Credit union mergers have slowed down so far this year, but industry experts expect the pace of consolidations to pick up over the next five years, bringing the total number of credit unions from today's approximate count of 6,100 to 4,000 by 2020.
From January to September 2015, the NCUA approved 178 mergers, which represents a fall from the 193 approved consolidations that took place from January to September 2014, and the 190 consolidations during the first three quarters of 2013. What's more, the NCUA's recently released approved mergers for October 2015 show only 19 consolidations were given the green light compared to 28 in October 2014 and 24 in October 2013.
And, in November and early December, approximately 12 credit unions have publicly announced the completion of consolidations or new merger agreements, including the $19 billion PenFed Credit Union in Alexandria, Va., which completed three consolidations with military cooperatives based in Dallas and Fort Worth, Texas and Hawaii. The consolidations will also expand PenFed's international operations.
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At press time, November's approved mergers were not posted on the NCUA's website.
"The number of credit union mergers each year is slowing because the number of credit unions is dropping with those same mergers," Dennis Dollar, principal of Dollar Associates, explained. "The percentage of credit unions merging is actually higher today than it was 10 years ago. The number of mergers has averaged one per business day since 2000. I don't see that slowing down between now and 2020. In fact, I see it increasing with the pressure for building more capital, the growing demands of members, the increasingly burdensome regulatory landscape and the need for economies of scale."
Based on NCUA data, Dollar estimated there will be about 4,000 credit unions operating in about five years.
He also noted that his Birmingham, Ala.-based firm is now working on 15 different mergers and about 60% of the firm's phone calls are from credit unions requesting assistance with planned consolidations.
Read more about recent credit union mergers and how PenFed is expanding through strategic consolidations in the Dec. 9, 2015 print issue of Credit Union Times.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
