Credit Union Mergers – June 2016

NCUA approved 16 mergers in June 2016 which is up from 10 last month.

The number of mergers are up and the combined assets of merged credit unions are also up nearly $10 million compared to last month.  Compared to June of last year the total merged assets are significantly down to $225 million versus last year’s $535 million. That’s a difference of $310 million. The mean and median assets of merged credit unions are down to $14.1 million and $8.4 million respectively.

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Large Credit Union Mergers

There were no acquisitions of credit unions with assets exceeding $100 million this month.

The largest merger was Chicopee Municipal Employees Credit Union ($48M) merging into Polish National Credit Union ($489M) also headquartered in Chicopee, MA.  Chicopee Municipal Employees CU is well capitalized (11% Net Worth), has moderate delinquency (0.61%) and profitable (0.10% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $205 million.  There are 2 credit union acquirers with assets exceeding $1 billion.

With $2.3 billion in assets Community America Credit Union, was the largest acquiring credit union in May.

Other credit union with assets exceeding $1 billion included:

• Credit Union of Southern California, Whittier, CA (Just over $1.0B)

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

The nearest merger of equals is:

Kanas City, CO based Kaskaskia Valley Credit Union ($12M) and Mount Vernon, IL based Jeff-Co Schools ($9M)

There is one credit union with less than $1 million in assets being acquired.  The smallest credit union is Jefferson County Public Employees Credit Union based in Menan, ID with $259,000 in assets, which is being acquired by $146 million in assets Connections Credit Union headquartered in Pocatello, ID.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to site the reason for the merger.  Of the 16 mergers in June, the following reasons were given:

• Expanded services: 12
• Poor financial condition: 3
• Inability to Obtain Officials: 1

Financial Performance of Acquired Credit Unions

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

The delinquent loans-to-total loans ratio averages 3.9%.

8 of the 16 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.15% and median -0.08% for June of 2016.

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