Credit Union Merger Approvals – February 2016

Mergers approvals are off to a slow start this year.  The NCUA approved 15 mergers in February 2016 which is equal to the number of approvals from last month. Although a fairly low approval number it is nearly twice the number of mergers from February of last year.

The combined assets of merged credit unions is up nearly $40 million compared to last month.  For the month of February the total merged assets was $550 million compared to last year’s $210 million.  The mean and median assets of merged credit unions were $36.6 million and $14.6 million respectively.  In contrast, last month the mean assets was $34.0 million.

Large Credit Union Mergers

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

The largest merger was Woodbridge, VA based Belvoir Credit Union ($325M) merging into Pentagon ($19B) headquartered in Arlington, VA.  Belvoir CU is well capitalized (8.3% Net Worth), has low delinquency (0.9%) and profitable (0.3% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $301 million.  There are four credit union acquirers with assets exceeding $1 billion.

With $19 billion in assets Pentagon FCU, was the largest acquiring credit union in February.

Other credit unions with assets exceeding $1 billion included:

• Atlanta Postal Credit Union, Atlanta, GA ($2.0B)
• Ascend Federal Credit Union, Tullahoma, TN ($1.8B)
• Metro Credit Union, Chelsea, MA ($1.5B)

The acquired credit unions on average represented 2% of the assets of the acquiring credit unions.

The nearest merger of equals was among Charlotte, NC based Carolina Postal Credit Union ($84M) and Kannapolis, NC based Southern Select Community Credit Union ($33M).

There was one credit union with less than $1 million in assets being acquired.  The smallest credit union is Menard Credit Union based in Chester, IL with $365,000 in assets, which is being acquired by $301 million SIU Credit Union headquartered in Carbondale, IL.

Click Here to Download White Paper “Growth by Merger”

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to site the reason for the merger.  Of the 15 mergers in February, the following reasons were given:

• Expanded services: 9
• Poor financial condition: 2
• Inability to obtain officials: 1
• Conversion to or merger with NFICU
• Lack of sponsor support: 1
• Lack of growth: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.1%. Only one credit union had a net worth ratio below 7.0% and is considered under-capitalized.

The delinquent loans-to-total loans ratio averages 1.8%.

Eleven of the 15 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is 0.01% and median 0.08% through December of 2016.

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