Credit Union Mergers – August 2016

NCUA approved 19 mergers in August 2016 which has increased from 11 last month.

The number of mergers are up and the combined assets of merged credit unions are also up nearly $86 million compared to last month.  For the month of August, the total merged assets are slightly up to $234 million compared to last year’s $223 million. That’s a difference of $11 million. The mean and median assets of merged credit unions are down to $12.3 million and $4.2 million respectively.

Large Credit Union Mergers

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

The largest merger was Miami, FL based Ryder System Credit Union ($40M) merging into Power Financial Credit Union ($570M) headquartered in Pembroke Pines, FL.  Ryder System is very well capitalized (22% Net Worth), has low delinquency (0.25%) and is losing money (-0.34% ROA).  “Expanded Services” was given as the reason for the merger.

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Credit Union Merger Stats

The median size of acquiring credit unions is $229 million.  There are 5 credit union acquirers with assets exceeding $1 billion.

With $20.2 billion in assets Pentagon Credit Union, was the largest acquiring credit union in August.

Other credit union with assets exceeding $1 billion included:

• Affinity Credit Union, Basking Ridge, NJ ($2.5B)
• South Carolina Credit Union, North Charleston, SC ($1.5B)
• Trustone Financial Credit Union, Plymouth, MN($1.1B)
• Harborstone Credit Union, Tacoma, WA ($1.2B)

The acquired credit unions on average represent less than 1% of the assets of the acquiring credit unions.

The nearest merger of equals is:

• Jeannette, PA based Elliott Commmunity Credit Union ($33M) and Cranberry Township, PA based MSA Employees Credit Union($11M), which represents a third of the acquirer’s assets.

There are 4 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Cornerstone Baptist Church Credit Union based in Brooklyn, NY with $ 49,699 in assets, which is being acquired by $60 million in assets Consumer Credit Union also headquartered in Brooklyn, NY.

Reasons for Credit Union Mergers

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

• Expanded services: 12
• Poor financial condition: 3
• Inability to Obtain Officials: 1
• Lack of Growth: 2
• Lack of Sponsor Support: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 14.4%. Four credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 13.6%

5 of the 16 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -1.63% and median -0.76% for August of 2016.

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