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Friday, 16 March 2012 08:56

Credit unions mergers to continue

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As the banking industry enters another era of mergers and acquisitions, Michigan credit unions continue the steady consolidation trend that has been occurring for more than a decade, though at a slightly slower rate the last two years.

Overall, there were 10 mergers in Michigan in 2011 involving state and federally chartered credits unions, versus 11 each in 2010 and 2009 and an average of 13 annually between 1990 and 2011, according to the Michigan Credit Union League.

Many of the credit union mergers of recent years involved small institutions partnering with a larger counterpart to drive efficiencies, though there have been a few deals involving like-sized institutions as well.

Dave AdamsIt’s the same pressures that affect all businesses and all institutions,” said Dave Adams, CEO of the Michigan Credit Union League.

The retirement of a CEO or top executive, financial troubles, or the need to grow services or extend its field of membership will also lead small credit unions to explore a merger, Adams said. He sees consolidation continuing in the future at the same pace as the past several years, with 3 percent to 5 percent of all credits unions annually involved in a merger.

“I don’t see anything accelerating,” Adams said. “I don’t really see a high rate of consolidation.”

Unlike banks, credit unions mergers are not driven by a need to grow earnings or shareholder value, he said.

“It’s economies of scale, it’s more services, it’s broader membership,” Adams said.

Among the latest proposed mergers are the Mattawan-based 3,926-member Access First Federal Credit Union with the 23,596-member United Bay Credit Union in Bay City, Allegis Credit Union in Kalamazoo and Honor Credit Union in St. Joseph, and the ailing 1,500-member St. Joseph Valley Credit Union in Three Rivers into the 31,000-member Kellogg Community Federal Credit Union in Battle Creek.

Among the 2011 deals involving West Michigan institutions was the Eddy Employees Federal Credit Union in Three Rivers merging into Educational Community Credit Union in Kalamazoo that took effect in October, and the Jackson Vibrators Employees Credit Union in Ludington joining Grand Valley Co-Op Credit Union in Grand Rapids in July.

The trend has steadily reduced the number of credit unions in the state.

There were 196 state-chartered credit unions in Michigan at the end of 2011, according to the Michigan Office of Financial and Insurance Regulation. That’s down from 202 at the end of 2010 and is nearly 100 fewer than a decade earlier.

Federally chartered credits unions declined to 122 in 2011 from 172 in 2000, according to the MCUL.

Read 2602 times Last modified on Thursday, 04 October 2012 00:27

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