Credit Union, Bank Acquisitions Heating Up

Credit Union, Bank Acquisitions Heating Up

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Only 16 credit unions in the United States have assets exceeding $10 billion; 4-Star VyStar CU, Jacksonville, FL is one of them. What began in 1952 with just $60 and 12 members as Jax Navy FCU is now one of the largest CUs in the nation. Its goal: provide loans to naval families in a time when credit was hard to come by.

VyStar witnessed steady growth and expanded its reach with scattered branch openings. By 1991, its assets reached $500 million and in 1997, membership exceeded 200,000. As the credit union celebrated its 50th anniversary in 2002, it also changed from a federal to a state charter, changed its name to VyStar and expanded its Field of Membership to include five Florida counties.

The following year it added eight more counties, continuing its growth. In 2016, that growth included the acquisition of Anchor Seven Federal Credit Union. By the end of 2018, VyStar was serving 49 of Florida’s 67 counties and had also expanded into Southeast Georgia. In addition to opening several new branches in 2019, it also made its first bank acquisition. Citizens State Bank was a small, 4-branch, community bank that happened to fall squarely into VyStar’s expansion plans. It also captured the attention of people who are not so happy to see credit unions acquiring banks.

It was not the only such transaction to draw criticism, nor was it the first. In fact, more than two dozen bank acquisitions by credit unions have been announced and/or completed since the beginning of 2019.

The most controversial (until now) was the proposed acquisition of $850 million asset 5-Star Apollo Bank in Miami by Florida’s largest credit union, $12 billion asset 4-Star Suncoast Credit Union, Tampa. That deal, announced late in 2019, would have been the largest to date, but was called off due to COVID-19.

VyStar CU dwarfed that plan with an announcement earlier this month to acquire 5-Star Heritage Southeast Bank, Jonesboro, GA. Heritage Bank has $1.6 billion in assets and a branch network that extends from Jacksonville, Florida to Alpharetta, Georgia. While Vystar will still be the second largest CU headquartered in Florida, it will move up to 13th largest in the country.

Florida may be a hot spot for these purchases, but they are taking place all over the country. Minnesota’s largest Credit Union, 5-Star Wings Financial CU, had one bank deal fall through, but is in the process of acquiring the $72 million asset 3½-Star Brainerd S&L. Similarly, Iowa’s largest credit union, 5-Star Greenstate Financial CU, helped solidify that status with the purchase of First American Bank in Fort Dodge, IA.

Last September (JRN 37:36), we reported that 4-Star Verve, a Credit Union, out of Oshkosh, WI finalized its acquisition of South Central Bank, N.A., Chicago, IL and its $296 million in assets in January 2020. Originally chartered in 1938 as Wisconsin Axle Credit Union, Verve has acquired eight institutions since 1982: 7 credit unions and 1 bank.

We also noted that while no one batted an eyelash when 5-Star MidFlorida Credit Union, Lakeland FL acquired over a dozen credit unions between 1984 and 2017, critics certainly took notice when it announced its largest acquisition to date—Community Bank & Trust Bank of Ocala. It also took over the Florida branches of First American Bank of Iowa. These transactions were both completed in 2019.

Meanwhile, on the opposite corner of the country, 5-Star Sound CU, Tacoma, WA had just completed its acquisition of The Bank of Washington in Lynnwood. With this addition, Sound CU now operates through 28 branch offices in four counties. It is also designated as a low-income credit union (LICU). This indicates that a majority of the credit union’s members are low-income and also provides special concessions to enable the credit union to better serve its low-income membership.

Benefits include:

  • An exception from the statutory cap on member business lending, which expands access to capital for small businesses and helps credit unions to diversity portfolios;
  • Eligibility for grants and low-interest loans from the Community Development Revolving Loan Fund;
  • Ability to accept non-member deposits from any source; and
  • Authority to obtain supplemental capital.

Bank or CU, LICU or not, you can count on Bauer to provide the same trusted, independent star-ratings on all federally-insured financial institutions, just as we’ve been doing since our inception in 1983.


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