- Phoenix-based Arizona Federal Credit Union said it would acquire Lake Havasu City, Arizona-based Horizon Community Bank for $91.4 million, according to a Thursday press release.
- The deal is the fifth acquisition of a bank by a credit union to be proposed in 2022 so far, and would mark the second such deal in Arizona Federal’s history, after the credit union acquired Pinnacle Bank in 2019.
- “We believe that quality growth and diversification is essential to continued success in our industry, and we intend to achieve it both organically and through mergers or acquisitions,” Ronald L. Westad, CEO of Arizona Federal, said in the press release.
Buying Horizon would give Arizona Federal six new locations and help it expand into the western half of the Grand Canyon State.
The bank held $539.5 million in assets, $259.9 million in loans, $471.7 million in deposits and $43.4 million in equity, as of Dec. 31. The asset total would push Arizona Federal past $3.3 billion. The credit union is already Arizona's third-largest, according to Credit Union Times.
The deal, expected to be complete by the end of the year, hinges on whether the credit union can convert its charter from a federal to state one, according to a statement from Arizona Federal.
The credit union said it would continue to operate all existing Horizon branches.
“I’m excited for Horizon employees to join together with Arizona Federal employees to bring additional financial services and resources to the communities we serve,” Horizon CEO Ralph Tapscott said in the press release. “Arizona Federal has demonstrated their competency and commitment to community banking and they will be a great partner for our bank."
Thursday's deal marks the fifth bank acquisition proposed by a credit union in 2022's first 69 days. At this rate, there could be 26 deals in the works by the end of year — double 2021's 13. That's in line with an estimate from Michael Bell, co-leader of the financial institutions practice group at the law firm Honigman, floated in January. A record 16 banks were bought by credit unions in 2019.
“I expect 25-plus to announce [in 2022]. … My prediction is based on the work and deal flow I am seeing,” Bell told American Banker in January. “I have never seen so much activity.”
The Arizona Federal deal, he added more recently, shows geographic diversity among credit union-bank tie-ups.
(Indeed, the year's first two bank purchases proposed by credit unions both sprung from Georgia: Georgia's Own Credit Union's move to buy Vinings Bank, and Robins Financial Credit Union's announced plan to take over Persons Banking Company.)
"This is relevant to all selling banks everywhere," Bell said of the Arizona deal.
But it may not be welcome news to trade groups such as the Independent Community Bankers of America (ICBA), which argues credit unions’ tax-exempt status allows them to offer a higher purchase price in acquisitions than banks can, and lets them grow more freely.
Aside from the Georgia deals, Wisconsin-based Summit Credit Union said this month it would buy substantially all of the assets and liabilities of Commerce State Bank. And Louisiana-based Barksdale Federal Credit Union in late February agreed to buy HomeBank of Greenbrier, Arkansas.
The Arizona Federal transaction will help Horizon customers “gain access to expanded consumer financial services, including loans, insurance, credit cards, investment services and more,” according to Thursday's press release.
Arizona Federal “will benefit from further diversification and from new revenue streams, which will help us continue investments in new products and services, including enhanced online services," the credit union said. "It will also help fund the future expansion of our services to new markets throughout Arizona."