McGraw-Hill Federal Credit Union has acquired Education Affiliates FCU, a credit union that serves educators in New York City, according to the North Jersey Record.
Effective Sept. 1, McGraw-Hill will gain 4,000 members, bringing its population up to about 24,000 members. With the addition of the smaller union's finances, McGraw-Hill will now have approximately $350 million in assets.
Number of credit union mergers rises
While credit unions purchasing banks in the last year has been called a mini-trend, many larger credit unions are acquiring small institutions. McGraw-Hill's transaction is only one of 123 credit union mergers that have been approved by the National Credit Union Administration since the beginning of 2014, according to the source.
Since the recession, smaller credit unions have faced difficult times because of high regulatory costs and increased borrower defaults. Many mergers are approved because of one credit union's poor financial status, lack of growth, decreasing membership, loss of sponsors or lack of officials, according to Credit Union Times.
Education Affiliates recorded a loss of about $78,000 in 2013.
"A lot of small organizations are realizing it is difficult to keep pace with the changes in the financial services sector," said Shawn Gilfedder, CEO of McGraw-Hill.
Another large merger, which was approved in April, was the transaction between Tri-Co FCU in Randolph, New Jersey, and Visions FCU in Endwell, New York. By the end of 2013, Visions' net worth had decreased 3.97 percent, CU Times reported, and the credit union reported a loss of nearly $6 million between 2009 and 2013.
A smooth transition
McGraw-Hill plans to keep the current Education Affiliates office open, and will convert members over to the new operating system by the end of the year, the source reported. According to McGraw-Hill's website, Education Affiliate members will be able to carry on normally during the transition.