Credit Union Merger Approvals – May 2017

NCUA approved 17 mergers in May 2017 which increased from 11 last month. The number of mergers are up and the combined assets of merged credit unions are up nearly $ 468M compared to last month.  For the month of May, the total merged assets are up to $765 million compared to last year’s $216 million. That’s a difference of $549 million. The mean and median assets of merged credit unions are $45 million and $23.6 million respectively.

Large Credit Union Mergers

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

The largest merger was Santa Rosa, CA based Community First Credit Union ($212M) merging into Mendo Lake Credit Union ($241M) headquartered in Ukiah, CA.  Community First Credit Union is well capitalized (9.03% Net Worth), has low delinquency (0.47%) and profitable (0.44% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $233 million.  There is one credit union acquirer with assets exceeding $1 billion.

With $6.9 billion in assets, Barksdale Credit Union was the largest acquiring credit union in May.

The acquired credit unions on average represent 16% the of the assets of the acquiring credit unions.

The nearest merger of equals is Santa Rosa, CA based Community First Credit Union ($212.2M) and Mendo Lake Credit Union ($241.4M) headquartered in Ukiah, CA.

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There are 2 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Public Service Sewaren Credit Union based in Sewaren, NJ with $181,689 in assets, which is being acquired by $35.8 million in assets Public Service Credit Union headquartered in Middlesex, NJ.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 17 mergers in May, the following reasons were given:

• Expanded services: 15
• Poor Financial Condition: 1
• Inability to Obtain Officials: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 9.2%. Two credit unions have a net worth ratio below 7.0% and is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 2%

Seven of the 17 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -1.70% and median -0.08% for May of 2017.

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