FOREST GROVE, Ore. — Despite perceptions that credit union mergers are on a major upswing, NCUA statistics show a significant decline from a year ago based on several factors, according to David Bartoo, head of a merger consulting firm here.
"For one thing NCUA was approving fewer mergers in the last quarter of 2006 which is producing a decline now," explained Bartoo, president of the Merger Solutions Group, a firm representing CU clients.
In the firm's latest report, Merger Solutions found that in the third quarter of 2007 there were 57 CUs receiving preliminary approval in the third quarter with an average size of over $21 million per merging CU.
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"This is a significantly lower number than the 81 mergers approved by the NCUA in Q3 2006," said Bartoo. "As we had predicted in December 2006, there was going to be a significant slowdown in merger activity when compared to previous years." The firm noted that merger approvals by the NCUA through three quarters of 2007 versus 2006 showed an 18% reduction.
"The key to our prediction of the slowing of activity was in our modeling of individual credit union merger risk in 2006,"said Bartoo. "We have modeled the merger risk of individual credit unions back to 2004 and provided it quarterly to credit unions looking to focus their acquisition opportunities."
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