Credit Union Merger Approvals – April 2018

NCUA approved 12 mergers in April 2018 which decreased from 13 last month. The number of mergers are down however the combined assets of merged credit unions are up nearly $46M compared to last month.  For the month of April, the total merged assets are down, $235 million compared to last year’s $297 million. That’s a difference of $62 million. The mean and median assets of merged credit unions are $19.6 million and $6.7 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 Monroe, MI based Education Plus Credit Union ($116M) merging into Directions Credit Union ($715M) headquartered in Toledo, OH. Education Plus Credit Union is well capitalized (15.74% Net Worth), has low delinquency (1.29%) and is barely making money (1.15% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $474 million.  There are four credit union acquirers with assets exceeding $1 billion.

Click! CU Merger Perspective Survey

With $5.8 billion in assets, Teachers Credit Union was the largest acquiring credit union in April.

The other credit unions with assets exceeding $1 billion included:

• Knoxville TVA Employees Credit Union, Knoxville, TN ($1.9B)
• Oregon State Credit Union, Corvallis, OR ($1.2B)
• Suffolk Credit Union, Medford, NY ($1.1B)

The acquired credit unions on average represent 2% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

Salt Lake City, UT based Federal Family Credit Union ($29M) merging into Hercules First Credit Union ($69M) headquartered in Salt Lake City, UT.  There are credit unions with less than $1 million in assets being acquired.  The smallest credit union is McPherson Community Credit Union based Tryon, NE with $563,561 in assets, which is being acquired by $680 million in assets Centris Credit Union headquartered in Omaha, NE.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 12 mergers in April, the following reasons were given:

• Expanded Services: 11
• Poor Financial Condition:1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.33%. There are two credit unions that have a net worth ratio below 7.0%, which is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 1.43%

Five of the 12 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.69% and median -0.05% for April of 2018.

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