Credit Union Merger Approvals – April 2016

Mergers approvals were down slightly in April.  NCUA approved 20 mergers in April 2016 which are down from 23 last month.

The number of mergers are down and the combined assets of merged credit unions are also down nearly $25 million compared to last month.  For the month of April, the total merged assets are significantly down to $345 million compared to last year’s $1.5 billion. That’s a difference of over 1.1 billion. The mean and median assets of merged credit unions is $17.3 million and $5.1 million respectively.  In contrast, last month the mean assets were $16.1 million.

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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 Central Falls, RI based Dexter Credit Union ($96M) merging into Navigant CU ($1B) headquartered in Smithfield, RI.  Dexter CU is very poorly capitalized (5.2% Net Worth), has moderate delinquency (.93%) and is losing money (-4.10% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $ 240 million.  There are seven credit union acquirers with assets exceeding $1 billion.

With $2.8 billion in assets Service CU , was the largest acquiring credit union in April.

Other credit unions with assets exceeding $1 billion included:

• Navigant CU, Smithfield, RI ($1.6B)
• Trumark Financial CU, Fort Washington, PA ($1.7B)
• Robins Financial CU, Warner Robins, GA ($2.1B)
• CommunityAmerica CU, Lenexa, KS ($2.3B)
• Unify Financial CU, Torrance, CA ($2.2B)
• Financial Partners, Downey, CA ($1.1B)

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

The nearest merger of equals is tied between two separate mergers:

• Rochester, NY based Wit Credit Union ($13M) and Rochester, NY based Irondequoit Credit Union ($5M)
• Warrenville, IL based Northstar Credit Union ($111M) and Plainfield, IL based Oak Trust Credit Union ($46M)

There are three credit unions with less than $1 million in assets being acquired.  The smallest credit union is KCUMB Credit Union based in Kansas City, MO with $449,000 in assets, which is being acquired by $3 billion in assets CommunityAmerica Credit Union headquartered in Lenexa, KS.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to site the reason for the merger.  Of the 20 mergers in March, the following reasons were given:

• Expanded services: 17
• Inability to obtain officials: 1
• Lack of growth: 2

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 10.5%. Five credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 0.7%.

7 of the 20 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.9% and median -0.5% for April of 2016.

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