Credit Union Consolidation Continues
There were 70 CU mergers in the first six months of 2021, down one from last year at this point but continuing a decades-long trend.
The drumbeat of credit union industry consolidation continues.
So far in 2021, there were 39 mergers in the second quarter and 31 in the first quarter. That total of 70 in the first six months of the year is down one from the same point in 2020. In trailing one-year numbers – from June 2020 to June 2021 – there were 135 mergers.
Back in 1985, there were nearly 18,000 banks and thrifts in America and about 15,000 credit unions. As of June 30, 2021, there were 5,005 and 5,136, respectively.
It’s also noteworthy that even with eliminating outlying mergers over $1 billion, 2021 has seen the largest average merger size of any year prior by a wide margin.
Let’s dig a bit deeper into the current numbers, courtesy of the Peer-to-Peer database we maintain at Callahan & Associates.
A Look at the Numbers in Aggregate
By total assets, the second quarter of this year saw far more merged away than in the first quarter of the year: $2.4 billion compared with $1.3 billion, or 78.5% more. For the first half of the year, total assets merged away was up 13.7% from the first half of 2021, $3.7 billion compared with $3.3 billion. In trailing one-year numbers, $7.2 billion in member assets were merged into other cooperatives from June 2020 to June 2021.
By average asset size, the average was $61.3 million for credit unions merged away in the second quarter of 2021, up 41.9% from the $43.2 million in average size from the first quarter of 2021. The average assets for merged credit unions in the first half of the year was $53.3 million, down 22.4% from $68.7 million on average in the first half of 2020 – though the 2020 average value was skewed upward by one large, $2.2 billion merger.
The Largest and Most Mergers by State and Credit Union
By state, Ohio had the most mergers in the trailing 12 months from June 2020 through June 2021 at 14, followed by New York at 11, Illinois at 10, Pennsylvania at six, and five each for California and Virginia. Only 11 states did not have a credit union acquired by another during that time.
Here are the five largest mergers in the second quarter of this year:
- Xceed Financial Credit Union ($981.8 million, Calif.) merged with Kinecta Federal Credit Union ($5.4 billion, Manhattan Beach, Calif.)
- Infinity Federal Credit Union ($336.3 million, Westbrook, Maine) merged with Deere Employees Credit Union ($1.4 billion, Moline, Ill.)
- Premier Federal Credit Union ($251.6 million, Greensboro, N.C.) merged with Charlotte Metro Credit Union ($798.9 million, Charlotte, N.C.)
- Aspire Federal Credit Union ($141.6 million, Clark, N.J.) merged with Pentagon Federal Credit Union ($27.3 billion, McLean, Va.)
- Leyden Credit Union ($100.6 million, Franklin Park, Ill.) merged with Partnership Financial Credit Union ($248.4 million, Morton Grove, Ill.)
Here are the five largest from the first quarter:
- Columbus Metro Federal Credit Union ($259 million, Columbus, Ohio) merged with Telhio Credit Union ($951.8 million, Columbus, Ohio)
- NorthStar Credit Union ($211.8 million, Warrenville, Ill.) merged with NuMark Credit Union ($332.6 million, Joliet, Ill.)
- Lower Valley Credit Union ($128.4 million, Sunnyside, Wash.) merged with Self-Help Credit Union ($1.5 billion, Durham, N.C.)
- Riverset Credit Union ($117.6 million, Pittsburgh, Pa.) merged with Allegent Community Federal Credit Union ($151.7 million, Pittsburgh, Pa.)
- Anderson Federal Credit Union ($107.5 million, Anderson, S.C.) merged with Spero Financial Credit Union ($543.0 million, Greenville, S.C.)
No credit unions acquired more than one other credit union over the first half of 2021, but if you extend that back one year (June 2020 to June 2021), PenFed acquired three credit unions totaling $441.7 million in assets, and 11 others merged two smaller credit unions into their cooperatives.
A Five-Year Lookback
Over the past five years – from June 2016 to June 2021 – there have been 852 credit union mergers, an average of 170 mergers per year. All told, $32.2 billion in assets were consolidated into another credit union over this period.
The average size of each acquisition was $37.8 million in assets. Five credit unions with more than $1 billion in assets merged into a larger credit union (a “super merger”) over the past five years, the largest of which was Schools Financial Credit Union ($2.2 billion, Sacramento), which merged into SchoolsFirst Federal Credit Union ($16.8 billion, Santa Ana, Calif.) in the first quarter of 2020.
Meanwhile, five mergers over the past five years were “reverse mergers,” where the surviving credit union had less assets than the credit union it acquired.
Over the past five years, Pennsylvania had the most mergers with 70, followed by Ohio (58), California and New York (54), and Illinois (50). Every state had at least one merger during that time.
PenFed also recorded the most mergers over the past five years, acquiring 16 smaller cooperatives with a total of $2.2 billion assets. American Heritage Credit Union ($3.6 billion, Philadelphia) and Nuvision Federal Credit Union ($2.8 billion, Huntington Beach, Calif.) had seven each totaling $56 million and $785.3 million in assets respectively. Superior Credit Union ($1.4 billion, Lima, Ohio) and Peach State Credit Union ($737.1 million, Lawrenceville, Ga.) recorded six each with total assets of $206 million and $113.2 million, respectively.
Bank Acquisitions
Outside of acquiring other credit unions, some credit unions have moved into the banking space, acquiring either an entire bank or a handful of bank branch locations. A credit union-bank transaction happened 14 times between June 2020 and June 2021. Four of these were branch acquisitions and the other 10 were full bank acquisitions.
Will Hunt Industry Analyst Callahan & Associates Washington, D.C.