Right up to the end, 2024 was an active year for credit union deals for banks

The holiday season did not stop credit union-bank deal activity.

The final days of 2024 brought two credit union-bank deal announcements and one deal termination. Hanscom FCU announced a planned purchase of the majority of Peoples Bank's assets and liabilities on Dec. 20, and Zeal CU announced a planned acquisition of substantially all the assets and liabilities of Gogebic Range Bank on Dec. 30.

Also on Dec. 30, Atlanta Postal CU and Affinity Bancshares Inc. announced a mutual termination of a planned merger. Both parties agreed to the termination following discussions between Atlanta Postal CU and regulators. The Atlanta Postal CU-Affinity Bancshares Inc. deal would have been the fourth-largest bank purchase by a credit union since 2019.

Even with the nixing of that deal, 2024 was a boom year for transactions. Credit unions purchased more banks in 2024 than ever before and doubled the amount of assets sold compared to the previous record in 2022. The activity contrasted with the still-recovering bank-to-bank M&A market, which continues to trail 10-year averages. The slow bank M&A market helped open the door for acquisitive credit unions to use their cash advantage to buy small community banks with attractive footprints, a trend that has existed for years but flourished in 2024.

Credit unions' ability to buy banks has frustrated some within the banking community, who cite credit unions' non-taxed advantage, and some within the credit union space, who fear the loss of credit unions' tax-exempt status. Despite these pushbacks, the deals have continued to grow in frequency and size and are expected to continue in 2025.

Big year

There were 21 credit union-bank deals in 2024. 2019 and 2022 were also busy for such deals, with 13 and 14 deals, respectively. However, 2024 surged past those counts, becoming the year with the most credit union-bank deals in less than 10 months. Three of the five largest credit union-bank deals since 2019 were announced in 2024, pushing assets sold in credit union-bank deals to approximately $10.88 billion, more than twice the previous record for assets sold, which was $5.15 billion in 2022.

Larger credit union-bank deals are partly a result of credit unions in the US becoming more comfortable with M&A, announcing larger deals in both acquiring banks and between credit unions, industry participants say.

Big buys

The two largest bank acquisitions by credit unions on record were announced in 2024: First Financial Northwest Bank's acquisition by Global FCU and Sabine State Bank and Trust Co.'s acquisition by Texas Dow Employees CU. With First Financial Northwest Bank's $1.53 billion in assets and Sabine State Bank and Trust's $1.31 billion in assets, the two deals are the only credit union-bank deals with targets larger than $1 billion.

The expected closing date of Global FCU's planned purchase of First Financial Northwest Bank was delayed to the first quarter of 2025, the parties announced Dec. 13, 2024.

Big moves

Since 2015, banks from 21 states have been targeted in credit union acquisitions. Some states' regulators and legislators have banned credit union-bank deals, and other states' stances are murkier because few or no such deals have been announced there.

The deal involving Massachusetts-based Hanscom acquiring Chestertown, Maryland-based Peoples Bank marked the first credit union deal targeting a bank in that state in more than 10 years. During that period, West Virginia had its first credit union-bank deal in September 2024, with Summerville, South Carolina-based Rev FCU announcing its planned deal to acquire Spencer, West Virginia-based First Neighborhood Bank. New York had its first CU-bank deal in January 2024 with Hudson Valley CU's planned purchase of Catskill Hudson Bancorp Inc., followed by ESL FCU's planned purchase of Generations Bank announced in September 2024.