- Jacksonville, Florida-based VyStar Credit Union and Georgia community bank, Heritage Southeast, agreed to end their merger plans, the two financial institutions announced Wednesday.
- The termination of the $195.7 million deal comes after the two firms had agreed in April to extend the deal’s closing deadline from March 31 to June 30, the third such delay since the tie-up was first announced in March 2021.
- The termination was approved by both companies’ boards of directors “after careful consideration of the proposed transaction and the lack of a clear path forward to obtaining the regulatory approvals needed for closing,” VyStar and Heritage said.
As recently as April this year, Heritage CEO Leonard Moreland said the deal with VyStar “remains a priority.”
On Wednesday, however, Moreland said the two firms decided to end the tie-up after it became clear that all required regulatory approvals would not be obtained in a timely manner.
“The termination of the purchase agreement positions HSBI to benefit from an improved post-COVID 19 economic climate, stronger capital position and focus on the consistent growth and value creation we have delivered through the years,” Moreland said in a statement. “Additional strategic initiatives that have been delayed and designed to improve efficiencies can now be pursued along with strategic partnerships that will enhance shareholder value.”
In a statement Wednesday, VyStar President and CEO Brian Wolfburg said moving forward separately “is the prudent decision.”
“VyStar will continue to expand our services in Georgia,” Wolfburg said. “We would like to extend our sincere appreciation to both the VyStar and HSBI teams that worked diligently throughout an extensive process.”
Both parties will bear their own costs and expenses in connection with the terminated transaction, and neither party will pay any fee as a result of the termination, the companies said.
The deal’s termination will be welcome news to bank trade groups which, in the last several years, have blasted the growing number of credit union acquisitions of community banks.
Community bank advocates say the not-for-profit institutions’ tax-exempt status gives credit unions greater purchasing power and an unfair advantage over community banks.
“VyStar has either closed, moved, sold or consolidated half of the branches acquired” from a bank acquisition the credit union undertook in 2019, the ICBA and the Community Bankers Association of Georgia wrote in a joint letter to the Federal Deposit Insurance Corp. last year, urging the regulator to reject the proposed acquisition.
The deal would have made VyStar the 13th-largest credit union in the U.S., with $12.5 billion total assets, 88 branches and a membership of more than 850,000 customers, VyStar said last year.
The end of VyStar’s planned acquisition of Heritage comes as the credit union’s mobile and online banking platforms have been experiencing a series of disruptions and outages over the last month, according to News4Jax.