Suncoast Credit Union, Florida's largest credit union, signed a definitive agreement to acquire Apollo Bank, setting the Tampa-based credit union up for a major move into the Miami market, the financial institutions announced Tuesday. The sum of the deal is undisclosed.
If regulators approve the deal, it would be the largest bank acquisition by a credit union since 2012, when the Federal Reserve Bank of St. Louis began tracking such figures.
"The Miami market is the most populous market in the state and we just felt like Suncoast, being what it is, we owe it to Florida and Miami to have a presence down there to offer great financial services options to those consumers in that market," Suncoast CEO Kevin Johnson told Banking Dive.
Suncoast's plans highlight a growing trend in the financial services industry. Credit unions have announced 16 bank acquisitions this year, nearly doubling the nine deals announced in 2018, according to American Banker. Credit unions "are getting bolder and bolder," said Alex Sanchez, president and CEO of the Florida Bankers Association.
Banks and industry trade groups have slammed the practice, saying tax exemptions give credit unions an unfair advantage.
The Independent Community Bankers of America (ICBA) launched a campaign in October aimed at ending what it calls "risky practices, costly tax subsidies, and irresponsibly lax oversight" of credit unions. It accused some credit unions of neglecting their mission to serve low-income households.
Johnson said the trend represents a desire for credit unions to expand their reach in an accelerated time frame.
"One of the reasons [for the trend] is to enter new markets. It gives you a head start — being able to become profitable in that market, gain traction in the market and build brand awareness in the market," he said. "Acquiring another financial institution that is established in a new market is much quicker than if you go in there and build it organically."
Suncoast, which has $10 billion in assets and more than 866,000 members, has had its eyes on Miami for some time, Johnson said.
Apollo Bank, which was founded in 2010 by CEO and Chairman Eddy Arriola, has five branches in Miami, $746 million in assets and around 100 employees. Suncoast will rebrand those branches and keep all of Apollo's employees, Johnson said.
"All the employees are integral to our success," he said. "They know their current customers and they know the Miami market, so we're going to rely on them heavily."
The decision to acquire Apollo also stems from the bank's strong commercial portfolio, Johnson said.
"Apollo has a lot of talent around commercial lending and commercial deposits. And while we have that at Suncoast, it's only going to strengthen our team to bring in the expertise especially in that market," he said.
Arriola will serve as Suncoast's South Florida market president once the acquisition is complete.
"Nearly a decade after launching, we realized that partnering with a larger institution would put our team in position to offer even more products and services to clients while allowing our bank to scale," Arriola said in a statement. "After considering a range of options, it became clear that Suncoast Credit Union was the right partner. Suncoast is a Florida market leader that shares Apollo Bank's deep-rooted commitment to client service and community involvement."