Dive Brief:

• Moline, Illinois-based Empeople Credit Union will acquire Lomira, Wisconsin-based TSB Bank for an undisclosed sum, the institutions announced in a press release.
• The deal, expected to be completed in the fourth quarter, will create a roughly $2.2 billion-asset institution, giving Empeople expanded business and commercial services and a deeper footprint in Wisconsin.
• After the deal closes, TSB Bank will operate as “TSB Financial, a division of Empeople Credit Union,” said the bank’s CEO, Thomas O’Connor. “The communities we serve will continue to experience a customer-focused approach from familiar individuals in existing locations,” O’Connor said.

Dive Insight:

The deal marks Empeople’s first-ever bank acquisition, and the fifth purchase of a whole bank by a credit union so far in 2024 — though another transaction targeted part of a bank’s footprint. Daleville, Alabama-based All In Credit Union agreed to acquire five branches of 22nd State Bank last month.

By comparison, there were 11 credit union-bank tie-ups proposed in all of last year — short of the record 16 announced in 2022. 

Jeff Cardone, a partner at Luse Gorman, who served as legal counsel to Empeople Credit Union in the deal, said in an interview that, on a macro level, he expects credit union-bank transactions to continue at their current pace because of a convergence of business strategies of the institutions.  

“For credit unions, bank acquisitions expand their geographic footprint and lines of businesses and commercial lending infrastructure,” Cardone said. “For banks, a strategic partnership with a credit union provides economies of scale for their employees and customer base, while providing liquidity for their closely held shareholders.”

After the transaction closes, TSB Bank will liquidate and distribute its remaining assets to its stockholders. It counted $182 million in assets and $151 million in deposits as of Dec. 31, and has three locations and roughly 25 employees.

“TSB Bank is an extremely well-run institution with a very long history in the area,” Empeople Credit Union CEO Kurt Lewin said in the release.

TSB Bank opened in 1905 in Theresa, Wisconsin, as the Theresa State Bank.

“The expertise of the TSB Bank staff and management will allow us to expand opportunities for our members who own and operate small businesses,” Lewin said, noting that the credit union already has members at a nearby John Deere facility. 

Empeople, the sixth-largest credit union in Illinois by assets, was created in 2021 when the $1.3 billion-asset Deere Employees Credit Union in Moline merged with the $338 million-asset Infinity Federal Credit Union in Westbrook, Maine.

The Empeople deal would be the third credit union-bank tie-up this year to take root in the Midwest — typically fertile ground for such acquisitions. Michigan-based Advia Credit Union agreed last month to buy Illinois-based NorthSide Community Bank. Wabash, Indiana-based Beacon Credit Union, on the same day, announced it would acquire Mid-Southern Savings Bank of Salem, Indiana.

Bank-credit union deals have long irked trade groups like the Independent Community Bankers of America, which have argued that credit unions’ tax-exemption status allows them to offer higher buying prices than banks and help them to grow more freely.

Empeople earned $7.1 million in 2023, a 35% decrease compared with a year earlier, according to call report data from the National Credit Union Administration. 

Net income for TSB Bank was $2.1 million in 2023, compared with $1.8 million the year before, according to S&P Global Market Intelligence.