By Glenn Christensen
The NCUA approved eight mergers in February 2015, which is half the number of mergers from February of last year.
While there were not many mergers, the average size was relatively large compared to most months. The combined assets of the merged credit unions was $210 million. The mean and median assets of merged credit unions was $26 million and $15 million, respectively.
There was one merger where the merged assets exceeded $50 million.
The largest merger involved $93-million, Lincoln Park, Mich.-based Good Shepard Credit Union, which was approved to merge into Credit Union One ($850 million), based out of Ferndale. “Expanded Services” was cited as the reason for the merger. Through December, 2014, Good Shepard reported a net worth ratio of 8.7%, delinquency ratio of 0.61% and ROA of 0.02%.
The median size of acquiring credit unions was $374 million. There were no credit union acquirers with assets exceeding $1 billion. With $939-million in assets, US Alliance CU, based in Rye, N.Y., was the largest acquiring credit union in February, merging Pepsico Employees CU ($36 million).
The acquired credit unions on average represented 6% of the assets of the acquiring credit unions. Nearest in relative size was Corps of Engineers CU with $42million in assets, which represented 57% of the assets of Tarrant County CU.
One credit union with less than $1 million in assets was acquired: Holy Name Credit Union in Coffeyville, Kan., with $360,000 in assets. Holy Name CU was acquired by $21 million Co-Operative CU.
Reason for Credit Union Mergers
“Expanded services” continues to be the primary factor motivating these mergers, with every credit union merger in February citing that reason for merging.
Meanwhile, the median net worth ratio of the merging credit unions was 12.9%. None of the credit unions have net worth ratios below 7.0%.
The delinquent loans-to-total loans ratio averages 1.6%, which is primarily attributed to one credit union with a delinquency ratio nearing 8% of loans.
Half of the credit unions have positive earnings year to date through December 2014. Consequently the mean return-on-assets (ROA) is -1.65% through December of last year. Holy Nams CU heavily influenced the average with a -12% ROA.
Below is a chart of the NCUA merger approvals for February 2015:
Glenn Christensen is with CEO Advisory Group. For more info: www.ceoadvisory.com.