By Glenn Christensen
NCUA approved 13 mergers in March 2018, which was an increase over the prior month. It wasn’t just the number of mergers that were up, as the combined assets of merged credit unions was up nearly $69 million compared to February of this year.
For March, the total merged assets were $189 million compared to March 2017’s $168 million, a difference of $21 million. The mean and median assets of merged credit unions were $14.6 million and $10.6 million, respectively.
The largest merger was Hutchinson, Kan.-based Central Kansas Credit Union ($36 million) merging into Credit Union of America ($805 million) in Wichita. Central Kansas Credit Union was undercapitalized (6.93% net worth), had a delinquency ratio of 3% and a negative ROA (-0.12%). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions was $192 million. There was one credit union acquirer with assets exceeding $1 billion. The $1.2-billion Commonwealth Credit Union.
The acquired credit unions on average represented 4% the of the assets of the acquiring credit unions.
The nearest merger of equals El Paso, Texas-based Tip of Texas Credit Union ($23 million) merger into One Source Credit Union ($85 million), also in El Paso.
There was one credit union with less than $1 million in assets acquired–P.S. Local 821 Credit Union based Jersey City, N.J., which had $890,450 in assets. It was acquired by $14 million N.J.T. Employees Credit Union in Waldwick, NJ.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 13 mergers in March, the following reasons were given:
* Expanded Services: 11
* Poor Financial Condition:2
The median net worth ratio of the merging credit unions was 10.46%. There were four credit unions that had a net worth ratio below 7.0%, which is considered undercapitalized.
The delinquent loans-to-total loans ratio averaged 2.16%
Three of the 13 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.00% and median -0.39% for March of 2018.
Below is a chart of the NCUA merger approvals for March 2018.
Glenn Christensen is CEO of CEO Advisory Group. For info: www.ceoadvisory.com.