Albuquerque, NM-based Nusenda FCU announced plans to acquire Las Cruces, NM-based Western Heritage Bank in the first such deal in the state.

Financial terms of the transaction, expected to close in late 2023 or early 2024 subject to shareholder and regulatory approvals, were not disclosed.

With $4.14 billion in total assets at March 31, Nusenda FCU is the largest buyer among the credit union-bank deals announced this year, according to S&P Global Market Intelligence data. Western Heritage Bank had $335.1 million in assets as of the same date. The deal is Nusenda FCU's first bank buy.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southwest region between June 6, 2022, and June 6, 2023, averaged 158.94% of book and 173.79% of tangible book and had a median of 14.08x last-12-months earnings, on an aggregate basis.

Mercer Capital was financial adviser to Nusenda FCU, while the law firm Honigman LLP served as legal counsel. D.A. Davidson served as investment adviser and Feinmore Kay Harrison LLP served as legal adviser to Western Heritage.

It marks the second credit union-bank deal announced in the past week, and the fourth this year. Activity is still down from the record 16 credit union-bank deals last year, however.

With the completion of the deal, Nusenda FCU will enter El Paso County, Texas, with four branches to be ranked No. 13 with a 1.24% share of about $17.83 billion in total market deposits, as well as Luna County, NM, with one branch to be ranked fourth with a 2.84% share of roughly $425.35 million in total market deposits, according to Market Intelligence data. The credit union will also expand in Dona Ana County, NM, by one branch to be ranked No. 14 with a 1.62% share of approximately $3.57 billion in total market deposits.

Traditional bank M&A is down as well, with just 36 announcements year to date, including the Nusenda FCU-Western Heritage deal. As such, bank deals with credit unions as buyers make up 11% of all activity.

The deal will expand Nusenda FCU's branch presence in southern New Mexico and into Texas — both states which have never seen a credit union-bank deal before.

"Activity is increasing," said Michael Bell, partner and co-leader of the financial institutions practice at Honigman LLP, which advised Nusenda FCU on the deal. "Also, as indicated with this particular transaction, geographic diversity is also increasing."

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