When we last reported on Credit Union-Bank acquisitions in April (JRN 38:16), we said they were heating up, and they sure have. The third quarter was particularly active. One such transaction involves JRN listee 5-Star Financial Federal Bank, Memphis, TN, which has been listing its rates with us for over 25 years.
The transaction, announced on August 11th, calls for 5-Star Orion Federal CU, also of Memphis, to purchase the $751 million asset community bank in an all cash transaction. Established in 1957, Orion FCU has four other acquisitions under its belt, but this will be the first time it buys a bank.
Orion is clearly keen on growth. It was proud to announce it had passed the $1 billion asset mark in the first quarter of this year. A community credit union, it operates through a dozen branch offices, 11 in the Memphis area and the other in Little Rock, AR.
Financial Federal, by contrast, has just one office (on Aaron Brenner Drive in Memphis) and assets that amount to three-quarters of what Orion has in 12 locations. Regulatory approval is pending. If received, the transaction is expected to take place in the second quarter of 2022. We will be sorry to see Financial Federal go if/when that happens.
This next one was first announced in the summer of 2020 and completed on March 31, 2021. The then 5-Star, and now 4-Star, Heritage FCU, Newburgh, IN announced it would take over the $87 million Elberfeld State Bank, IN. This was the first acquisition of a bank for Heritage FCU and its first acquisition of any kind since 1983.
Now we jump forward to Q2’2021 when, after successfully purchasing First American Bank, Ft. Dodge, IA, in 2020, 5-Star GreenState Credit Union, North Liberty, IA announced plans to buy two more 5-Star banks: They are Oxford Bank & Trust, Oak Brook, IL and Premier Bank, Omaha, NE. These transactions will add $753 million and $379 million in assets, respectively ($1.1 billion combined) to GreenState’s already robust $7.7 billion asset base.
Only 22 U.S. Credit Unions currently have assets exceeding $8.8 billion, which is where this transaction will put GreenState.
5-Star Lake Michigan CU, Grand Rapids, MI announced its intention to buy the $646 million asset 5-Star Pilot Bank, Tampa, FL in the second quarter. Since purchasing Encore Bank in 2018, Lake Michigan already operates several branches in Southwest Florida. This transaction will extend it up the Gulf Coast.
In August, 5-Star Royal Credit Union, Eau Claire, WI, a $3.764 billion community credit union, announced it will purchase the $438 million asset 5-Star Lake Area Bank, Lindstrom, MN. And, two weeks after that (August 28th) Royal Credit Union completed its purchase of the $52 million asset 1-Star Peoples Choice CU, Medford, WI.
On September 8th, continuing its growth aspirations, Royal broke ground for a new 4,200 square foot office in Altoona that it plans to open in the spring. Later in the month, it announced plans to acquire the $6.8 million 5-Star Utilities Credit Union, Eau Claire.
Lake Area Bank will be the first bank that Royal CU takes over, but it is no stranger to acquisitions. Between 1964 (when it was established) and 2020, Royal CU has acquired eight other credit unions.
The next three were all announced in August:
4-Star Alabama Credit Union, Tuscaloosa, AL will purchase 5-Star Security FSB, Jasper, AL. Established in 1956, Alabama CU started gobbling up smaller credit unions after the turn of the century. In 20 years it has acquired eight credit unions; this $39 million asset bank will be its first bank purchase.
5-Star Fairwinds Credit Union, Orlando, FL, on the other hand, is buying its second bank: 5-Star Citizens Bank of Florida in Oviedo. With $492 million in assets, this is a much larger target than the $98 million Friends Bank that it took over in 2019, but it does have some experience under its belt this time.
And finally, 4-Star Scott Credit Union, Edwardsville, IL plans to but 3½-Star Tempo Bank, Trenton, IL with its $93 million in assets. Scott CU is reportedly looking to beef up its residential mortgage loan portfolio. If that’s the case, it picked the right bank.
Tempo Bank has over $58 million in residential real estate loans. That’s over 93% of its entire loan portfolio. At $1.079 billion, Scott CU’s loans dwarf that of Tempo Bank, but only 28% of those are in the form of mortgage loans (compared to 47% for its peers). This transaction will go a long way to remedy that situation.