Credit Union Merger Approvals – August 2017

NCUA approved 21 mergers in August 2017 which increased from 11 last month. The number of mergers are up and the combined assets of merged credit unions are up nearly $476M compared to last month.  For the month of August, the total merged assets are up, $569 million compared to last year’s $234 million. That’s a difference of $335 million. The mean and median assets of merged credit unions are $27.1 million and $4.6 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 Fullerton, CA based Pacific Community Credit Union ($186M) merging into Credit Union of Southern California ($1.2B) headquartered in Whittier, CA.  Pacific Community Credit Union is very well capitalized (15.60% Net Worth), has low delinquency 0.22%) and profitable (0.42% ROA).  “Expanded Services” was given as the reason for the merger.
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Credit Union Merger Stats

The median size of acquiring credit unions is $520 million.  There are six credit union acquirers with assets exceeding $1 billion.

With $2.0 billion in assets, Trumark Financial Credit Union was the largest acquiring credit union in August.

Other credit union with assets exceeding $1 billion included:

• American Heritage Credit Union, Fort Washington, PA ($1.9B)
• Capital Credit Union, Green Bay, WI ($1.3B)
• USAlliance Credit Union, Rye, NY ($1.3B)
• Credit Union of Southern California, Whittier, CA ($1.2B)
• South Florida Educational Credit Union, Miami, FL ($1.1B)

The acquired credit unions on average represent 4% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

Fort Wayne, IN based General Credit Union ($84M) merging into Partners 1^st Credit Union ($284M) headquartered in Fort Wayne, IN.  There are 5 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Love Gospel Assembly Credit Union based in Bronx, NY with $61,506 in assets, which is being acquired by $1.3 billion in assets USAlliance Credit Union headquartered in Rye, NY.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 21 mergers in August, the following reasons were given:

• Expanded Services: 15
• Poor Financial Condition: 4
• Lack of Growth: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 9.45%. Four credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 5.28%

Eight of the 21 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is 1.43% and median -0.26% for August of 2017.

Below is a chart of the NCUA merger approvals for August 2017: