Less than six months in, 2024 is already shaping up to be a record-breaking year for credit union-bank deals, and the pace is showing no signs of slowing down.
Total target assets of banks selling to credit unions hit its highest yearly point ever less than halfway through 2024. Through June 4, 12 US banks have announced plans to sell to a credit union for a total of $7.21 billion in target assets — well above the previous yearly record of $5.15 billion in 2022. The number of acquisition announcements is also set to break the current yearly record, as 2024's total is just two shy of the 14 announcements in all of 2022.
The uptick in the pace of announcements and size of these deals is stoking the bank industry's preexisting concerns with these transactions. The Independent Community Bankers of America (ICBA) is blaming the uptick on the more stringent bank regulatory environment.
"The loss of community banks to tax-advantaged credit unions clearly shows the harmful and irreversible impact of the excessively burdensome regulatory environment that only continues to grow," ICBA President and CEO Rebeca Rainey said in a statement. "Further, the sluggish merger approval processes of federal banking regulators constrain bank-to-bank deals, while National Credit Union Administration's bureaucratic obstacles and roadblocks to credit union conversions and mergers make it more difficult for a bank to acquire a credit union than vice versa."
The surge in total target assets sold less than six months into the year is a result of these deals getting larger.
One of the latest deals, Atlanta Postal CU's announced acquisition of Affinity Bank NA, is the fourth-largest such deal since 2019 based on Affinity Bank's $869.6 million in assets at March 31.
Three of the four largest deals since 2019 have been announced this year, including the largest, Global FCU's acquisition of $1.53 billion in assets First Financial Northwest Bank, and second-largest, Texas Dow Employees CU's planned purchase of $1.31 billion in assets Sabine State Bank and Trust Co.
The latest deal, ELGA CU's planned purchase of Marine Bank & Trust Co., is the 11th-largest deal this year. Among the 15 largest such deals announced since 2019, seven are from this year.
Credit unions are also scoring more attractive transactions, scooping up several banks with outperforming metrics. The 12 bank targets so far this year had a median return on average assets (ROAA) of 0.66%, a median net interest margin of 3.35% and a median efficiency ratio of 69.61%. Five of the banks had an ROAA above 1%.
The 12 banks also experienced a median of just 0.6% of deposit shrinkage year over year and 4.2% loan growth during the same period.
While most of the banks involved in these deals had pristine credit quality with zero to little net charge-offs to average loans, Affinity Bank had the highest such ratio at 0.21%.
The Atlanta Postal CU-Affinity Bank deal marks the 10th such deal in the Peach State since 2015, which is now rivaling Florida and Illinois for the most credit union bank deals in that period.
ELGA CU's announced acquisition of Marine Bank & Trust further solidifies Florida's top spot, with 16 deals since 2015. Five of those deals have involved Michigan-based credit union buyers because of migration patterns of people to Florida from the Midwest and the attractive economic environment in Florida, experts have told Market Intelligence.
Washington state has also moved up the ranks, with six such deals since 2015. Four of those have been announced just this year.
