The conserved Citizens Community Credit Union in Devils Lake, N.D., which lost more than $8 million this year, plans to merge on January 1 with North Dakota's largest credit union, the $611 First Community CU in Jamestown, according to a prepared statement.
The NCUA placed the $185 million Citizens Community CU into conservatorship in June for unspecified safety and soundness issues.
"First Community Credit Union completed extensive due diligence, and while there were some loan issues, Citizens Community Credit Union was adequately funded to cover reserve requirements," First Community CU President/CEO Stephen Schmitz, said Tuesday. "We're excited about the opportunity to grow our credit union. With (CCCU's) 10 branches situated across the Devils Lake and Grand Forks markets, the Citizens Community Credit Union field of membership was very attractive to First Community Credit Union. Efficiencies to be gained across the branch network will provide strength and stability to our combined membership base moving forward."
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Chartered in 1940, CCCU serves 11,550 members, which will increase First Community CU's membership from its current membership of 32,378 to 43,928 after the merger.
Schmitz also said the First Community intends to retain CCCU's 48 full-time staff and 12 part-time staff post merger.
CCCU's financial performance reports filed with the NCUA show the credit union lost $8,054,354 by the end of this year's third quarter with a net worth of 6.92% and ROAA of -5.61%.
Despite its total loan growth from $110 million in 2012 to $163 million in 2016, the credit union's net income dropped precipitously from $3.3 million in 2012 to $460,184 in 2016, according to NUCA financial performance reports. By the end of this year's first quarter, CCCU recorded a net income loss of $933,194 and $1,141,127 at the end of the second quarter.
The credit union's total loans also declined in 2017 from $159 million in the first quarter, 155 million in the second quarter, and $149 million in the third quarter.
NCUA financial performance reports show CCCU got into trouble with delinquent loans, posting a delinquent loan rate of 8.21% at the end of this year's third quarter, nearly double from its delinquent loan rate of 4.60% at the end of 2016's third quarter. The peer average is 0.86%. The credit union also posted net charge offs of one percent at the end of third quarter 2017, compared to a net charge off rate of 0.11% at the end of last year's third quarter. The peer average is 0.51%.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
