The need for additional economies of scale as the result of the downturn and credit squeeze, not NCUSIF assessments, may drive more merger activity this year.

That's according to CUNA Mutual Group's just-released Trends Report. At the end of February there were 8,021 CUs, as estimated by CUNA Economics and Statistics. Through the first two months of 2009, the net decline in CUs was 67 institutions.

Over the past year, the CU count decreased by 322 institutions, which is in line with CUNA Mutual's early 2009 forecast of 350 CUs.

"We do not believe current results are driven by challenges brought on by NCUSIF assessments, rather the accumulated weight of our economic [and] credit downturn and the need for additional economies of scale and scope," wrote Dave Colby, chief economist at CUNA Mutual, in the report.

Although the industry lost 361 CUs in the $0-$20 million asset class in 2008, the remaining 4,576 CUs (57% of all CUs) had a collective capital-to-asset ratio of 15.6%, according to the report.

"This is why we believe reasons other than capital challenges will drive mergers of these smaller institutions," Colby wrote.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.