Credit Union Mergers - January 2016

Credit Union Merger Approvals – January 2016

To begin the year NCUA approved 15 mergers in January 2016, which is down from the 20 mergers in December and 19 in January of last year.

The combined assets of merged credit unions is down nearly $190 million compared to last month.  For the month of January the total merged assets was $485 million compared to last year’s $499 million.  The mean and median assets of merged credit unions were $23.7 million and $9.7 million respectively.  In contrast, last month the mean assets were $33.6 million.

Large Credit Union Mergers

There was one acquisition of credit unions with assets exceeding $100 million this month.

The largest merger was Broomfield, CO based Community Financial Credit Union ($225M) merging into Warren Credit Union ($554M) also headquartered in Cheyenne, WY.  Community Financial CU is well capitalized (11.4% Net Worth), has low delinquency (0.2%) and profitable (0.5% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $174 million.  There is one credit union acquirer with assets exceeding $1 billion.

With $1.8 billion in assets Founders Federal Credit Union, based in Lancaster, SC was the largest acquiring credit union in January merging $7 million Clinton Credit Union.

The acquired credit unions on average represented 11% of the assets of the acquiring credit unions.

The nearest merger of equals was among Webster City, IA based People’s Credit Union ($31M) and Fort Dodge, IA based Frontier Community Credit Union ($19M).

There was one credit union with less than $1 million in assets being acquired.  The smallest credit union is Cerrobrass Credit Union based in Sauget, IL with $548,000 in assets, which is being acquired by $10 million Processors-Industrial Community Credit Union headquartered in Granite City, IL.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to site the reason for the merger.  Of the 15 mergers in January, the following reasons were given:

  • Expanded services: 13
  • Poor financial condition: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 13.2%. Only one credit union had a net worth ratio below 7.0% and is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 0.8%.

Nine of the 15 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.9% and median 0.1% through December of 2016.

Below is a chart of the NCUA merger approvals for January 2016:Credit Union Merger Approvals January 2016