NCUA Approves 19 Mergers in December

The NCUA approved 19 mergers in December 2014 which is up from the 28 mergers in December of last year.

Very small, boutique credit unions were absorbed in December.  The combined assets of the merged credit unions are $88 million.  The mean and median assets of merged credit unions are $5.5 million and $3.2 million respectively.  In contrast, in November the mean assets were $19 million.

Large Credit Union Mergers

There were no mergers with credit unions exceeding $50 million in assets.

In fact, the largest merger was $28 million Silver City, NM based Chino Credit Union which was approved to merge into First Financial Credit Union ($425 million) based out of Albuquerque.  “Poor Financial Condition” is cited as the reason for the merger.    Through September Silver City reported a net worth ratio of 6.75%, delinquency ratio of 1.76% and ROA of 0.46%.

 

Credit Union Merger Stats

The median size of acquiring credit unions is $298 million.  There was one credit union acquirer with assets exceeding $1 billion.  With $1.5 billion in assets Educators CU, based in Racine, WI was the largest acquiring credit union in December merging Racine Police CU.  Intouch CU, which is merging Dallas-based New Mount Zion Baptist Church CU with under $1 million in assets, was the second largest acquirer with $818 million in assets.

The acquired credit unions on average represented only 2% of the assets of the acquiring credit unions.  There were two mergers where the relative size between the merged and continuing credit unions where significant of significant size, almost nearing mergers of equals.  In Virginia, Richmond Police Department CU, with $6.2 million in assets, represented 42% of Richmond Fire Dept CU’s $14.8 million assets.  With $5.9 million in assets Mountain Community CU in Georgia accounts for 42% of Catoosa Teachers CU assets.

Four credit unions with less than $1 million in assets are being acquired.  The smallest credit union is Golden CU based in Columbus, GA with $379,000 in assets.  Golden CU is being acquired by $8 million Regional Members CU.

 

Reason for Credit Union Mergers

“Expanded services” continues to be the primary factor motivating these mergers.  “Poor financial condition” was the reason for the merger sited by four of the credit unions. “Inability to obtain officials” was also cited as a reason for the merger.

 

Financial Performance of  Acquired Credit Unions

The median net worth ratio of the merging credit unions is 14.0%.  Two credit unions have net worth ratios below 7.0%.

The delinquent loans-to-total loans ratio averages 3.8%, which is primarily attributed to three credit unions with delinquency ratios exceeding 10% of loans.  This includes the 16% delinquency ratio reported by New Mexico Correctional Employees FCU.

Only eight of the 19 credit unions have positive earnings year to date.  Consequently the mean return-on-assets (ROA) is -1.1% through September of this year.

Below is a chart of the NCUA merger approvals for December 2014: