Credit Union Merger Approvals – March 2018

NCUA approved 13 mergers in March 2018 which increased from 9 last month. The number of mergers are up and the combined assets of merged credit unions are up nearly $69M compared to last month.  For the month of March, the total merged assets are up, $189 million compared to last year’s $168 million. That’s a difference of $21 million. The mean and median assets of merged credit unions are $14.6 million and $10.6 million respectively.

Large Credit Union Mergers

The largest merger was Hutchinson, KS based Central Kansas Credit Union ($36M) merging into Credit Union of America ($805M) headquartered in Wichita, KS. Central Kansas Credit Union is under-capitalized (6.93% Net Worth), delinquency ratio of 3.00% and a negative ROA (-0.12%).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $192 million.  There is one credit union acquirer with assets exceeding $1 billion.

With $1.2 billion in assets, Commonwealth Credit Union was the largest acquiring credit union in March.

The acquired credit unions on average represent 4% the of the assets of the acquiring credit unions.

The nearest merger of equals El Paso, TX based Tip of Texas Credit Union ($23M) merging into One Source Credit Union ($85M) headquartered in El Paso, TX.

There is one credit union with less than $1 million in assets being acquired.  The smallest credit union is P.S. Local 821 Credit Union based Jersey City, NJ with $890,450 in assets, which is being acquired by $14 million in assets N.J.T. Employees Credit Union headquartered in Waldwick, NJ.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 13 mergers in March, the following reasons were given:

• Expanded Services: 11
• Poor Financial Condition:2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.46%. There are four credit unions that have a net worth ratio below 7.0%, which is considered undercapitalized.

The delinquent loans-to-total loans ratio averages 2.16%

Three of the 13 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -1.00% and median -0.39% for March of 2018.

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