Credit Union Merger Approvals - May 2018

Credit Union Merger Approvals – May 2018

NCUA approved 19 mergers in May 2018 which increased from 12 last month. The number of mergers is up and the combined assets of merged credit unions are also up nearly $421M compared to last month.  For the month of May, the total merged assets are down, $656 million compared to last year’s $765 million. That’s a difference of $109 million. The mean and median assets of merged credit unions are $65.6 million and $9.1 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 Novi, MI based Vibe Credit Union ($543M) was acquired by the smaller Oakland County Credit Union ($368M) headquartered in Waterford, MI.  In this merger of equals the acquiring credit union will change its name to the merging credit union Vibe. Vibe Credit Union is well capitalized (13.31% Net Worth), has low delinquency (0.23%) and profitable (0.57% ROA).  Oakland County Credit Union has a net worth ratio of 10.6%, delinquency ratio of 0.28% and ROA of 0.66%.  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $270 million.  There are two credit union acquirers with assets exceeding $1 billion.

With $2 billion in assets, Educators Credit Union was the largest acquiring credit union in May.

The other credit union with assets exceeding $1 billion was:

  • Arrowhead Central Credit Union, Rancho Cucamonga, CA ($1.2B)

The acquired credit unions on average represent 17% the of the assets of the acquiring credit unions.

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The smallest credit union is Gorton’s Of Gloucester Employees Credit Union based Gloucester, MA with $ 824,721 in assets, which is being acquired by $91 million in assets Luso-American Credit Union headquartered in Peabody, MA.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 19 mergers in May, the following reasons were given:

  • Expanded Services: 15
  • Poor Financial Condition: 3
  • Loss / Declining Field of Membership: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 9.75%. 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 2.73%

Five of the 19 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.44% and median -0.12% for May of 2018.

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