The reasons that credit unions seek to acquire community banks are well documented.

Chief among them are a desire to expand into new markets without being forced to build branches, and to fill in gaps in an institution’s footprint.

But perhaps the number one driver has been the opportunity to add established commercial lending teams with the acquired banks.

“It is generally a high priority of the deal,” attorney Jeff Cardone of Luse Gorman, who advised on several of last year’s CU-bank deals, told Tyfone.

Case in point: Atlanta-based Georgia’s Own Credit Union in 2022 acquired Smyrna, Georgia-based Vinings Bank in the first move by a credit union that year to buy a bank.

At America’s Credit Unions’ Governmental Affairs Conference in Washington this week, Mike Sims, chief commercial banking officer at Georgia’s Own, said 95% of Vinings Bank’s lending activity was centered around commercial and industrial loans.

“Georgia’s Own purchased us because that’s what we did,” he said. “We did not do a lot on the consumer side of the equation. It was really C&I.”

In a breakout session called “fueling growth: the future of commercial lending in credit unions,” panelists said that commercial lending is something that credit unions are sometimes hesitant to get involved in due to the risks involved and a lack of expertise in that portfolio.

Sims, however, has a unique perspective on the issue having gone through a credit union-buying-bank deal.

He worked for banks – including SunTrust — for more than three decades before moving to Georgia’s Own, so wrapping his head around working for a credit union took him a little while. “I resisted initially because I didn’t know what [credit unions] were all about. I hated them for 35 years, and now I’m one of them,” he said.

But Sims now believes that credit unions are uniquely positioned to supplant community banks in the commercial space.

He said that’s due in part to the fact that many community banks are built to be sold – including Vinings – while credit unions often operate in communities for the long haul. And in some ways credit unions are a natural conduit into that lending line due to their mission of helping those communities thrive.

Sims said those factors resonate with small-to-medium business owners.

“So when I sit down with my business clients today my thought process is 100% different than it was two-and-a-half years ago,” he said. “I was making decisions on behalf of my shareholders and the ownership of the institution. I get the chance now to tell that business owner that ‘I make decisions on your behalf.’”

The $4.2 billion-asset Georgia’s Own has seen its total commercial loans grow from $471 million at the end of 2022 to $537 million at the end of last year, according to National Credit Union Administration call report data.

Still, Georgia’s Own lost roughly $14.2 million in 2024 compared to earnings of $14.1 million a year earlier, according to call report data from the NCUA.

Glenn Christensen, President and CEO of consultancy CEO Advisory Group, told Tyfone that when evaluating a bank acquisition one of the key decision criteria is the commercial lending talent, customer base and platform.

Some credit unions look at a bank acquisition as an entry into commercial lending, especially CRE, and others are looking to enter C&I lending.

“Most of the credit unions have a member business lending practice and see bank acquisitions as a way to build a deeper core competency in their commercial lending practices and also to enter new markets,” Christensen said.

Some credit unions apparently already got the message.

Because while total credit union loans outstanding increased just 2.6% during the year that ended Sept. 30, commercial loans increased $15.5 billion, or 10%, to $168.4 billion, according to the NCUA.

Sims called commercial lending “the future of credit unions” and said that he has so much fun competing for business loans today with community banks.

“Take it from someone who crossed over and left the dark side, it’s a good thing and it will help your credit union,” he said.

“Those of you who are thinking ‘is commercial banking the right place to go?’ I would suggest to you that quite frankly it’s the future of credit unions.”

 – Mike Sims
Chief Commercial Banking Officer
Georgia’s Own Credit Union