight in the prior month. The number of mergers was up and the combined assets of merged credit unions were up nearly $ 129 million compared to last month.
For April, the total merged assets were down to $297 million compared to 2016’s $345 million. That’s a difference of $48 million. The mean and median assets of merged credit unions was $27 million and $10.6 million, respectively.
Large Credit Union Mergers
There was one acquisition of a credit union with assets exceeding $100 million this month.
The largest merger was Jericho, N.Y.-based Northwell Health Credit Union ($114 million) merging into Bethpage Credit Union ($6.9 billion), headquartered in Bethpage, N.Y. Harbor Credit Union was well capitalized (11.13% net worth), had high delinquency (6.63%) and moderate profitability (0.46% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $582 million. There was one credit union acquirer with assets exceeding $1 billion.
The aforementioned Bethpage was the largest acquiring credit union in April.
The acquired credit unions on average represented 3% the of the assets of the acquiring credit unions. The nearest merger of equals was between Lubbock, Texas-based Lubbock Teachers Credit Union ($18.1 million) with 14% of the assets of Texas Tech Credit Union ($130.7 million) headquartered in Lubbock, Texas.
There were two credit unions with less than $1 million in assets being acquired. The smallest credit union was Arlington Hotel Credit Union based in Arlington Hotel, Ark., with $132,625 in assets, which was acquired by $70.7 million Diamond Lakes Credit Union in Malvern, Ark.
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 April, the following reasons were given:
- Expanded services: 9
- Poor Financial Condition: 2
The median net worth ratio of the merging credit unions was 11.2%. One credit union had a net worth ratio below 7.0% and was considered under-capitalized.
The delinquent loans-to-total loans ratio averaged 6%
Seven of the 11 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.12% and median 0.02% for April of 2017.
Below is a chart of the NCUA merger approvals for April 2017:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.