Credit Union Merger Approvals -- July 2018

NCUA approved 14 mergers in July 2018 which increased from 12 last month. The number of mergers is up, and the combined assets of merged credit unions are also up nearly $159M compared to last month.  For the month of July, the total merged assets are up, $394 million compared to last year’s $93 million. That’s a difference of $301 million. The mean and median assets of merged credit unions are $39.4 million and $24.6 million respectively.

Large Credit Union Mergers

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

The largest credit union was Wisconsin Rapids, WI based Bull's Eye Credit Union ($157M) was acquired by Connexus Credit Union ($1.9B) headquartered in Wausau, WI. Bull's Eye Credit Union is well capitalized (10.53% Net Worth), has low delinquency (0.60%) and profitable (1.10% 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 $241 million.  There are four credit union acquirers with assets exceeding $1 billion.

With $2.69 billion in assets, Community America Credit Union was the largest acquiring credit union in July.

The other credit union with assets exceeding $1 billion were:

• Langley Credit Union, Newport News, VA ($2.61B)

• Connexus Credit Union, Wausau, WI ($1.9B)
• Covantage Credit Union, Antigo, WI ($1.6B)

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

The nearest merger of equals is:

• Savannah, GA based Savannah Federal Credit Union ($19M) merging into Core Credit Union ($77M) headquartered in Statesboro, GA.  There isn’t any credit union with less than $1 million in assets being acquired.

The smallest credit union is Taft Employees Credit Union based Hahnville, LA with $ 2,532,389 in assets, which is being acquired by $56 million in assets Total Choice Credit Union headquartered 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 is 8.49%. There are two credit unions that have a net worth ratio below 7.0%, which is considered undercapitalized.

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

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

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