An Update on Latest in CU Merger Activity

By Glenn Christensen 

Christensen Glenn

NCUA approved 14 mergers in July 2018, an increase over the 12 of one month earlier.

The number of mergers was also up, as was the combined assets of the merged credit unions by nearly $159 million when compared to the prior month. For July, the total merged assets were,$394 million, compared to the $93 million of July of 2017, an increase of $301 million.  

The mean and median assets of the merged credit unions were $39.4 million and $24.6 million, respectively. 

There was one acquisition of a credit union with assets exceeding $100 million in July.  The largest credit union involved in a merger was Wisconsin Rapids, Wis.-based Bull's Eye Credit Union at $157 million, which was acquired by the $1.9-billion ConnexusCredit Unionin Wausau, Wis. Bull's Eye Credit Union was well capitalized (10.53% net worth), had low delinquency (0.60%) and was profitable (1.10% ROA).  “Expanded Services” was given as the reason for the merger.  

Credit Union Merger Stats 

The median size of acquiring credit unions averaged $241 million.  There were four credit union acquirers with assets exceeding $1 billion.  

With $2.69 billion in assets, CommunityAmerica Credit Union in Kansas, was the largest acquiring credit union in July.  The other credit unions with assets exceeding $1 billion were:

  • Langley Credit Union, Newport News, Va. ($2.61 billion)
  • Connexus Credit Union, Wausau, Wis. ($1.9 billion)
  • Covantage Credit Union, Antigo, Wis. ($1.6 billion)

The acquired credit unions on average represent 5%the of the assets of the acquiring credit unions.  

The nearest merger of equals was Georgia-based Savannah Federal Credit Union ($19 million) merging into Core Credit Union ($77 million), headquartered in Statesboro, Ga.  

There weren’t any credit unions with less than $1 million in assets that were acquired.  The smallest credit union involved in a merger during July was Taft Employees Credit Union based Hahnville, La. with $ 2.5 million in assets, which was acquired by $56-million Total ChoiceCredit Union in Hahnville, La.                    

Reasons for Credit Union Mergers

When seeking regulatory approval credit unions are required to cite the reason for the merger.  Of the 14 mergers in July, the following reasons were given:

  • Expanded Services: 10
  • Poor Financial Condition: 4

Financial Performance of Acquired Credit Unions

The median net worth ratio of the merging credit unions was 8.49%. There were two credit unions that had a net worth ratio below 7.0%, which is considered undercapitalized. 

The delinquent loans-to-total loans ratio averaged 2.24%

Ten of the 14 of the merging credit unions reported positive earnings year to date.  The mean return-on-assets (ROA) was 0.44% and median was 0.35% for July of 2018. 

Below is a chart of the NCUA merger approvals for July 2018:

Glenn Christensen is president and CEO of CEO Advisory Group

Credit-Union-Merger-Approvals-July-2018

 

                          

Section: Standard
Word Count: 761
Copyright Holder: CUToday.info
Copyright Year: 2018
Is Based On:
URL: https://www.cutoday.info/THE-tude/An-Update-on-Latest-in-CU-Merger-Activity