Credit Union Merger Approvals – February 2017

Posted on March 31, 2017 by Glenn Christensen

NCUA approved 14 mergers in February 2017 which decreased from 21 last month. The number of mergers are down and the combined assets of merged credit unions are down nearly $990M compared to last month. For the month of February, the total merged assets are markedly down to $144 million compared to last year’s $550 million. That’s a difference of $406 million. The mean and median assets of merged credit unions are $10.3 million and $6.5 million respectively.

Large Credit Union Mergers

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

The largest merger was Des Plaines, IL based Encore Credit Union ($33M) merging into Consumers Cooperative Credit Union ($1.1B) headquartered in Gurnee, IL. Encore Credit Union is very well capitalized (17% Net Worth), has low delinquency (0%) and is profitable (.3% ROA). “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $385 million. There are 4 credit union acquirers with assets exceeding $1 billion.

With $1.7 billion in assets Educators Credit Union, was the largest acquiring credit union in February.

Other credit union with assets exceeding $1 billion included:

Capitol Credit Union, Green Bay, WI ($1.2B)
Consumers Cooperative Credit Union, Gurnee, IL ($1.1B)
Nuvision Credit Union, Huntington Beach, CA ($1.4B)

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

The nearest merger of equals is:

Westfield, NY based Westfield Area Credit Union ($3.6M) and North East Welch Credit Union ($14.2M) headquartered in North East, PA. There are 2 credit unions with less than $1 million in assets being acquired. The smallest credit union is Hanna Employees Credit Union based in Pleasant Prairie, WI with $173,062 in assets, which is being acquired by $1.7 billion in assets Educators Credit Union headquartered in Racine, WI.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 14 mergers in February, the following reasons were given:

Expanded services: 10
Poor Financial Condition: 1
Inability to Obtain Officials: 1
Loss/Declining Field of Membership: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 13.5%. Two credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio has a median of 0.6% and mean of 4.9%. The high mean is attributed to one credit unions with delinquency ratio nearing 50%.

Seven of the 14 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -0.19% and median -0.03% for February of 2017.

Below is a chart of the NCUA merger approvals for February 2017: