Credit Union Mergers Fall For The Sixth Straight Year

The number of credit union mergers has fallen for six years; however, the aggregate assets of merged institutions reached a record $8.4 billion with the help of two significant mergers.

 
 

Credit unions faced wide-ranging challenges in 2020 — a worldwide pandemic, social unrest, and political and economic upheaval. Still, merger activity largely mirrored the pace set in 2019.

There were 136 credit union mergers in 2020. This was seven fewer than the year prior. Of those, a record-setting two were significant, meaning near or more than $1 billion in assets. It is important to highlight significant mergers because they skew merger activity above the peer average.

Excluding the two outliers, the average asset size of merged credit unions fell in 2020 to $34.7 million. However, since 2015, more than 71% of all credit union mergers included institutions with less than $20 million in assets.

In a departure from recent years, credit union acquisitions of banks contracted. Those fell from 10 in 2019 to five in 2020, with many postponed or pending as of year-end. Read on for insight into key credit union merger trends.

MERGER NUMBERS & RATE

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(1)_Merger_Numbers___Rate

The credit union merger rate declined slightly to 2.5% in 2020.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

MERGERS COMPLETED BY QUARTER

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(2)_Mergers_Completed_by_Quarter

In 2020, 136 credit unions merged with other credit unions; that was seven fewer than in 2019.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

AGGREGATE ASSETS & PERCENTAGE OF INDUSTRY ASSETS OF MERGED CREDIT UNIONS

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(3)_Agg._Assets_and_Percentage_of_Industry_Assets

As a percentage of industry assets, total merged assets grew 33.9%, or $2.1 billion, year-over year. Excluding significant mergers, total merged assets declined 4.5%, or $217.2 million, during the same period.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

AGGREGATE ASSETS OF MERGED CREDIT UNIONS

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(4)_Aggregate_Asssets_of_Merged_Credit_Unions

Including significant mergers, the aggregate assets of merged credit unions in 2020 exceeded 2019 by more than $2 billion.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

AVERAGE ASSET SIZE OF MERGED CREDIT UNIONS

FOR U.S. CREDIT UNIONS (EXCLUDING SIGNIFICANT MERGERS) | DATA AS OF 12.31.20
(5)_Average_Asset_Size

The average asset size of merged credit unions in 2020 was $34.7 million, up 1.3% from 2019.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

CREDIT UNION MERGERS

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(6)_CU_Mergers

Credit unions with less than $20 million in assets have accounted for 71% of all mergers since 2015.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

CREDIT UNION – BANK ACQUISITION BY YEAR

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.20
(7)_CU-Bank_Mergers

Credit union bank mergers slowed in 2020; however, nine remained pending as of Dec 31.

SOURCE: CALLAHAN & ASSOCIATES & NCUA

Considering A Merger?

Callahan’s Peer-to-Peer has built in merger functionality that allows credit unions to scenario plan possible mergers by combining the call report data of two reporting credit unions to see financial impact using all of our pre-built charts including lending, deposits, income, expenses, capital, staffing, members, infrastructure, electronic offerings, and member metrics.

See For Yourself
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March 15, 2021


Comments

 
 
 
  • excellent summary of factual trends. One minor suggestion. Cu's don't merge with banks; they purchase all the assets and liabilities and pay the bank's shareholders for the value of the bank enterprise. A very different financial and operational event from a credit union merger.
    Anonymous