Credit union purchases of community banks — once rare, now routine — have become a defining feature of consolidation in American finance.

Since 2015, 18 Florida community banks have agreed to be acquired by credit unions, the most of any state, according to S&P Global Market Intelligence data. Illinois is close behind with 17, but since 2020 it has eclipsed every state in deal volume, including four transactions announced in 2025 alone.

Two of those deals involved the $8.2 billion-asset Michigan State University FCU, which announced plans to acquire both Gold Coast Bank and American Eagle Bank. The East Lansing, Michigan-based credit union also bought two Illinois community banks in 2023.

The activity underscores how credit unions, long defined by their not-for-profit structure and restrictions around “common bond” membership, are expanding more aggressively into traditional banking terrain.

The latest Illinois deal came in September, when Land of Lincoln Credit Union in Decatur said it would acquire Williamsville State Bank and Trust, a $97 million-asset institution with three branches in Sangamon County. The purchase is Land of Lincoln’s third in three years, following its acquisition of Nokomis Savings Bank and Colchester State Bank in 2023.

In Florida, the largest new entrant is MidFlorida Credit Union in Lakeland, which agreed in April to buy Prime Meridian Bank of Tallahassee, a $924 million-asset institution. The transaction is one of the largest credit-union–bank deals ever announced and marks MidFlorida’s third bank purchase in five years.

Sixteen credit union–bank acquisitions were announced in 2025 — slightly behind 2024’s record 22 but still historically high. For many credit unions, acquiring a bank has become a quicker way to gain market share, diversify lending and add deposit bases that are often more stable than those in credit union membership pools.

Story continued below…

Banking trade groups, which have long argued that credit unions have drifted far beyond their intended mission, are confronting the latest wave with heightened urgency. Their objections center on two themes: tax fairness and what they call “mission drift or creep.”

Rebeca Romero Rainey, president and chief executive of the Independent Community Bankers of America, denounced MidFlorida’s expansion strategy, calling the credit union “growth obsessed” and saying some large cooperatives “have strayed far beyond their founding congressional mandate.” She argued that recent deals “are harming small businesses and local communities,” adding that “it is time for Congress to eliminate the federal tax exemption for credit unions over $1 billion in assets.”

In Florida, where consolidation has intensified in recent years, critics say the state has become a target for out-of-state credit unions wielding the financial advantage of tax exemption.

Kathy Kraninger, president and chief executive of the Florida Bankers Association, told Tyfone that while mergers are “good for economic growth, innovation, efficiency,” the landscape becomes “not fair and consumers are the ones who lose” when tax-advantaged credit unions buy commercial banks.

“Credit unions are not banks,” she said, arguing that many now operate beyond the remit of serving narrowly defined membership groups. As an example, she pointed to Flagler Credit Union, a division of Dort Financial, announcing a 15-year naming rights deal with Florida Atlantic University.

She said the credit union “has spent $22.5 million to name FAU’s stadium” while serving “anyone who lives, works, attends school or worships in the state of Michigan or in Palm Beach, Martin, Hendry, and Broward counties in Florida.” She questioned “what is the common bond among those members” and “how does that expenditure serve their members?”

But Brian Waldron, Dort Financial’s President and CEO, said the financial services landscape is crowded – with fintechs and banks pouring billions into branding, user acquisition, and platform presence.

“If credit unions want to grow, especially among Gen Z, unbanked populations, and lower-income households, we need a bold presence. Stadium naming rights are that bold presence.

But Kraninger warned that broad membership and aggressive expansion could lead to “inevitable safety and soundness issues” or reduce the number of community banks. And she raised concerns about taxpayers: “When they buy commercial banks, taking the tax base of those banks away, that is eroding the public interest in credit unions as tax-exempt entities.”

Illinois bankers have expressed similar alarm. Randy Hultgren, president and chief executive of the Illinois Bankers Association, told Tyfone “the mission drift of credit unions warrants more scrutiny” and that “big credit unions can leverage their tax advantages to dump large amounts of cash into bank acquisitions – often offering all-cash deals above market value.”

He said legislative efforts in Illinois to restrict such deals “went nowhere,” but banks searching for buyers “must secure the best value for their shareholders,” even if that means accepting credit union offers. His group is now focused on federal action, arguing that “Congress chartered credit unions and provided their tax advantages” and should “monitor credit unions’ activities” and “tax the mega-credit unions.”

Pointing to the sector’s size, Hultgren noted that “Navy Federal Credit Union has over $178 billion in assets, and dozens of credit unions are over $10 billion.” In Illinois alone, he said, taxing credit unions with over $500 million in assets would yield “a little over $33 million in annual tax dollars,” and nationally the total would be “$3.1 billion per year.”

They emphasize that “100 percent of the transactions between community banks and credit unions are voluntary,” noting it is “legally impossible for a credit union to acquire community bank stock” or pursue a hostile takeover. Bank shareholders, they stress, “must voluntarily and democratically elect to engage in a transaction with a credit union.”

They also argue that the deals keep branches open in communities where bank consolidation or closures might otherwise leave voids. The arrangements, they contend, “keep people employed and give consumers more low-cost product options.”

As consolidation accelerates, both sides appear entrenched, with bankers urging Congress for closer scrutiny and credit unions asserting that their expansion serves customers left behind by traditional lenders.

What remains certain is that Florida and Illinois — two states with expansive banking footprints and varied local economies — are likely to remain battlegrounds for the sector’s fastest-growing trend.

“If the mega-credit unions can buy tax-paying banks, and they can churn out dozens of commercial loans, they should be scrutinized like banks, and they should be taxed in the same way as the banks they’ve acquired.”

– Randy Hultgren
President & Chief Executive
Illinois Bankers Association