Credit Union Merger Approvals 1Q 2020

NCUA approved 34 mergers in Q1 of 2020 which increased from 32 last quarter. The combined assets of merged credit unions is $404M, which compares to $1.6B last quarter and $1.3B year ago.

The mean and median assets of merged credit unions are $11.9M and $4.7M, respectively.

LARGE CREDIT UNION MERGERS

There are no acquisitions of credit unions with assets exceeding $100 million this quarter.  The largest acquisition is:

• Ball State CU, located in Muncie, IN, which is being merged into Financial Center First CU ($573M) in Indianapolis, IN.  Ball State has $90M in assets, 6.3% net worth ratio, 1.6% delinquent loan ratio, and -0.6% ROA. 

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CREDIT UNION MERGER STATS

The median size of acquiring credit unions is $209 million.  There are six credit union acquirers with assets exceeding $1 billion.

With $3.2 billion in assets, Navy Army Community is the largest acquiring credit union in Q1.

The other continuing credit unions with assets exceeding $1 billion were:

• Trumark Financial CU ($2.4B)
• South Carolina CU ($1.8B)
• Sound ($1.8B)
• Fox Communities CU ($1.8B)
• Educators CU ($2.2B)

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

The nearest merger of equals is:

• St. Columbkille FCU ($21.6M) merging into the smaller All Saints CU ($20.4M), 105% acquiree/acquirer ratio

There are six credit unions with less than $1 million in assets being acquired. The smallest credit union merger is Bethany Baptist Christian FCU based in Chester, PA with $43,000 in assets. 

REASONS FOR CREDIT UNION MERGERS

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 32 mergers in Q2, the following reasons were given:

EXPANDED SERVICES	27
POOR FINANCIAL CONDITION	5
CORPORATE RESTRUCTURING	1
INABILITY TO OBTAIN OFFICIALS	1
Grand Total	34

FINANCIAL PERFORMANCE OF ACQUIRED CREDIT UNIONS

The median net worth ratio of the merging credit unions is 14.35%. There are 6 credit unions that have net worth ratios below 7.0%, which is considered undercapitalized.

The delinquent loans-to-total loans ratio averages 8.54%.  Eighteen (18) of the 34 merging credit unions reported negative earnings year to date.  The mean return-on-assets (ROA) was -1.43% and median -0.30% for Q1 of 2020.

Below is a chart of the NCUA merger approvals for Q1 2020: