- Alabama One Credit Union in Tuscaloosa announced Thursday it has agreed to buy First Bank of Linden, an $82 million-asset, single-branch institution roughly 100 miles west of the state capital, Montgomery.
- The deal represents the credit union's second takeover of 2020, following a July merger that brought Alabama Rural Electric Credit Union under the Alabama One umbrella. Alabama One CEO Bill Wells said the motivation for the deal was geographical, as it would expand the credit union's footprint in western Alabama, which the executive sees as strategically important.
- Alabama One did not disclose the all-cash price it will pay for the bank. The deal, expected to close by June 2021, would mark the sixth purchase of a bank by a credit union this year.
The deal, which is still subject to sign-off from regulators and First Bank of Linden shareholders, stands to push Alabama One's assets to about $825 million, according to American Banker.
"We are excited about joining the Alabama ONE family as its culture and commitment to local communities are very similar to our own," Ann Scott Yelverton, First Bank of Linden's chairman, president and CEO, said, according to the West Alabama Watchman. "This combination is an attractive fit for our bank, offering a comprehensive set of products and services to our customers and an expanded geographic diversification."
Half of this year's bank acquisitions by credit unions have come in Indiana. Newburgh-based Heritage Federal Credit Union said in July it would acquire the branches of The Elberfeld State Bank. And Crane Credit Union has announced the acquisition of two banks over the past three months: Poseyville-based Community State Bank of Southwestern Indiana in June and Spencer-based Our Community Bank in August.
Elsewhere in the country, Tinker Federal Credit Union in Oklahoma City agreed in April to buy $285 million-asset Prime Bank of Edmond, Oklahoma. And Apple Valley, Minnesota-based Wings Financial Credit Union agreed to buy $224 million-asset Neighborhood National Bank in February.
The acquisition of taxpaying banks by tax-exempt credit unions has aroused pushback from at least one trade group. The Independent Community Bankers of America (ICBA) launched a campaign last fall aimed at curbing the trend, which at the time was rapidly accelerating.
Credit unions bought 32 banks in the seven years preceding a December hearing, in which National Credit Union Administration (NCUA) Chairman Rodney Hood defended credit union growth in front of the House Financial Services Committee. Half of those deals came in 2019, compared with nine the previous year.
But the coronavirus has considerably slowed credit union-bank tie-ups. The pandemic in May scuttled Tampa, Florida-based Suncoast Credit Union's planned acquisition of Miami's Apollo Bank. "The COVID-19 virus changed the value of our agreement and left us with an unpredictable future," Suncoast CEO Kevin Johnson said, adding the two entities could revisit the merger once the pandemic is over.
Weigh-in from the judicial branch stifled another deal in January, when the Colorado Banking Board rejected Elevations Credit Union's attempt to buy Cache Bank & Trust. Just days before the board was set to vote on the acquisition, the Colorado Bankers Association (CBA) wrote a letter arguing that credit unions can't be "authorized purchasers" of banks, according to language in state statutes.
Michael Bell, partner at law firm Howard & Howard in Royal Oak, Michigan, told Banking Dive in May such deals could again regain momentum depending on when the outbreak ends.
"I expect all of those things that are paused to heat right up," he said. "So either the end of this year will be really busy or 2021 will be busier than it was going to be."