CEO Advisory Group
Credit Union Merger Approvals – December 2016
NCUA approved 18 mergers in December 2016 which stayed the same from 18 last month. The difference is that there is one credit union, Indianhead, that merged 4 tiny credit unions this month.
The number of mergers are the same however the combined assets of merged credit unions are up nearly $ 1.2B compared to last month. For the month of December, the total merged assets are markedly up to $1.6 billion compared to last year’s $673 million. That’s an increase of $974 million. The mean and median assets of merged credit unions are $91.5 million and $3.6 million respectively.
Large Credit Union Mergers
There were 3 acquisitions of credit unions with assets exceeding $100 million this month.
The largest merger was San Diego, CA based North Island Financial Credit Union ($1.2B) merging into California Credit Union ($1.6B) headquartered in Glendale, CA. North Island Financial Credit Union is well capitalized (11.3% Net Worth), has low delinquency (0.4%) and is profitable (0.8% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions is $98 million. There are 4 credit union acquirers with assets exceeding $1 billion.
With $20.7 billion in assets Pentagon Credit Union, was the largest acquiring credit union in December.
Other credit union with assets exceeding $1 billion included:
- Nutmeg State Financial Credit Union, Rocky Hill, CT ($3.4B)
- American Heritage Credit Union, Philadelphia, PA ($1.8B)
- California Credit Union, Glendale, CA ($1.6B)
The acquired credit unions on average represent 3% the of the assets of the acquiring credit unions.
The nearest merger of equals is San Diego, CA based North Island Financial Credit Union ($1.2B) and California Credit Union ($1.6B) headquartered in Glendale, CA.
There are 3 credit unions with less than $1 million in assets being acquired. The smallest credit union is Catholic Credit Union based in Superior, WI with $ 833,647in assets, which is being acquired by $46 million in assets Indianhead Credit Union headquartered in Spooner, WI.
Indianhead Credit Union was approved for mergers with four credit unions this period, all based in Superior, WI:
- Douglas County CU ($3.6M)
- Lake Superior Refinery CU ($1.3M)
- Catholic CU ($0.8M)
- Water-Light ($1.3M)
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 18 mergers in December, the following reasons were given:
- Expanded services: 14
- Poor financial condition: 2
- Inability to Obtain Officials: 1
- Loss/Declining Field of Membership: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions is 15.0%. Three credit unions have a net worth ratio below 7.0% and are considered under-capitalized.
The delinquent loans-to-total loans ratio averages 1.1%
Ten of the 18 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -1.3% and median -0.01% for December of 2016.
Below is a chart of the NCUA merger approvals for December 2016:
