Credit Union Merger Approvals — August 2018

NCUA approved 16 mergers in August 2018 which increased from 14 last month. The number of mergers is up, and the combined assets of merged credit unions are also up nearly $1.0B compared to last month.  For the month of August, the total merged assets were $1.4B, up $800M compared to last year’s $570M in combined assets. The mean and median assets of merged credit unions are $86 million and $8.3 million respectively.

Large Credit Union Mergers

There were three acquisitions of a credit unions with assets exceeding $100 million this month.

The largest credit union was Anchorage, AK based Denali Credit Union ($663M) was acquired by NuVision Credit Union ($1.6B) headquartered in Huntington Beach, CA. Denali Credit Union is well capitalized (7.6% Net Worth), has moderate delinquency (1.3%) and profitable (0.55% ROA).  “Expanded Services” was given as the reason for the merger.

Other large merging credit unions include:

• Mill City Credit Union, Minnetonka, MN – $ 348M
• Bay Ridge Credit Union, Brooklyn, NY – $183M

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Credit Union Merger Stats

The median size of acquiring credit unions is $495 million.  There are three credit union acquirers with assets exceeding $1 billion.

With $2.1 billion in assets, Trumark Financial Credit Union was the largest acquiring credit union in August.

The other continuing credit unions with assets exceeding $1 billion were:

• NuVision Credit Union, Huntington Beach, CA ($2.61B)
• Island Credit Union, Hauppauge, NY ($1.5B)

The acquired credit unions on average represent 14% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

Minnetonka, MN based Mill City Credit Union ($348M) merging into City and County Credit Union ($540M) headquartered in Saint Paul, MN.

There are three credit unions with less than $1 million in assets being acquired.  The smallest credit union is Carmel Brotherhood Credit Union based Cincinnati, OH with $120,000 in assets, which is being acquired by $871 million in assets Kemba Credit Union headquartered in West Chester, OH.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 16 mergers in August, the following reasons were given:

• Expanded Services: 11
• Poor Financial Condition: 5

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.2%. There are four credit unions that have a net worth ratio below 7.0%, which is considered undercapitalized. Worst was Ark City Teachers credit union which had a negative 33% net worth ratio.

The delinquent loans-to-total loans ratio averages 2.4%

Six (6) of the 16 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) was -6.7% and median -0.8% for August of 2018.

Below is a chart of the NCUA merger approvals for August 2018: