NCUA Merger Approvals - February 2018

Credit Union Merger Approvals – February 2018

NCUA approved 9 mergers in February 2018 which decreased from 20 last month. The number of mergers are down and the combined assets of merged credit unions are down nearly $378M compared to last month.  For the month of February, the total merged assets are down $120 million compared to last year’s $144 million. That’s a difference of $24 million. The mean and median assets of merged credit unions are $13.3 million and $8.1 million respectively.

Large Credit Union Mergers

There was not an acquisition of a credit union with assets exceeding $100 million this month.

The largest merger was Albany, NY based Health Employees Credit Union ($33M) merging into State Employees Credit Union ($3.5B) headquartered in Albany, NY.  Health Employees Credit Union is Well capitalized (15.26% Net Worth), has low delinquency (0.68%) and is barely making money (0.10% ROA).  “Expanded Services” was given as the reason for the merger.

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Credit Union Merger Stats

The median size of acquiring credit unions is $323 million.  There are two credit union acquirers with assets exceeding $1 billion.

With $3.5 billion in assets, State Employees Credit Union was the largest acquiring credit union in February.

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

  • Nuvision Credit Union, Huntington Beach, CA ($1.6B)

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

The nearest merger of equals is:

Floodwood, MN based Floodwood Area Credit Union ($19M) merging into Northwoods Credit Union ($91M) headquartered in Cloquet, MN.  There is one credit union with less than $1 million in assets being acquired.  The smallest credit union is Kit Tel Credit Union based Kittanning, PA with $817,526 in assets, which is being acquired by $15 million in assets Armstrong County Federal Employee Credit Union headquartered in Kittanning, PA.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 9 mergers in February, the following reasons were given:

  • Expanded Services: 7
  • Poor Financial Condition:1
  • Lack of Growth: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 15.26%. There are 2 credit unions that have a net worth ratio below 7.0%, which is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 1.53%

Five of the nine of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.24% and median 0.10% for February of 2018.

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

Credit Union Mergers February 2018