CEO Advisory Group
Credit Union Merger Approvals 2Q 2024
NCUA approved 46 mergers in Q2 of 2024 which increased from 26 last quarter. The combined assets of merged credit unions total $3.3B, which compares to $3.7B last quarter and $2.7B in Q2 2023.
The mean and median assets of merged credit unions are $72.8M and $26.4M, respectively.
LARGE CREDIT UNION MERGERS
There were five acquisitions of credit unions with assets exceeding $100 million this quarter. The largest acquisition is:
- Member One CU, located in Roanoke, VA is being merged into Virginia CU ($5.3B) in Richmond, VA. Member One CU has $1.7B in assets, 9.0% net worth ratio, 0.5% delinquent loan ratio, and 0.6% ROAA LTM.
CREDIT UNION MERGER STATS
The median size of acquiring credit unions is $520M. There are 15 credit union acquirers with assets exceeding $1 billion and 12 credit union acquirers with assets below $100M.
With $5.3 billion in assets, Virginia CU is the largest acquiring credit union in Q2.
The acquired credit unions on average represent 5.0% of the assets of the acquiring credit unions.
There are 2 credit unions with less than $1 million in assets being acquired. The smallest credit union merger is Forrest County Teachers CU based in Hattiesburg, MS with $198,000 in assets.
REASONS FOR CREDIT UNION MERGERS
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 46 mergers in Q2, the following reasons were given:
FINANCIAL PERFORMANCE OF ACQUIRED CREDIT UNIONS
The median net worth ratio of the merging credit unions is 10.6%. There are 8 credit unions that have net worth ratios below 7.0%, which is considered undercapitalized.
The delinquent loans-to-total loans ratio averages 1.4%. Nearly half, twenty-two (22), of the 46 merging credit unions reported negative earnings in the last 12 months. The mean return-on-assets (ROA) was -0.29% and median 0.05% in the last twelve months.
Below is a chart of the NCUA merger approvals for Q2 2024:
Credit Union Acquisitions of Banks
Bank consolidation was at a slightly slower pace than credit union mergers. There was a total of 32 bank acquisitions announced in the second quarter of 2024.
Five of the announced bank acquisitions were by credit unions. In total these banks had assets of $3.7B, which is 11% more than the combined CUs acquired in the 2nd quarter.
Only one CU announced the deal terms. In May 2024, Atlanta Postal CU announced the acquisition of Affinity Bank, with $870M in assets. The transaction was reported with a Price/Tangible Book of 159% and Price/Earnings multiple of 22.8, according to S&P Global Market Intelligence. Among all bank acquisitions reporting deal terms the Price/Tangible Book was 118%.
Among all acquired banks the average ROAA was 0.82% with only 2 reporting a negative ROAA the last twelve months before the announced M&A transaction.
Following is a deal summary of the credit union acquisitions of banks and summary of all bank transactions:
