Credit Union Mergers – September 2016

 

NCUA approved 19 mergers in September 2016 which stayed the same from 19 last month. The difference is that there is one credit union, Northwood, that merged 4 tiny credit unions this month.

While the number of mergers is the same, the combined assets of merged credit unions are up nearly $47 million compared to last month.  For the month of September, the total merged assets are markedly down to $281 million compared to last year’s $399 million. That’s a difference of $118 million. The mean and median assets of merged credit unions are down to $14.8 million and $4.3 million respectively.

Large Credit Union Mergers

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

The largest merger was Glendale, CA based Fiscal Credit Union ($142M) merging into Unify Financial Credit Union ($2B) headquartered in Torrance, CA.  Fiscal Credit Union is adequately capitalized (8% Net Worth), has low delinquency (0.17%) and marginally profitable (0.03% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $42 million.  There are 4 credit union acquirers with assets exceeding $1 billion.

With $2.2 billion in assets Unify Financial Credit Union, was the largest acquiring credit union in September.

Other credit union with assets exceeding $1 billion included:

• Fox Communities Credit Union, Appleton, WI ($1.2B)
• Fort Washington Credit Union, Fort Washington, PA ($1.8B)
• Orange County’s Credit Union, Santa Anna, CA($1.4B)

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

The nearest merger of equals is Fairfield, CT based Cornerstone Credit Union ($32M) and Wallingford, CT based Wallingford Municipal Credit Union($17M).

There are 4 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Wesley Ame Zion Credit Union based in Philadelphia, PA with $ 86,960 in assets, which is being acquired by $12 million in assets Northwood 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 19 mergers in September, the following reasons were given:

• Expanded services: 15
• Poor financial condition: 1
• Inability to Obtain Officials: 1
• Loss/Declining Field of Membership: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 11.9%. Two credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The median delinquent loans-to-total loans ratio is 0.65%.

Seven of the 19 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.08% and median -0.36% year to date.

Below is a chart of the NCUA merger approvals for September 2016: