FOREST GROVE, Ore. -- The perception may be evident that creditunion mergers are on the upswing, but NCUA statistics show asignificant decline from a year ago based on several factors,according to David Bartoo, head of a merger consulting firmhere.

"For one thing NCUA was approving fewer mergers in the lastquarter of 2006 which is producing a decline now," explainedBartoo, president of the Merger Solutions Group, a firmrepresenting CU clients.

In the firm's latest report, Merger Solutions found that in thethird quarter of 2007 there were 57 CUs receiving preliminaryapproval with an average size of over $21 million per mergingCU.

"This is a significantly lower number than the 81 mergersapproved by the NCUA in Q3 2006," said Bartoo. "As we had predictedin December 2006, there was going to be a significant slowdown inmerger activity when compared to previous years." The firm notedthat merger approvals by the NCUA through three quarters of 2007versus 2006 showed an 18% reduction.

The key to the firm's prediction of slowing activity, he said,rests on what he described as the "modeling of individual creditunion merger risk in 2006" based on acquisition opportunities.

Using capital ratios and other data, Merger Solutions noted thatits "merger propensity model" which is available for its clientsseeking to acquire CUs or holding the status quo has shown areduced number of CUs based on metrics data having "a high mergerlikelihood in comparison to previous years."

By region, NCUA's Region IV saw the most activity with theapproval of 16 mergers totaling over $276 million in assets, saidBartoo. Region V experienced the highest merger volume with justover $654 million in total assets being transferred through 13mergers

Most of this, he said, was via the Toyota Federal Credit Union($260 million) merger with Western Credit Union and Golden BayCredit Union ($210 million) merger with Meriwest Credit Union.

California led the nation with the most completed mergers atnine followed by Pennsylvania with eight and Texas with seven.

For the second time in the last three quarters, state charteredCUs made up a majority (30 out of 57) of CUs in NCUA approvedmergers. With 25 mergers in 2007, Region II nearly doubled itstotal mergers of 13 in 2006, the Merger Solutions reportconcluded.

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