S&P: CU-bank acquisitions at record pace in ‘24

Credit union-bank acquisitions are on a record pace in the first half of 2024, according to a recent report from S&P Global

A dozen banks had announced pending sales to credit unions through June 4 for a total of $7.21 billion in target assets, which is above the previous record of $5.15 billion in 2022, according to the June 5 report. The number of announced deals this year is only two short of the 14 announcements in all of 2022.

S&P attributed the record value of credit union-bank acquisitions to three of the four largest deals since 2019 being signed so far this year, including Atlanta Postal Credit Union’s announced buy of Affinity Bank NA; Global FCU’s acquisition of $1.53 billion First Financial Northwest Bank; and Texas Dow Employees CU’s planned buy of $1.31 billion Sabine State Bank & Trust Co. 

Earlier this month, Grand Blanc, Mich.-based ELGA Credit Union announced its pending acquisition of Florida-based Marine Bank & Trust. Several CU-bank buys have also been announced in the Upper Midwest. In January, Oshtemo, Mich.-based Advia Credit Union announced its plans to further expand in Illinois by acquiring Chicagoland-based NorthSide Bank. Wabash, Ind.-based Beacon Credit Union announced its pending acquisition of Salem, Ind.-based Mid-Southern Savings Bank. Moline, Ill.-based Empeople Credit Union plans to acquire Lomira, Wis.-based TSB Bank.  

Independent Community Bankers of America President and CEO Rebeca Romero Rainey attributed the record pace to the tax-exempt status of credit unions and increasing bank regulation. She noted CU-bank deals have accounted for one-quarter of this year’s bank acquisitions.  

The ICBA has called on Congress to hold hearings on revoking the tax-exempt status of credit unions. A core part of the association’s argument is credit unions should pay “exit fees” when purchasing community banks — equal to 10 percent of the gross value of the acquired bank’s assets or liabilities as shown on its most recent balance sheet, whichever is greater. The ICBA sees the fee as a chance for the government to capture at least part of the lost value of taxes the bank would have paid going forward had it remained independently owned or been acquired by another tax-paying bank. 

The heightened pace of CU-bank buys comes as the overall number of M&As remains relatively low. Only 96 deals were announced last year, according to S&P Global Market Intelligence, the lowest number since at least 2000 and just more than half the 161 finalized in 2022. Projections for M&A to recover this year have not been realized as the Federal Reserve has delayed rate cuts amid strong economic conditions and higher-than-expected inflation.