4 Charts About Credit Union Mergers

Credit unions face the reality of a merger every year, so how are mergers reshaping the credit union landscape?


Mergers occur in the credit union industry for a number of reasons, the largest proportion being the result of an institution that is currently unable or soon will be unable to shoulder the growing cost of operations. If recent history is any indicator, mergers in the credit union industry are not going away. In fact, they might become more prevalent as innovation and change favor size and scale.


Source: Peer-to-Peer Analytics by Callahan & Associates

Since 2004, the decline in charters has been similar at credit unions and banks. In the past decade, an average of 250 institutions have merged every year. As competition increases and credit unions broaden their product and member service offerings, the rate of mergers will likely continue at this pace.




Source: Peer-to-Peer Analytics by Callahan & Associates

Over the past 15 years, the rate of credit union mergers has ranged from a low of 2.2% to a high of 3.8%. Although the actual number of credit unions merging each year has largely remained constant, the overall decline in the total number of credit unions means the rate of mergers is gradually increasing.




Source: Peer-to-Peer Analytics by Callahan & Associates

In a normal year, the aggregate assets of merged credit unions has ranged between $4 billion and $5 billion, with the exception of several large mergers that are noted above. The average asset size of merged credit unions peaked in 2009 at $33.8 million. In 2014, the average asset size was $22.8 million, which is in line with recent historical averages.




Source: Peer-to-Peer Analytics by Callahan & Associates

Over the past five years, merged credit unions have been predominantly decreasing in asset size. Of credit unions that have merged since year-end 2009, 78% have had less than $20 million in assets. By contrast, the rate of mergers at institutions with more than $20 million in assets has remained flat over the period. One exception is the $20-$50 million asset class, which posted a slight increase in its merger rate.


May 11, 2015


  • I expect merger activity will increase. The loss of sponsor support and the shift to community fields of membership has increased the advantages of scale. Add to that the coming shift to electronic delivery channels that offer low per transaction costs but require big up front costs and require sophisticated management to support them and you increase the advantages of scale. The FDIC classifies banks as small when their assets are less than $550 million. The better definition for credit unions and banks is whether or not they have the scale to compete. I think that $550 million in assets is at the low end of where scale begins to offer advantages in serving members. Those who have merged with smaller credit unions are finding that the smaller credit unions don't always offer much in return for the work and risk of doing a merger. I predict that fewer small credit unions will find willing merger partners. The growth in larger mergers will increase. The reason is that credit unions with $100 million to $300 million in assets are now seeing weak member growth and other member relevancy issues. These credit unions will have better controls and fewer merger issues and offer more reward for the same amount of work. Regulatory pressure drives mergers. There has been a lot of questioning of regulatory practices that give a bye to credit unions with smaller asset bases. This will change and regulators will cite more exceptions and drive more mergers.