Credit Unions Acquire Two Community Banks: An Emerging Trend
In recent news, two small, profitable community banks decided to sell themselves to larger credit unions, indicating a possible trend in the financial industry. Despite the unexpected nature of these transactions, industry experts predict that this trend is likely to continue or even escalate in the coming years.
On Monday, GECU Credit Union, a $4.4 billion-asset credit union based in El Paso, Texas, announced its acquisition of the $184.1 million-asset Bank of the Southwest in Roswell, New Mexico. The following day, Community First Credit Union of Florida, a $2.9 billion-asset credit union based in Jacksonville, announced its entrance into the South Georgia marketplace by acquiring the $331 million-asset First Southern Bank in Waycross.
The Deal Details and Reactions
These back-to-back deals have ended the apparent lull in credit union-bank transactions, causing considerable reaction from banking advocates. The Independent Community Bankers of America (ICBA), led by President and CEO Rebeca Romero Rainey, has called on Congress to tax credit unions with assets of more than $1 billion in response to these acquisitions.
The ICBA argues these deals negatively impact local communities, primarily because the entire credit union industry, irrespective of asset size, currently enjoys an exemption from federal income taxes. The recent acquisitions have sparked renewed calls for policymakers to reconsider this tax exemption.
Expert Prediction on the Trend
Despite this criticism, Michael Bell, a leading attorney in financial institutions practice at the Honigman law firm in Michigan, believes that credit unions will continue to acquire banks. However, he maintains that such transactions will remain a “sharp minority” of all deals involving banks.
Bell anticipates at least one more credit union will announce a bank purchase in 2025 and predicts robust credit union-bank merger activity in 2026. He stated, “The deal flow I see on my desk, the conversations I’m involved in [indicate] 2026 will be the same or better.”
Impact of the Acquisitions
According to GECU, the acquisition of Bank of the Southwest would result in a merged institution with 440,000 members and $4.7 billion in assets. GECU’s president and CEO, Gayle Long, stated that this acquisition aligns with the credit union’s mission to expand its positive impact and support more families on their financial journey.
On the other hand, Community First’s acquisition of First Southern is expected to strengthen its commercial lending capabilities and expand its footprint. CEO Sam Inman emphasized the unified vision between the two institutions, noting their shared focus on community-oriented, relationship-based approaches.
Despite the details of these individual deals, the larger trend they represent has raised significant questions about the future of bank acquisitions by credit unions. The financial industry will be watching closely to see whether these acquisitions represent a temporary surge or a long-term shift in the market.
For more information about the acquisitions, visit the source link Here.
