Louisiana credit unions to merge into a $1 billion-asset institution

OnPath Federal Credit Union and Louisiana Federal Credit Union have announced the largest credit union merger in Louisiana's history.

If approved, the deal would create the third-largest credit union in the state.

The combined credit union will do business as OnPath Credit Union and would have more than $1 billion of assets serving more than 89,000 members with 15 branches throughout Louisiana. Metairie-based OnPath said Monday that the deal is set to be finalized by mid-2024.

"During these times of uncertainty, as more individuals and communities grapple with financial challenges, the merger with Louisiana Federal Credit Union becomes an opportunity to combine our capabilities," said OnPath's President and CEO Jared Freeman in the release. "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 added that becoming a larger credit union would provide opportunities to position the $624 million-asset OnPath for continued growth.

Worries about outdated business models and disruption by fintechs and other competitors such as Apple are driving more credit unions to consider mergers, said Peter Duffy, managing director for Piper Sandler.

"There is a more widely held belief that organic growth isn't enough to sustain minimum scale," Duffy said in an interview. "Increasingly, boards are understanding the cost to replace retiring C-suite folks and that a combination with another credit union can solve some of those problems."

Both OnPath and Louisiana FCU have struggled with earnings this year.

OnPath lost $2.4 million in the first three quarters of 2023, compared with earnings of $5.6 million a year earlier, according to call report data from the NCUA. Louisiana FCU earned $2 million in the first three quarters of 2023, a 57% decrease compared with a year earlier.

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Rhonda Hotard, president and CEO of La Place-based Louisiana FCU, said the partnership will expand services for members of the $404 million-asset company, including access to additional branches and a larger ATM/ITM network.

"We look forward to organically growing together for the benefit of our members and the communities we serve," she said in the release.

There have been a dearth of deals in recent years among midsize credit unions. 

Among notable transactions announced in 2023 was the $1.8 billion Hiway Credit Union in Saint Paul, Minnesota, announcing plans to merge with the $2.2 billion-asset Spire Credit Union in Falcon Heights.

The National Credit Union Administration approved 39 mergers in the third quarter, bringing the total number of deals for the year to 107. That is down 27% from the 146 mergers approved in the first three quarters of 2022.

Credit unions with assets of at least $500 million but less than $1 billion saw membership decline 4% year over year in the third quarter, according to the NCUA. 

In Louisiana, only the $2.2 billion-asset Barksdale Federal Credit Union in Bossier City and the $1.2 billion-asset Neighbors Federal Credit Union in Baton Rouge would be larger than OnPath after the merger is finalized.