CU-bank deals on pace to shatter all-time record volume

With 12 new deals pending, 2024 has already exceeded the 11 transactions announced last year.

Few issues raise the ire of community bankers as much as credit unions buying banks.

And with the halfway mark of the year right around the corner, 2024 is on pace to obliterate the previous high for credit union-bank deals announced in a calendar year.

“We will break the record this year,” Michael Bell, an attorney at Honigman, said in an interview. “We will eclipse 20 [deals] and land somewhere in the low to mid 20s.”

Bell, who estimates he has advised on more than 90% of credit union-buying-bank deals over the years, said current deal-chatter levels are unprecedented, and “barring an act of God or a black swan event,” 2024 will surely surpass the record 16 deals announced in 2022.

Only 11 credit union-bank tie ups were reached last year.

The latest deal: $1.5 billion-asset ELGA Credit Union in Michigan agreed to acquire Florida-based Marine Bank & Trust in an all-cash transaction. Shareholders of the $650 million-asset Marine Bank will receive $43.75 in cash for each share owned.

This is the 12th deal announced this year in which a credit union is buying a bank.

“Importantly, ELGA CU has committed to maintaining all Marine Bank jobs and banking centers, as well as expanding our philanthropic efforts throughout Vero Beach and Marine Bank’s other communities.”

 – Bill Penney
President & CEO
Marine Bank & Trust

The transaction, which is expected to be completed in early 2025, will create an institution with approximately $2.2 billion in assets, 105,000 members and 18 branches throughout Michigan and Florida.

Credit unions sometimes use bank acquisitions to strengthen their commercial lending programs, and that is one of the factors involved in the ELGA/Marine deal.

“This highly complementary transaction will allow us to bring our expertise in consumer banking and low-income lending to Marine Bank’s communities, while gaining extensive business banking experience,” Terry Katzur, ELGA’s president and CEO, said in the press release.

In many cases the acquiring credit union experiences specific gains in its commercial lines of business, Bell added.

“But there are multiple strategies that seem to transcend most transactions including geographic expansion and talent and capabilities gain,” Bell said.

Following the close of the transaction, Marine Bank’s president and CEO Bill Penney will become Florida market president and retain local decision-making authority over banking centers in the communities Marine Bank currently serves.

And the number of both banks and credit unions continues to decline, primarily due to mergers.

There were 4,706 FDIC-insured banks at the end of 2022, but that number fell to 4,587 at the end of last year.

By comparison, there were 4,604 federally insured credit unions as of Dec. 31, 2023, compared to 4,760 a year earlier.

The recent run of deals no doubt has the banking trades fuming.

The Independent Community Bankers of America said this “dangerous trend” is accelerating — accounting for roughly a quarter of this year’s banking industry acquisitions.

“Each acquisition expands the federal tax exemption for more than $2 trillion in credit union assets and displaces trusted providers of credit in local communities,” said ICBA President and CEO Rebeca Romero Rainey in a press release.

The ICBA was also outraged to learn that Beacon Credit Union does not have federal deposit insurance. Beacon instead has private insurance through American Share Insurance.

The Indiana-based credit union in January said it plans to acquire Salem-based Mid-Southern Savings Bank.

“One of the latest credit unions to acquire a community bank is not only exempt from taxes and the Community Reinvestment Act — its deposits aren’t federally insured,” the ICBA tweeted.

In addition to those whole-bank deals, credit unions have also been acquiring bank branches at a healthy clip.

Daleville, Alabama-based All In Credit Union agreed to acquire five branches of 22nd State Bank, and Poughkeepsie, New York-based Hudson Valley Credit Union said it will acquire eight branches from Berkshire Bank.

Add to this debate the fact that banks continue to ask for a repeal of the credit union tax exemption, and it is clear the Hatfields and the McCoys have nothing on banks and credit unions.

Why Is This Relevant?

While credit unions and community banks occasionally sit on opposite ends of the table, Tyfone believes that together they represent the middle market of Americans and a more personalized approach to supporting their financial health and futures.

And as banks and credit unions merge and acquire, adopting digital banking technologies becomes crucial in maintaining operational continuity and offering an enhanced customer experience to the acquired users.

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