A seasoned deal lawyer, specializing in credit union acquisitions of small, chartered banks, is witnessing a resurgence in activity after a brief pause during the regional-bank crisis earlier this year.
Michael M. Bell, the chair of the financial-institutions practice group at Detroit-based law firm Honigman LLP, has recently revealed that the sector has witnessed an announcement of five credit union purchases for banks ranging from $150 million to $300 million in assets. Bell’s firm has been responsible for handling three of these transactions.
Bell enthusiastically exclaimed, “We just had a sensational week, and it showcases the increased pace of deals through 2023. Furthermore, it seems like gasoline will be thrown on the fire in 2024—resulting in potentially even more intensified activity.”
Bell’s team, along with him at Honigman, has successfully concluded between 10 to 20 deals in recent years. However, Bell believes that there are more than 20 potential deals in the pipeline for 2024, provided that the economy experiences a soft landing as predicted by many experts. It is noteworthy that despite working on over 100 potential deals per year, only a fraction, approximately one-fifth, reach a final fruition.
The deal-making landscape has regained momentum over the summer. After a temporary pause beginning in late March due to marketplace uncertainty following the collapse of Silicon Valley Bank, Signature Bank, and First Republic banks, Bell observes an upswing in activity.
Stay tuned as the credit union acquisition arena gains further traction and fuels the future prospects of this dynamic industry.
Title: Summit Credit Union’s Acquisition of Commerce State Bank Strengthens Its Market Position
In a significant development, Summit Credit Union completed its acquisition of Commerce State Bank of Indiana in late 2022. With the addition of Commerce State Bank, Summit Credit Union, based in Wisconsin, now boasts over $6 billion in assets and a network of 54 offices. This merger has positioned Summit Credit Union as a major player in the financial-services market.
Expanding Opportunities in Credit Unions-Bank Mergers
Industry insiders predict that mergers between credit unions and banks will continue to grow in size and scope. For example, Bell, an expert in such deals, foresees transactions involving banks with assets ranging from $1 billion to $2 billion. As a pioneer in facilitating a credit union’s acquisition of a bank in 2017, Bell recognized the potential for geographic expansion, broadening service offerings, and attracting fresh talent. Prior to this innovative approach, credit unions relied solely on increasing their membership base.
Capital-Raising and Advisory Services for Smaller Banks
While credit unions and smaller banks don’t typically trade on major stock exchanges like Nasdaq or NYSE, there are medium-sized regional banks that offer M&A advisory and capital-raising lending services. Institutions such as Stifel Financial, Raymond James Financial, Hovde Financial, and Janney Montgomery Scott play a crucial role in assisting smaller banks looking to sell their businesses.
This strategic move by Summit Credit Union reaffirms the trend of credit unions acquiring banks for mutual benefit. As the competition for deposits intensifies, smaller banks will likely face increasing pressure to seek merger opportunities.
Also check out: Credit Unions buying banks? Yes indeed, says this deal lawyer
Also check out: Smaller banks will be under pressure to merge as competition for deposits heats up: S&P
