CEO Advisory Group
Credit Union Mergers Approvals – November 2016
NCUA approved 18 mergers in November 2016 which decreased from 11 in October.
For the month of November, the total merged assets are up 500 percent to $426 million compared to last year’s $85 million. That’s an increase of $342 million. The mean and median assets of merged credit unions are $23.7 million and $9.6 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 Carson, CA based Harbor Credit Union ($118M) merging into Southland Credit Union ($600) headquartered in Las Alamitos, CA. Harbor Credit Union is well capitalized (14.5% Net Worth), has relatively high delinquency (3.5%) and healthy earnings (0.82% ROA). “Expanded Services” was given as the reason for the merger.
Credit Union Merger Stats
The median size of acquiring credit unions is $297 million. There are 3 credit union acquirers with assets exceeding $1 billion.
With $2.3 billion in assets Unify Financial Credit Union, was the largest acquiring credit union in November.
Other credit union with assets exceeding $1 billion included:
- Local Government Credit Union, Raleigh, NC ($1.7B)
- Goldenwest Credit Union, Ogden, UT ($1.2B)
The acquired credit unions on average represent 5% the of the assets of the acquiring credit unions.
The nearest merger of equals is:
- Perry Point, MD based Perry Point Credit Union ($20M) and Baltimore, MD based Central Credit Union of Maryland ($21M)
There are 2 credit unions with less than $1 million in assets being acquired. The smallest credit union is West Holmes School Employees Credit Union based in Millersburg, OH with $ 321,272 in assets, which is being acquired by $668 million in assets Directions Credit Union headquartered in Toledo, OH.
Reasons for Credit Union Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 11 mergers in October, the following reasons were given:
- Expanded Services: 12
- Poor Financial Condition: 3
- Loss/Declining Field of Membership: 2
- Lack of Sponsor Support: 1
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions is 11.6%. Two credit unions have net worth ratios below 7.0% and is considered under-capitalized.
The delinquent loans-to-total loans ratio averages 1.6%
Only 4 of the 18 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) is -0.33% and median -0.18% for November of 2016.
Below is a chart of the NCUA merger approvals for November 2016:
