Credit Union Mergers - June 2018

Credit Union Merger Approvals — June 2018

NCUA approved 12 mergers in June 2018 which decreased from 19 last month. The number of mergers is down, and the combined assets of merged credit unions are also down nearly $422M compared to last month.  For the month of June, the total merged assets are down, $235 million compared to last year’s $478 million. That’s a difference of $243 million. The mean and median assets of merged credit unions are $23.5 million and $2.6 million respectively.

Large Credit Union Mergers

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

The largest credit union was Durland, MI based Sagelink Credit Union ($209M) was acquired by PFCU ($326M) headquartered in Portland, MI. Sagelink Credit Union is well capitalized (11.12% Net Worth), has low delinquency (0.59%) and is barely making money (0.32% 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 $134 million.  There are no credit union acquirers with assets exceeding $1 billion.

With $455 million in assets, First Heritage Credit Union was the largest acquiring credit union in June.

The acquired credit unions on average represent 12% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

Durland, MI based Sagelink Credit Union ($209M) merging into PFCU ($3M) headquartered in Portland, MI.  There is one credit union with less than $1 million in assets being acquired.  The smallest credit union is North East KY Cap Credit Union based Olive Hill, KY with $ 147,490 in assets, which is being acquired by $209 million in assets Members Choice Credit Union headquartered in Ashland, KY.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 12 mergers in June, the following reasons were given:

  • Expanded Services: 10
  • 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 12.38%. There is one credit union that has a net worth ratio below 7.0%, which is considered undercapitalized.  The delinquent loans-to-total loans ratio averages 1.38%.  Five of the 12 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -3.45% and median -0.90% for June of 2018.

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