- Waterloo, Iowa-based Veridian Credit Union has agreed to buy Eden Prairie, Minnesota-based American Investors Bank and Mortgage (AIBM), the companies announced Tuesday.
- Financial terms of the deal, which is expected to close in July 2023, were not disclosed.
- AIBM has just one branch and 14 employees, which Veridian has promised to retain. But the acquisition gives the credit union, which counts 30 locations in Iowa and Nebraska, an entry to Minnesota.
The transaction marks the 12th time this year a credit union has proposed buying a bank. That type of combination has traditionally rankled 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 buying community banks is the logical, predictable outcome of the credit union industry's 100% income tax exemption," Minnesota Bankers Association CEO Joe Witt told American Banker.
The Midwest, too, has served as a particular hotbed of credit union-bank M&A activity. Minnesota-based Wings Financial Credit Union agreed last month to acquire Wisconsin-based Settlers Bank.
Additionally, Illinois-based Credit Union 1 and NuMark Credit Union each said in June they would acquire banks in the state. Michigan-based DFCU Financial said in May it would acquire Florida-based First Citrus Bank. Wisconsin-based CoVantage Credit Union said in April it would buy substantially all of Illinois-based LincolnWay Community Bank’s assets and liabilities. And Summit Credit Union said in March it would buy substantially all of the assets and liabilities of fellow Wisconsin firm Commerce State Bank.
AIBM CEO David Coauette said the bank’s clients “will continue to experience the personalized service they are accustomed to and will benefit from additional services offered by Veridian.”
Coauette, a 21-year veteran of AIBM, will retire after the transaction closes, according to the press release.
The purchase of $113 million-asset AIBM by $6.7 billion-asset Veridian puts 2022 on pace to match the 13 proposed acquisitions of banks by credit unions last year. That number is far lower, however, than the “25-plus” Honigman attorney Michael Bell predicted in January.
“There are a few more that should announce prior to year’s end,” Bell said last month. But Kirk Hovde, head of investment banking for Hovde Group, told American Banker a recession could prompt credit unions to “hold off” on announcing any upcoming transactions.
Credit unions bought a record 16 banks in 2019, but the trend cooled in 2020 amid the start of the COVID-19 pandemic.
"We're excited to welcome the employees and clients of AIBM to Veridian and eager to become a part of the Eden Prairie community," Renee Christoffer, Veridian's CEO, said in Tuesday’s release. “The future we share is bright.”