NCUA Approves 20 Credit Union Mergers in July

Mergers declined in July compared to last month and a year ago.  The NCUA approved 20 mergers in July 2015, which is down from the 25 mergers in July of last year.

Not only were the number of mergers larger the combined assets was substantially greater.  Total assets of the merged credit unions is nearly $514 million compared half of last year’s $1.0 billion.  The mean and median assets of merged credit unions are $25.7 million and $14.0 million respectively.  In contrast, last month the mean assets were over $19.8 million.

Large Credit Union Mergers

There were two mergers with a credit union exceeding $100 million in assets.

Palatine, IL based Premier Credit Union ($183M) is merging into Consumers Cooperative Credit Union ($677M) headquartered in Gurnee, IL.  Premier CU was strong financially with 9.4% net worth/capital ratio and low delinquency.  Premier CU Chairman Leslee Johnson and CEO James Roche explained the merger benefits in a letter to the members: “The merger with Consumers Credit Union will bring greater product offerings, enhanced technology services, more competitive savings and loan rates, enriched online banking and mobile capabilities, and greater accessibility.  All current Premier Credit Union branch locations will remain open, and you will continue to enjoy the friendly, courteous, and personal service you have come to expect as a valued credit union member.”

This Wisconsin merger unites La Crosse-based Community Credit Union ($123M) into Oshkosh-based Verve a Credit Union ($595M).  Verve, a Credit Union will be the surviving charter.  Community CU President/CEO, Chris Butler, provided insight on the collaborative nature of the merger: “Unlike many mergers that happen out of necessity, we’ve been working together since January to bring our members an even greater credit union experience. By combining our resources, we can continue giving back to our communities in new and exciting ways.” See how the merger is communicated to the members in this video.

Credit Union Merger Stats

The median size of acquiring credit unions is $274 million.  This month there were no credit union acquirers with assets exceeding $1 billion.  With $890 million in assets Operation Engineers Local Union #3 Credit Union, based in Livermore, CA was the largest acquiring credit union in June merging $18 million IBEW Members Credit Union.

The acquired credit unions on average represented 9% of the assets of the acquiring credit unions.

There were no merger of equals in the month of June.

Four credit unions with less than $1 million in assets are being acquired.  The smallest credit union is A.Y. McDonald Employees CU based in Dubuque, IA with $676,000 in assets, which is being acquired by $28 million Holy Ghost Parish Credit Union.

Reasons for Credit Union Mergers

There was a greater variety of reasons given for mergers in June, however “expanded services” continues to be the primary factor motivating these mergers.  “Poor financial condition” was the reason for the merger sited by three of the credit unions. “Lack of sponsor support” was also cited as a reason for the merger by two credit unions. Three credit unions indicated the merger was motivated by the “inability to obtain officials”.

 

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.4%. Five credit unions have net worth ratios below 7.0%.

The delinquent loans-to-total loans ratio averages 2.2%, which is primarily attributed to three credit unions with delinquency ratios exceeding 5% of loans.

Only six of the 20 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.96% and median -0.38% through June of this year.

Below is a chart of the NCUA merger approvals for July 2015: