As US banks stay on the M&A sidelines, credit unions are not shying away.
As of March 18, credit unions were buyers in 27.3% of US bank deals announced in 2024, a percentage that would mark the highest total ever in a full year, according to S&P Global Market Intelligence data. Deals in which credit unions buy banks started gaining popularity in 2019 and made up about 5% between then and 2021. But that percentage has been growing since 2022 — when interest rates started rising and uncertainty in the operating environment began increasing — as bank buyers took a step back, leaving more room for credit unions to step in.
Credit unions are also increasingly purchasing bank branches, participating in three of the nine most recent bank branch sales.
Other records in sight
Sound CU's deal for Washington Business Bank is the latest transaction in which a credit union targeted a bank. It marks the sixth such deal announced in 2024, nearly halfway to the current full-year record of 14 deals in 2022.
That year also holds the record for the most bank assets sold to credit unions at $5.15 billion, but 2024 is already over halfway to that mark with $2.90 billion in target bank assets slated to be sold to credit unions.
More than $1.5 billion of 2024's assets being sold come from Global Federal CU's deal for First Financial Northwest Bank, the largest credit union acquisition of a bank. The average assets of the six banks targeted in sales to credit unions this year is $438.1 million.
Price check
In Sound CU's deal for Washington Business, the buyer agreed to pay a premium between 20.6% and 27.7% to the bank's closing share price of $28.20 prior to deal announcement. That premium is lower than the median level other CUs have paid for banks since 2019, but the buyers in some recent deals have been paying up.
Among credit union-bank deals since 2019, Hudson Valley CU is paying the highest premium to the bank's closing price prior to deal announcement with its 119.0% premium for Catskill Hudson Bancorp Inc.
Deal map
Two of the six credit union-bank deals announced this year have targeted banks in Washington state, doubling the number of such deals in the state since 2015.
The deals indicate that credit unions in different parts of the country are starting to pursue banks. In previous years, transactions with credit unions buying banks were largely concentrated in the Midwest and Southeast.
