Michael Bell, an attorney at Honigman and M&A adviser, said he’s never known a credit union to agree to buy two banks within a week.

This week, two credit unions did that, he said.

Dothan, Alabama-based Five Star Credit Union agreed to buy Abbeville, Georgia-based Wilcox County State Bank in an all-cash deal, according to a press release seen Thursday by Banking Dive.

The deal comes three days after the credit union proposed purchasing Macon, Georgia-based OneSouth Bank.

“It’s just how the timing worked out on these two specific transactions,” Five Star CEO Robert Steensma said in an email response to Banking Dive. “We were in talks with one of the banks for almost a year, the other bank took less than 4 months to make their decision to sell to Five Star.”

The transaction is expected to close by the second quarter of 2024, pending regulatory approvals.

It would push the $773.2 million-asset Five Star to nearly $950 million and add four Georgia locations to the credit union’s 19-branch footprint. Those totals don’t include the four branches and $212.2 million Five Star stands to gain once the OneSouth transaction closes.

Also Thursday, Michigan State University Federal Credit Union said it would buy Illinois-based Algonquin State Bank. That deal would add two branches, $145 million in assets and $131 million in deposits to MSUFCU, and boost the credit union’s Illinois presence to 10 locations by 2024. MSUFCU this year announced a plan to open five branches in Chicago. The credit union would get three more Illinois branches through its acquisition of McHenry Savings Bank, announced Monday.

“After proudly serving the banking needs of Algonquin and surrounding communities since 1902 (and since 1974 by the current ownership group), we are happy to find a partner in MSUFCU that shares our values and dedication to its customers, employees, and the communities it serves,” Dan Morrissey, Algonquin State Bank’s chair, said Thursday. “We know that MSUFCU will provide the resources and personalized service needed to meet the banking needs of our customers as well as the broader Chicago market.”

The deal is set to close in the first quarter of 2024. MSUFCU expects its asset total to reach roughly $9 billion by the end of that year.

Five Star’s deal for Wilcox County State Bank would mark the credit union’s fourth purchase of a Georgia-based bank in the past decade. It bought Flint River National Bank in 2014 and Farmers State Bank a year later.

“We have looked at more than 30 potential acquisitions since 2015. Many don’t come to fruition for a variety of reasons,” Steensma said of the pause in M&A activity since 2015.

“Five Star has demonstrated their commitment to relationship banking in smaller communities,” Wilcox CEO Mike Durden said in a statement. “They understand our customers and their unique needs. The combination of the two organizations will be a great fit for our customers and for the communities we serve.”

Thursday’s Five Star and MSUFCU transactions mark the ninth and 10th tie-ups between credit unions and banks in 2023. Six of those were announced in August, and five this week alone.

The pace of such deals began slowly this year, but 2023 has now caught up to its record-tying predecessor, 2022, as 10 credit union-bank combinations had been announced by the end of August in each year. Last year ended with 16 deals.

“The bank M&A market really started to thaw out from the freeze prompted by [the failure of Silicon Valley Bank] et al. a month or two back as deal talks began to warm up,” Christopher Olsen, managing partner at Olsen Palmer, told Banking Dive via email. Olsen Palmer was an adviser in the Five Star-OneSouth deal.

“While the underlying conditions driving bank consolidation have remained steady — and have even been exacerbated by recent developments — the primary catalyst for the restart of discussions a month or two back was the metaphorical ‘all clear’ that the recent bank failures were isolated events and that a sequel to the great financial crisis was not in the cards,” Olsen said.

Bell said he thinks the boost in M&A activity is due to a combination of coincidence and an increase in demand.  

“The surge will follow where there are more small banks. This tends to be in the [Southeast] and Midwest,” he said. “That said, I think California is the next frontier and I expect activity there soon.”

Trade groups like the Independent Community Bankers of America have raised concerns about deals between banks and credit unions, arguing credit unions’ tax-exempt status allows them to offer a higher buying price and helps them grow more freely than banks.