New Mexico’s fourth largest credit union by assets, the $763 million Kirtland Federal Credit Union, said Thursday it intends to merge into the $2.3 billion Sandia Laboratory Federal Credit Union, the state’s largest credit union by assets.
Although the proposed merger was approved by both of the credit union’s boards of directors, the cooperatives have begun a “more in-depth process to evaluate the possibility of combining the two organization,” according to a prepared statement.
Successful consolidations between two large asset credit unions are rare. In October 2015, the 2.1 billion United Federal Credit Union in St. Joseph, Mich. announced it intended to merge into the $4.6 billion Lake Michigan Credit Union in Grand Rapids. But in January 2016, the consolidation was called off and the credit unions did not publicly explain why it was canceled.
The proposed merger between the two Albuquerque-based credit unions is the largest so far this year.
Nevertheless, if the in-depth evaluation process is successful and both Kirtland FCU and Sandia Laboratory FCU come to a final agreement, it probably won’t be finalized until the end of 2017.
In a prepared statement, Sandia Laboratory FCU said the proposed “partnership is a proactive step by two financially sound institutions to capitalize on their strengths and position the new organizations to move into the future.”
If the financial organizations agree to final terms of a merger, it will create a credit union with $3 billion in assets and more than 130,000 members.
Although Kirtland FCU posted a net worth of 12.55%, higher than the peer average of 10.98%, at the end of 2015, its ROAA slipped to 0.89% at the end of 2015, down from 1.11% in 2012, according NCUA financial performance reports.
By the end of the third quarter of this year, ending Sept. 30, Kirtland FCU posted a net worth of 12.87%, while its ROAA fell slightly to 0.81%, according to NCUA financial performance reports.
Sandia Laboratory FCU’s net worth was 11.07% at the end of 2015, higher than the peer average of 10.98%, while its ROAA increased from 0.90% at the end of 2012 to 1.03% by the end of 2015, according to NCUA financial performance reports.
By the end of the third quarter of this year, Sandia Laboratory FCU posted a net worth of 11.22%, while its ROAA declined to 0.88%, according to NCUA financial performance reports.
Although slightly different, both credit unions serve members that are connected to national defense with Kirtland Air Force Base and Sandia National Laboratories.
Kirtland FCU’s primarily military multiple common bond field of membership serves 46,767 members with a potential membership of 150,000. The credit union has 123 employees and 10 part-time employees.
Sandia Laboratory FCU’s primarily other manufacturing multiple common bond field of membership serves 83,553 members with a potential membership of 185,000. The credit union has 271 employees and 17 part-time employees.
In its prepared statement, Sandia Laboratory FCU said there will be no employee layoffs and branch offices will remain open. Two board members of Kirtland FCU will join the board, bringing the total number of board seats to 11 at Sandia Laboratory FCU.
If the credit unions agree to the final terms of the merger, it will require a vote from the Kirtland FCU members and approvals from state and federal regulators.
In addition, Kirtland FCU members approve the merger and final approvals from regulators are secured, it will be at least 18 to 24 months before the two financial institutions are fully integrated.
“Once the two organizations have been fully combined, the consolidated organization may consider a new name,” according to Sandia Laboratory FCU’s statement.
