The “Disappeared”
Since the beginning of 2008, the year the financial crisis began, 1,175 credit unions have merged or otherwise closed for business according to NCUA’s 5300 Call Report data. These credit unions, whose last reported total assets sum to $31B, range from $2.3B to numerous smaller credit unions with total assets measured in the thousands of dollars. In this post we’ll take a deeper look at these merger / closures.
The rate at which credit unions have merged or closed has been quite volatile as can be seen in the chart below (blue line). Mergers / closures appear to follow a seasonal pattern with a pronounced uptick in the number of mergers / closures occurring in the fourth quarter of each year. There was also a notable slowdown in the number of mergers / closures starting in 2010 and lasting through the first half of 2011.
Interestingly, NCUA noted in its “NCUSIF and TCCUSF Quarterly Statistics – September 30, 2012” report (page 8, slide 16) that the number of credit union failures in 2010 matched the previous high of 28 in 2009. The slowdown of 2010 and early 2011 can thus be attributed to a reduction in the number of voluntary mergers.
The assets involved in these mergers / closures (red columns in previous chart) have also been unevenly distributed across this time period. A surge of consolidation activity occurred in the fourth quarter of 2008 and first quarter of 2011 when total assets of merged / closed credit unions exceeded $3B. The fourth quarter of 2008 was marked by four $200M+ credit union mergers / closures and the $2.3B First Tech – Addison Avenue merger occurred in the first quarter of 2011. In contrast, total last reported assets of merged / closed credit unions fell below $1B in 4 of the 18 quarters since the start of 2008.
