Credit Union Merger Approvals – June 2017

NCUA approved 21 mergers in June 2017 which increased from 17 last month. The number of mergers are up yet the combined assets of merged credit unions are down nearly $287M compared to last month.  For the month of June, the total merged assets are up to $478 million compared to last year’s $225 million. That’s a difference of $253 million. The mean and median assets of merged credit unions are $22.8 million and $14.9 million respectively.

Large Credit Union Mergers

There was one acquisition of a credit union with assets exceeding $100 million this month.

The largest merger was Cincinnati, OH based Cinco Family Financial Center Credit Union ($113M) merging into Superior Credit Union ($663M) headquartered in Lima, OH.  Cinco Credit Union is well capitalized (7.74% Net Worth), has low delinquency (0.11%) and profitable (0.22% ROA).  “Expanded Services” was given as the reason for the merger.

Credit Union Merger Stats

The median size of acquiring credit unions is $309 million.  There are three credit union acquirers with assets exceeding $1 billion.

• Affinity FCU, Basking Ridge, NJ ($2.7B) acquired NEA ($94M)
• American Heritage CU, Philadelphia, PA ($1.9B) acquired SM ($77K)
• Financial Partners CU, Downey, CA ($1.2B) acquired Star Harbor ($15M)

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

The nearest merger of equals is Conshohocken, PA based Media Members Credit Union ($43M) and U of P Credit Union ($25M) headquartered in Phila, PA.

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There are two credit unions with less than $1 million in assets being acquired.  The smallest credit union is SM Credit Union based in Philadelphia with $77,000 in assets, which is being acquired by $1.9 billion in assets American Heritage Credit Union headquartered in Philadelphia.

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 21 mergers in June, the following reasons were given:

• Expanded services: 18
• Poor Financial Condition: 1
• Poor Management: 1

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions is 8.3%. Six credit unions have a net worth ratio below 7.0% and are considered under-capitalized.

The delinquent loans-to-total loans ratio averages 7.1%

Seven of the 21 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) is -1.77% and median -0.46% for June of 2017.

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