By Glenn Christensen
NCUA approved 22 mergers in September 2018, an increase from the 16 approved in the prior month. The combined assets of the merged credit unions was $288 million, which compares to $1.4 billion in the previous month and $392 million one year earlier.
The mean and median assets of the merged credit unions was $13.1 million and $5.3 million, respectively
There were two acquisitions of a credit unions with assets exceeding $100 million as of September, the largest being Norfolk, Va.-based PortAlliance FCU, which was acquired Chartway FCU in Virginia Beach, Va.
The median size of acquiring credit unions was $256 million. There were five credit union acquirers with assets exceeding $2 billion, the largest of which was Randolph-Brooks at $8.8 billion in assets.
The other continuing credit unions with assets exceeding $1 billion were:
- American Heritage ($2.2 billion)
- Chartway ($2.2 billion)
- Keesler ($2.6 billion)
- Wings Financial ($4.8 billion)
The acquired credit unions on average represented 1% the of the assets of the acquiring credit unions.
The nearest merger of equals was between McKees Rocks, Penn.- based Plumbers Local #27 ($2.3 million) and the $11.9-million West Penn P&P in Beaver, Penn.
There were two credit unions with less than $1 million in assets that were acquired. The smallest credit union is Holsey Temple in Philadelphia, which had just $28,000 in assets. It was acquired by the $2-billion American Heritage FCU, also in Philadelphia.
Reasons For Mergers
When seeking regulatory approval credit unions are required to cite the reason for the merger. Of the 22 mergers in September, the following reasons were given:
- Expanded Services: 12
- Poor Financial Condition: 4
- Poor Management: 1
- Inability to Obtain Officials: 2
- Loss/Declining Field of Membership: 1
- Conversion to or Merger with NFICU: 2
Financial Performance of Acquired Credit Unions
The median net worth ratio of the merging credit unions was 15.15%. There were four credit unions that had a net worth ratio below 7.0%, which is considered undercapitalized. Worst was Community Works Credit Union, which had a 5.91% net worth ratio.
The delinquent loans-to-total loans ratio averaged 1.68%
Ten of the 22 of the merging credit unions reported positive earnings year to date. The mean return-on-assets (ROA) was -1.10% and median -0.59% for September of 2018.
Below is a chart of the NCUA merger approvals for September 2018.
Glenn Christensen leads CEO Advisory Group. For more information: www.ceoadvisory.com.