trending Market Intelligence /marketintelligence/en/news-insights/trending/rm2ghrgt8cqefswdi-5fja2 content esgSubNav
In This List

Weekly Recap – Total credit union loans outstanding grow by 10% YOY in Q1

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Weekly Recap – Total credit union loans outstanding grow by 10% YOY in Q1

The weekly recap features news on regulatory actions, mergers and other issues facing the credit union space. Send tips, ideas and chatter to ken.mccarthy@spglobal.com.

In the spotlight

Former Members 1st FCU CEO Robert Marquette was staunchly opposed to mergers, but the current president and CEO George Nahodil has a different approach.

In a recent interview, Nahodil, who took over after Marquette died last year, said the old-school thinking about mergers was that they were rarely pursued by larger institutions for fear that they would offend the target. Today, however, more large credit union are examining whether such partnerships make sense.

"And if it does, people should really be putting their egos aside and saying, 'Let's make this happen,'" he said. "For me ... are we going to say 'no' to mergers? No, we're not."

Nahodil said Members 1st occasionally receives calls from small credit unions looking to partner, including one it fielded recently. That institution was a bit out of Members 1st market, though, and not a good fit. If opportunities come along to partner with credit unions in contiguous counties that would allow Members 1st to continue growing, it will certainly consider them, he said.

Members 1st is just outside the top 50 largest credit unions in the nation with about $3.93 billion in assets at the end of the first quarter. The credit union has had internal discussions about how certain mergers could be strategically advantageous for all parties involved, but is not ready to push the issue, Nahodil said. That is partially because it does not want to be seen as a "big bully" seeking to gobble up smaller institutions.

Nahodil pointed to the merger between Belco Community CU and Cornerstone FCU as an example of a deal that brought two healthy credit unions together to form a stronger company.

In other news

* When it comes to securing the long-term survival of a credit union, factors such as membership growth and increasing market share might take a back seat to having a solid succession plan. But it is an area where many credit unions have some work to do. About one-third of credit unions do not have a succession plan in place, said Ken Rollins, co-founder and principal of law firm Pillar+Aught. According to the latest Credit Union Staff Salary Report by the Credit Union National Administration, 68% have a CEO succession plan in place, and 12% expect to have one in place by year-end.

* The National Credit Union Administration approved 12 credit union mergers in April, according to the agency's latest Insurance Report of Activity. Eleven of the mergers were attributed to "expanded services." Just one — Tyron, Neb.-based McPherson Community FCU's merger into Omaha, Neb.-based Centris FCU — was due to poor financial condition. The merging credit unions reported a combined $239.9 million in assets as of March 31.

* Total assets in federally insured credit unions rose by $79 billion, or 5.9%, during the year ending in the first quarter of 2018, to $1.42 trillion, according to data released June 6 by the NCUA. Total loans outstanding increased $87.3 billion, or 9.9%, over the year to $971.9 billion. Credit union loan balances rose over the year in every major category, compared with the first quarter of 2017. The number of federally insured credit unions with assets of at least $1 billion increased to 294 in the first quarter of 2018 from 278 in the first quarter of 2017.

* Net charge-off trends continued to diverge at U.S. credit unions and community banks in the first quarter. During the first quarter, U.S. credit unions reported $1.46 billion in net charge-offs, a 13.4% increase year over year and equal to 0.60% of average loans. Meanwhile, net charge-offs at U.S. community banks fell 13.4% year over year to $464.1 million, or 0.09% of average loans. Thirteen of the country's 20 largest credit unions by loans and leases reported an increased net charge-off ratio year over year in the first quarter.

* The American Bankers Association filed a cross-appeal in response to the NCUA's appeal of the U.S. District Court ruling on its field-of-membership rule. In response, the Credit Union National Association said the ABA's action continues a long line of "tireless attacks" against credit unions by banks. CUNA reaffirmed its position that the field-of-membership rule was properly promulgated by the NCUA and well within its authority. Two provisions of the NCUA's revised rule were rejected by a federal judge March 29, and other aspects were upheld.