Credit Union Mergers – October 2016

NCUA approved 11 mergers in October 2016 which decreased from 19 last month.

The number of mergers declined the combined assets of merged credit unions are down nearly $196 million compared to last month.  For the month of October, the total merged assets are markedly down to $85 million compared to last year’s $295 million. That’s a difference of $210 million. The mean and median assets of merged credit unions are down to $7.7 million and $7.0 million respectively.

Large Credit Union Mergers

There were no acquisitions of credit unions with assets exceeding $100 million this month.

The largest merger was Golden, CO based Jeffco Credit Union ($21M) merging into Space Age Credit Union ($112) headquartered in Aurora, CO.  Jeffco Credit Union is well capitalized (14% Net Worth), has low delinquency (0.00%) and healthy earningss (0.69% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $112 million.  There are 2 credit union acquirers with assets exceeding $1 billion.

With $6.5 billion in assets Vystar Credit Union, was the largest acquiring credit union in October.

Other credit union with assets exceeding $1 billion included:

• Educational Employees Credit Union, Fresno, CA ($2.7B)

The acquired credit unions on average represent 1% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

• Kansas City, MO based KC Area Credit Union ($5M) and Kansas City, KS based Area Credit Union($7M)

There are 3 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Christopher Credit Union based in Chesaning, MI with $ 277,583 in assets, which is being acquired by $12 million in assets United Financial Credit Union headquartered in Saginaw, MI.

Reasons for Credit Union Mergers

When seeking regulatory appr0val credit unions are required to cite the reason for the merger.  Of the 11 mergers in October, the following reasons were given:

• Expanded services: 9
• Poor financial condition: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 11.10%. One credit union has a net worth ratio below 7.0% and is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 4.29%

Only 3 of the 11 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -1.11% and median -0.23% for October of 2016.

Below is a chart of the NCUA merger approvals for October 2016: