Dive Brief:

• Atlanta Postal Credit Union and its subsidiary Center Parc Credit Union have agreed to buy Covington, Georgia-based Affinity Bank in an all-cash transaction, the companies announced Thursday.
• The final purchase price was not disclosed. However, APCU said it would pay enough so that Affinity Bank can distribute $22.50 per share to its shareholders. The per-share payout amount is subject to potential increases based on the levels of tax payments involved in the transaction, the companies said.
• The transaction is expected to close in the fourth quarter of this year or the first quarter of 2025.

Dive Insight:

The acquisition of $870 million-asset Affinity by $2.5 billion-asset APCU marks the 11th purchase of a whole bank this year by a credit union. That matches the number of credit union-bank deals announced in all of 2023 — with more than half of 2024 to go. The year appears well on pace to shatter the record 16 such deals announced in 2022.

Michael Bell, a partner at the law firm Honigman, has said he expects “this will clearly be a record year.”

“For nearly 100 years, Affinity Bank has successfully served both small businesses and individuals throughout Atlanta and the entire region,” Blake Graham, APCU’s CEO, said in a statement. “Through this agreement, we look forward to welcoming Affinity Bank’s customers as new members and exceeding their expectations in every way as we work to help them financially flourish.”

The deal would give APCU four added locations, including a branch in Atlanta; two more, southeast of the city; and a loan production office in a northern suburb.

“During our proud history, Affinity Bank has been committed to serving our clients and local communities. Through a consistent level of superior quality service, our dedicated staff has grown a loyal commercial and retail customer base,” Edward J. Cooney, Affinity’s CEO, said Thursday. “APCU/Center Parc share our core values, and have demonstrated a similar commitment to their members, employees and the communities they serve.”

The APCU/Affinity deal is far from the epicenter of this year’s credit union-bank activity. Four banks headquartered in Washington state are involved in acquisitions by credit unions. Three more are in the Midwest. Texas-based TDECU is the only other credit union in 2024 to announce a whole-bank purchase of an institution based in the Southeast.

Alabama-based All In Credit Union agreed to buy five branches of 22nd State Bank — one of three partial-bank purchases by credit unions so far this year.

Bank-credit union tie-ups have long been a source of frustration for banking trade groups.

In a February post on X, formerly Twitter, the Independent Community Bankers of America said 20% of bank acquisitions “are now by tax-subsidized credit unions, and each one increases the portion of the financial services industry exempt from [the Community Reinvestment Act] and taxation.”

Industry groups “continue calling on Congress to hold hearings, request a Government Accountability Office study on the credit union industry, and consider an ‘exit fee’ on these acquisitions to capture the value of the tax revenue lost once the acquired bank’s business activity becomes tax-exempt,” Rebeca Romero Rainey, ICBA’s CEO wrote in an emailed statement to American Banker.

A January opinion piece published in the American Bankers Association’s ABA Banking Journal, contends that credit unions do not face the strict regulatory oversight that banks do, such as the requirement to serve low-to-moderate-income communities.

“The much ballyhooed ‘credit union difference’ harkens back to the movement’s founding nearly a century ago when these not-for-profit financial cooperatives had a clearly defined role. Bank acquisitions clearly demonstrate that the industry’s activities have expanded far beyond its original mission — and congressional intent,” wrote Robert Flock, a vice president in the ABA’s Office of Strategic Engagement, and Harris Simmons, chair of Zions Bancorporation. “Much has changed ... and lawmakers have an obligation to scrutinize this growing industry.”