Credit Union Merger Approvals – March 2017

NCUA approved 8 mergers in March 2017 which decreased from 14 last month. The number of mergers are down and the combined assets of merged credit unions are up nearly $ 24M compared to last month.  For the month of March, the total merged assets are markedly down to $168 million compared to last year’s $371 million. That’s a difference of $203 million. The mean and median assets of merged credit unions are $20.9 million and $8.8 million respectively.

Large Credit Union Mergers

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

The largest merger was Green Bay, WI based Harbor Credit Union ($110M) merging into Fox Communities Credit Union ($1.3B) headquartered in Appleton, WI.  Harbor Credit Union is well capitalized (9.57% Net Worth), has low delinquency (0.35%) and is moderately profitable (.32% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $381 million.  There are 3 credit union acquirers with assets exceeding $1 billion.

With $1.8 billion in assets American Heritage Credit Union, was the largest acquiring credit union in March.

Other credit union with assets exceeding $1 billion included:

• Fox Communities Credit Union, Appleton, WI ($1.3B)
• Greylock Credit Union, Pittsfield, MA ($1.1B)

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

The nearest merger of equals is:

• Nashville, TN based Employment Security Credit Union ($12.8M) and Tennessee Employees Credit Union ($15.7M) headquartered in Nashville, TN.

There are two credit unions with less than $1 million in assets being acquired.  The smallest credit union is First Baptist Church of Darby Credit Union based in Pleasant Darby, PA with $71,943 in assets, which is being acquired by $1.8 billion in assets American Heritage Credit Union headquartered in Philadelphia, PA.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 8 mergers in March, the following reasons were given:

• Expanded services: 7
• Poor Financial Condition: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 15.6%. One credit union has  a net worth ratio below 7.0% and is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 1.8%

Three of the 8 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.65% and median -0.28% for March of 2017.

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