Two proposed acquisitions of Illinois banks by credit unions — in as many days — further cement the state as fertile ground for such deals.
Lombard, Illinois-based Credit Union 1 announced Friday it would buy substantially all the assets and liabilities of Gurnee-based NorthSide Community Bank in a deal expected to close in the first quarter of 2023, at the latest.
That comes a day after Joliet-based NuMark Credit Union said it would acquire Earlville-based Pioneer State Bank in a transaction set to close in 2022's fourth quarter, according to Credit Union Times and Olsen Palmer, a law firm advising Pioneer.
Taken together, they mark the eighth and ninth intended purchases of banks by credit unions this year — a notion bound to rankle trade groups such as the Independent Community Bankers of America (ICBA), which argue credit unions’ tax-exempt status allows them to offer a higher purchase price in acquisitions than banks can, and lets them grow more freely.
Credit unions bought a record 16 banks in 2019. But the pace of those transactions has fallen off since the COVID-19 pandemic started.
Nonetheless, Michael Bell, a leading bank M&A attorney, predicted a record “25-plus” deals between credit unions and banks in 2022, according to American Banker. At the current rate, 2022 would see 21.
The value of neither deal was disclosed, but Olsen Palmer indicated the NuMark-Pioneer transaction was all-cash.
The Credit Union 1 deal follows a recent pattern of credit unions expanding their toehold in the Chicago suburbs to boost their commercial lending portfolio. Iowa-based GreenState Credit Union deepened its push into the nation's third-largest market in October, agreeing to buy Midwest Community Bank and its subsidiary, Blueleaf Lending.
"This acquisition for CU1 in the Chicagoland area perfectly complements our strategy of organic membership and asset growth through expanded products, services and technologies," Credit Union 1 CEO Todd Gunderson said in Friday's press release.
Acquiring the four-location, $311 million-asset Northside will give CU1 roughly $1.8 billion in assets once the transaction is complete, the credit union said. Plans are being made to combine the institutions’ staffs, it added.
“With the size and scale Credit Union 1 adds, it not only strengthens our ability to serve our existing customers in the manner that they have come to expect but also allows us to increase the number of businesses that we can help grow across the new combined partnership,” NorthSide CEO Patti Clausen said in Friday’s release. "We are excited to be a part of that promising future.”
This week's other Illinois deal, however, represents a push out from the city, as NuMark expands its footprint 50 miles west into a mostly rural part of the state.
The $135 million-asset Pioneer operates four branches and one seasonal location. NuMark, meanwhile, counts 11, according to Credit Union Times. Yet, Olsen Palmer indicated NuMark will operate 13 locations after the transaction is complete.
NuMark has not disclosed explicitly whether it plans to close any locations.
The transaction is set to grow NuMark's asset total to $759 million, according to Olsen Palmer.
NorthSide and Pioneer are not the first Illinois banks to be featured in credit union deals this year. Wisconsin-based CoVantage Credit Union said in April it would buy substantially all of New Lenox, Illinois-based LincolnWay Community Bank’s assets and liabilities.
This year's credit union-bank activity kicked off in February and March, with a pair of Georgia-based deals, one in Wisconsin, one in Arizona and another between a Louisiana credit union and an Arkansas bank. After several weeks of relative quiet, dealmaking picked up again in mid-May, when Michigan-based DFCU Financial said it would acquire Tampa, Florida-based First Citrus Bank.