OnPath Federal Credit Union on Monday announced an agreement to acquire Louisiana Federal Credit Union, which would create a New Orleans area credit union with more than $1 billion in assets.
Louisiana FCU of LaPlace, La., 29 miles west of New Orleans, must gain member approval to be acquired by OnPath, which is based in Metairie, six miles west of New Orleans.
Louisiana FCU had $403.9 million in assets and 36,032 members as of Sept. 30. OnPath had $623.5 million in assets and 52,978 members. If the merger had been completed Sept. 30, the combined credit union would have had just over $1 billion in assets and 89,010 members.
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The credit unions said they expect the merger will be completed by mid-2024.
"If approved, the combined credit union will do business as OnPath Credit Union, and the new brand will ensure that both credit unions' rich histories are honored," OnPath's news release said.
Jared Freeman OnPath President/CEO Jared Freeman said the merger is an opportunity to combine the capabilities of the credit unions.
"By uniting our strengths and harnessing increased economies of scale, we aim to extend our service to a larger membership base and elevate our impact on the communities we serve," Freeman said.
Louisiana FCU President/CEO Rhonda Hotard said the partnership will expand services for its members, including access to additional branches and a larger ATM/ITM network.
Rhonda Hotard "We look forward to organically growing together for the benefit of our members and the communities we serve," Hotard said.
Based on branch deployment, the credit unions' 16 locations don't overlap by parish, the Louisiana version of a county.
OnPath rose from the docks of Avondale Shipyards Inc. as ASI Federal Credit Union in 1961. It has 10 branches plus its headquarters in Jefferson, Lafourche, Orleans and Saint Tammany parishes.
Louisiana FCU was originally established in 1935 as the Norco Refinery Employees Federal Credit Union. It has six locations in Ascension, Saint James, Saint Charles, St. John the Baptist and Tangipahoa parishes.
Looking at the combined results for the credit unions is complicated by the fact that OnPath incurred a large charge in June.
A U.S. appeals court in Louisiana ruled July 5 that OnPath had to repay the U.S. Treasury Department for $12.3 million it received from the Community Development Financial Institutions (CDFI) fund from 2006 to 2012 because the credit union supplied invalid data.
Candace Washington, OnPath's vice president of member engagement, said OnPath took a charge in June to make the repayment. She did not specify the amount. However, OnPath had a "miscellaneous noninterest expense" of $8.2 million in the second quarter, up from $408,444 in the first quarter, $668,280 in the third quarter and $1.8 million for all of 2022.
Whatever the amount, OnPath lost $6.9 million in the second quarter, an annualized loss of 4.47% of its average assets and the third-largest loss for those three months among all credit unions.
However, the credit union earned a healthy $2.3 million in the first quarter (1.80% ROA) and $3.9 million (2.49% ROA) in the third quarter.
For January through September, OnPath had a loss of $2.5 million (0.50% ROA).
Louisiana FCU earned $2.0 million in the nine months ending Sept. 30, or 0.66% ROA, down from 1.36% a year earlier.
Had the two combined Sept. 30, the $323,992 net loss would have been -0.04% ROA, down from 1.38% a year earlier.
Net worth ratios were 9.39% at OnPath and 13.65% at Louisiana FCU on Sept. 30, compared with 11.4% for their peers and 11.0% for all credit unions. Combined, it would have been 11.12% Sept. 30, up from 10.04% a year earlier.
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Jim DuPlessis
Jim covers economic data trends emerging for credit unions, as well as branch news and dividends.
