Credit Union Merger Approvals – January 2017

NCUA approved 21 mergers in January 2017 which increased from 18 last month. There is one credit union, Pentagon, that merged 3 smaller credit unions this month. Pentagon Credit Union also acquired 2 credit unions last month.

The number of mergers are up however the combined assets of merged credit unions are down nearly $ 512M compared to last month.  For the month of January, the total merged assets are markedly up to $1.1 billion compared to last year’s $485 million. There was an increase of approximately $649 million. The mean and median assets of merged credit unions are $54 million and $17.1 million respectively.

Large Credit Union Mergers

There were 6 acquisitions of credit unions with assets exceeding $100 million this month.

The largest merger was Scranton, PA based Valor Credit Union ($228M) merging into Pentagon Credit Union ($20.7B) headquartered in Alexandria, VA.  Valor Credit Union is poorly capitalized (5.5% Net Worth), has a moderate delinquency rate (2%) and is losing money (-1.0% ROA).  “Poor Financial Condition” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $449 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 January.

Other credit union with assets exceeding $1 billion included:

  • Northeast Credit Union, Portsmouth, NH ($1.1B)
  • Hanscom Credit Union, Hanscom AFB, MA ($1.2B)
  • Midflorida Credit Union, Lakeland, FL ($2.6B)

The acquired credit unions on average represent 3% the of the assets of the acquiring credit unions.

The nearest merger of equals is Saint James, MN based St. James Public Schools Credit Union ($2.3M) and Northern Energy Credit Union ($3.0M) headquartered in Mankato, MN.

There is one credit union with less than $1 million in assets being acquired.  The smallest credit union is GCIU Local 235 Credit Union based in Independence, MO with $113,335 in assets, which is being acquired by $51 million in assets Central Communications Credit Union headquartered in Independence, MO.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 21 mergers in January, the following reasons were given:

  • Expanded services: 13
  • Poor Financial Condition: 4
  • Inability to Obtain Officials: 3
  • Lack of Growth: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 9.8%. Four credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 2.8%

Ten of the 21 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.60% and median -0.08% for January of 2017.

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

Credit Union Mergers - January 2017