Credit Union Merger Approvals – September 2017

NCUA approved 18 mergers in September 2017 which decreased from 21 last month. The number of mergers are down and the combined assets of merged credit unions are down nearly $177M compared to last month.  For the month of September, the total merged assets are up, $392 million compared to last year’s $281 million. That’s a difference of $111 million. The mean and median assets of merged credit unions are $21.8 million and $4.4 million respectively.

Large Credit Union Mergers

There were two acquisitions of credit unions with assets exceeding $100 million this month.

The largest merger was Janesville, WI based Parker Community Credit Union ($124M) merging into Educators Credit Union ($1.8B) headquartered in Racine, WI.  Parker Community Credit Union is adequately capitalized (7.97% Net Worth), has relatively low delinquency 0.95%) and is marginally profitable (0.19% 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 $433 million.  There are six credit union acquirers with assets exceeding $1 billion.

With $2.9 billion in assets, Idaho Central Credit Union was the largest acquiring credit union in September.

Other credit union with assets exceeding $1 billion included:

• Summit Credit Union, Madison, WI ($2.8B)
• Community First Credit Union, Appleton, WI ($2.7B)
• Financial Partners Credit Union, Downey, CA ($1.2B)
• Utilities Employees Credit Union, Reading, PA ($1.2B)
• Educators Credit Union, Racine, WI ($1.8B)

The acquired credit unions on average represent 3% the of the assets of the acquiring credit unions.

The nearest merger of equals is:

Bangor, ME based Eastern Main Medical Center Credit Union ($52M) merging into Acadia Credit Union ($158M) headquartered in Fort Kent, ME.  There are 2 credit unions with less than $1 million in assets being acquired.  The smallest credit union is Transfiguration Manhattan Zion Credit Union based in New York, NY with $63,878 in assets, which is being acquired by $73 million in assets New York Times Employees Credit Union headquartered in New York, NY.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 18 mergers in September, the following reasons were given:

• Expanded Services: 17
• Lack of Growth: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 12.08%. Three credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 3.11%

Ten of the 18 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -0.80% and median 0.05% for September of 2017.

Below is a chart of the NCUA merger approvals for September 2017: